Anaheim Awarded $21.3 Mil in Occupancy Taxes from Online Travel Companies
Expedia, Orbitz, Priceline, Travelocity and Others
ANAHEIM, CA, February 13, 2009 - An administrative hearing officer has ordered a group of online travel companies to pay the City of Anaheim $21.3 million dollars in back taxes, interest and penalties. The companies have been collecting the tax known as a Transient Occupancy Tax (TOT) on the retail price guests pay for the room, but have been remitting to the City only the tax on the wholesale price paid by the online travel companies.
"The issue at hand is full reimbursement of the taxes collected," said Anaheim Mayor Curt Pringle. "There is no reason why online travel companies should be paying a different amount of taxes than others who book the same hotel rooms. The hearing officer's decision is both logical and fair."
At issue in the case was the companies' tax liability per the Anaheim Municipal Code and the assessment of taxes owed from January 2000 through March 2008. According to the hearing officer's decision, the companies in the case, Expedia, Orbitz, Priceline, Travelocity and related businesses, will be required to pay the 15% TOT on the difference between the wholesale and retail rates of hotel rooms they purchased and resold in Anaheim between 2000-2008, as well as all service fees associated with the transactions. The online travel companies are also being required to pay penalties and interest.
The $21.3 million ruling, handed down on February 9, is expected to influence a host of similar suits filed on behalf of local governments throughout the country.
As a result of the February 9 ruling, the online travel companies have since filed an action in Orange County Superior Court asking for the ruling of the administrative hearing officer to be overturned. Despite this appeal, the City will continue its efforts to recoup its share of TOT revenues from these companies.
In May 2007, Mayor Pringle and the Anaheim City Council chose to take legal action against the online travel companies when it became clear the companies were not paying the taxes required by the City's Municipal Code.
For more information please contact Marty DeSollar, External Affairs Manager, (714) 765-5092 office, (714) 240-6051 cell, or Ruth Ruiz, Public Information Specialist, (714) 765-5060 office, (714) 420-7797 cell.
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