Text Resize

-A +A
Bookmark and Share

District of Columbia Wins Summary Judgment on Tax Liability in Suit Against Leading Online Travel Companies

Monday, September 24, 2012

District of Columbia Wins Summary Judgment on Tax Liability in Suit Against Leading Online Travel Companies

WASHINGTON, D.C. – District of Columbia Attorney General Irvin B. Nathan announced today that the District won a summary judgment ruling that four major online travel companies are liable for unpaid hotel room taxes in a suit in which the District is seeking to recover tens of millions of dollars.

The District alleges that Expedia, Orbitz, Priceline.com, and Travelocity have been selling hotel rooms in D.C. at retail prices, but the District is receiving taxes only on the hotel rooms’ discounted wholesale prices, depriving the District government of millions of dollars of tax revenue each year.

D.C. Superior Court Judge Craig Iscoe found that the District is entitled to receive hotel room taxes based on the online travel companies’ retail sale prices. Judge Iscoe found that the online travel companies are providing services that are taxable under District law and that the District’s hotel room tax applies to the online travel companies’ gross receipts from charges for hotel rooms in the District.

Judge Iscoe further found that the online travel companies’ tax liability is not limited by the three-year statute of limitations that ordinarily applies in the District’s tax collection cases.

“The Court’s ruling today is an important step in our efforts to ensure that the District receives the substantial sums it is owed by online companies selling hotel rooms in D.C.,” Attorney General Nathan said.

Today’s decision does not resolve a number of other issues in the case, including the total amount of taxes owed, whether the defendant companies are subject to negligence or fraud penalties, and whether the parent corporations of Expedia and Orbitz may also be held liable for these taxes.

Media Contacts