Cleveland PD Article Update on Tax Lawsuit Against Travel Websites Led by John Murray

July 23, 2013

John Murray of Murray & Murray quoted in CLEVELAND PLAIN DEALER article: "Whatever happened to the lawsuit Cuyahoga County and other counties filed against travel websites like Hotels.com, Expedia, Priceline and Travelocity over hotel taxes?"

By Patrick O'Donnell, The Plain Dealer

on July 22, 2013 at 6:00 AM, updated July 22, 2013 at 6:27 AM

http://www.cleveland.com/metro/index.ssf/2013/07/tax_lawsuit_against_travel_web.html

The case is still working its way through U.S. District Court in Toledo.

"We're just grinding away," said John Murray, the private attorney in Sandusky who is handling the case for the counties. The Cuyahoga County Prosecutor's office referred all questions to Murray.

The case, along with several others that have been pursued across the country, is a fight over how much counties are due in bed and lodging taxes from hotel bookings made through the websites.

The websites all receive discounts from the hotel, then charge customers more than the discounted amount and pocket the difference.

The counties say the websites and customers should pay tax on the full amount that a customer pays for the booking. The websites instead have been paying taxes on the lower, discounted price.

States and counties across the country have been fighting with the websites over the last several years, without coming to a national solution.

Murray estimated that the lost taxes for Cuyahoga County would be in the millions annually, though the exact amount depends on the discounts a site receives and the markup - information that is often proprietary and much of which is in sealed court records.

The Interactive Travel Service Association, the group representing the websites, has maintained that the sites are only booking agents. Since they are not actually hotels, the group has argued, they shouldn't pay a hotel tax on their margins.

The travel sites won a side battle in the case by having it set in the court of U.S. District Judge David Katz, who ruled for the sites in a similar 2005 lawsuit filed by Columbus, Dayton, Findlay, Toledo and eight other communities.

The websites asked Katz to decide the case in their favor in October and the two sides spent the next two months filing responses and documents in support of, or against, that request. The sides are still waiting for Katz to rule.

If Katz does not grant the request, the case will continue.

Murray said the best solution, rather than having continual court fights, would be for the legislature to clarify the law going forward.

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