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article imageIllinois municipalities sues Travelocity, Expedia and Priceline

By Owen Weldon     Apr 12, 2013 in World
Seven Illinois municipalities are suing some online travel companies, including Expedia, Priceline and Travelocity, saying that the companies owe unpaid taxes.
According to ABC, taking part in the lawsuit is Warrenville, Oakbrook Terrace and Rockford, as well as Bedford Park, Oak Lawn, Orland Hills and Willowbrook.
According to EvanstonNow, Tom Prindable, a managing partner at the Clifford Law Office, said that there is a gap of taxes that the online travel sites are not paying, and that is what the lawsuit is about. He proceeded to say that the lawsuit is also about capturing the difference in taxation that is not remitted to governmental bodies at the local level.
Robin Reck, spokeswoman for the Travel Tech Association, which represents travel sites that are Internet based, said that the correct amount of taxes are being paid and the hotel remits their payment to the communities.
When travelers book a hotel, whether it is in person or on a hotel's website, then they pay the state's combined tax of around 11% on the entire room rate. However, most online travel sites buy rooms in bulk, and they receive a discounted price, and pay taxes only on the discounted amount. For example, if an online travel site pays $50 or $100 a night room, then they would pay around $5.50 in taxes, instead of paying $11.
According to Equities, local governments want to collect taxes that go back to the 1990s, which is when online travel sites started.
Prindable said that the amount of taxes that is potentially owed to the muncipalites are hard to estimate because it is not known the total number of rooms rented, but if the state joins the suit, then it could be around $150 million, said Prindable.
More about Illinois, Sues, travelocity, Expedia, priceline
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