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Nov 3, 2009 2:21 pm US/Eastern
Florida Sues Internet Travel Companies Over Fees
TALLAHASSEE (CBS4) ―
A long-standing battle between Florida officials and out-of-state internet travel companies heated up Tuesday, when the state filed suit against two of the largest companies for millions of dollars, claiming Expedia.com and Orbitz failed to pay required taxes on tens of thousands of hotel room rentals made online.
Florida Attorney General Bill McCollum sued two of the companies Tuesday after the companies refused to pay the state the tax money for past bookings. The state wants the companies to pay taxes it believed are owed to agree to collect the money and pay the state for future bookings made in Florida.
"Consumers are already paying 'taxes and fees' when purchasing a
Florida hotel room online, yet the online travel companies have been
keeping too much of those taxes as profit," said Attorney General
McCollum. "If these taxes are due to the State, the companies should
pay them for the benefit of the people of Florida."
The lawsuit states that while the companies have been collecting the taxes from consumers, they have remitted only a portion of them back to Florida, keeping the rest as profit.
Florida is the first state to file a lawsuit against the travel companies, but Palm Beach County's tax collector filed a similar lawsuit last July.
The reason for the lawsuit is made clear in the court filings. The document claims as many as half of all hotel bookings made nationwide are done online, where it is difficult for states to collect locally imposed taxes like hotel and sales tax.
The state claims in its filing that the big internet travel companies negotiate wholesale rates from hotels and based any taxes collected on those wholesale rates, resulting in lower payments to the state when taxes are paid at all.
Chief Financial Officer Alex Sink applauded McCollum's decision to sue the companies. Sink and McCollum are each seeking their respective party's nomination for governor.
(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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