Florida Sues Online Travel Companies Over Hotel Taxes

Florida is suing Expedia and Orbitz after they failed to pay the state the full amount of taxes owed on room rentals.

The state of Florida is suing online travel reservation companies over hotel taxes, the latest in a string of lawsuits nationwide claiming the sites owe local authorities millions of dollars.

Attorney General Bill McCollum sued Expedia and Orbitz on Tuesday, claiming they failed to pay Florida the full amount of taxes collected on hotel room rentals through their sites.

“The customer is paying the tax already,” said McCollum, who is running for governor in 2010. “Orbitz and Expedia are not remitting to the state all the taxes they have collected.”

Consumers are charged a rate when they book a room online, and the company later reimburses the hotels a lesser amount, allowing them to pocket service fees. The taxes are paid on that less expensive rate, prompting legal action by cities and states that claim they’re being cheated out of millions of dollars in tax dollars.

Expedia and Orbitz did not immediately respond to requests for comment.

The Florida lawsuit — filed in a state Circuit Court in Tallahassee — claims the companies have been keeping some of the tax as profit.

Similar complaints against online travel companies have been filed by cities including New York, Chicago, Philadelphia, San Francisco and Atlanta and the tourist town of Branson, Mo. Officials have alleged that online travel services charged customers for local tourism taxes but never remitted those funds.

“In these tough budget times, I hope we can ensure that these companies pay what may be owed to Florida, instead of pocketing the tax our citizens have already shelled out,” Florida Chief Financial Officer Alex Sink said Tuesday.

Sink applauded her political rival’s decision to sue the companies. Sink, a Democrat, and McCollum, a Republican, are seeking their respective party nominations for governor and could end up facing each other in Florida’s 2010 race.