City Sues Travel Websites Over Tax

City Atty. Rocky Delgadillo has filed suit against online services that book hotel rooms, including Expedia and Hotwire, claiming they failed to pay the city as much as $10 million a year in taxes.

The lawsuit, filed this week in Los Angeles County Superior Court, claims the online vendors collect a 14% occupancy tax from guests but fail to forward the full amount to the city.

The websites base their tax bill on the discounted wholesale prices they pay hotels, but charge consumers fees calculated on the higher retail rates and pocket the difference, said Katie Buckland, a spokeswoman for the city attorney’s office.

“The websites can’t have it both ways,” Buckland said. “They can’t charge consumers taxes based on retail price but give back to the city only part of the money.” The city is seeking payment from as far back as 1999.