It looks like the worldwide web is going to lead to some world-class taxes.  The battle raging all over the country is between cities and towns, and states and counties against online travel companies, also known as OTCs.  This one involved Expedia in the City of Columbus, Georgia. The question was whether the OTCs have to pay the hotel and motel tax on the reduced rate they pay for the room or on the full price paid by the consumer.  The city argued the plain language of the city hotel and motel occupancy excise tax requires Expedia to collect and remit the taxes based on the final retail charge.  The OTCs argued the hotel taxes are only due on the wholesale price, that they are not in the hotel business, and they’re not renting the room, but the Court ruled for the city, stating the law requires the tax on the full rate and Expedia must collect and pay it.  So in the end, instead of paying wholesale, we’ll all pay on the whole sale.

THIS IS NEIL CHAYET LOOKING AT THE LAW™

Expedia, Inc. v. Columbus, Georgia, Georgia Supreme Court, No. S-09-A057, June 15, 2009, Benham, J., U.S. Law Week, Vol. 77, No. 49, Pg. 1805, 6-23-09

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