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City Fights To Collect Room Tax From Online Sites
POSTED: 6:49 pm PST February 2, 2010
UPDATED: 7:06 pm PST February 2, 2010
SAN DIEGO -- Millions of dollars are at stake for the city of San Diego as they try to collect hotel room tax from online travel Web sites like Expedia and Orbitz.In a similar case, a judge ruled against the city of Anaheim, which may impact how much San Diego will be able to collect.The city if facing a $93 million deficit and could use a little cash. The city sued several online travel companies for $25 million in unpaid hotel room tax."Any revenues we can get, especially in a down economy, it's money we're entitled to. We're not raising taxes on anybody. It's important that we go after it and collect it," said San Diego Chief Operating Officer Jay Goldstone.The case is going through an administrative hearing now and will probably wind up going to trial. The issue is how much hotel room tax the online Web sites do or do not pay.For example, if the travel Web site paid $50 for a room and charges the buyer $100, the sites pay room taxes on the $50. Several cities think the Web sites should pay on the whole $100.Carl Winston, director of San Diego State University's School of Hospitality and Tourism Management, told 10News, "This is really a nationwide issue. Every municipality across the U.S. is dealing with. The cities are literally upside-down. They're scrambling any way they can to turn up revenue. And this is fertile ground to explore. I don't think they're going to prevail."Because of the economy, San Diego's room tax revenue is down nearly 10 percent. The San Diego Convention and Visitors Bureau said about 60 percent of local hotel rooms are booked online, but only about 10 percent are booked through sites like Expedia, Priceline and Hotwire. Still, that adds up to a lot of lost revenue for the city."These operators believe they found a loophole," said Goldstone.The most recent ruling said the online sties do not owe the city of Anaheim $21 million for rooms booked over the Internet.10News spoke with the attorney in Dallas handling the case for San Diego, and he said there are big differences between the cases in Anaheim and San Diego and he doesn't think the ruling against Anaheim will have a significant effect on San Diego's case.
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