Montana sues online travel companies over taxes

2010-11-08T18:01:00Z 2010-11-14T13:23:16Z Montana sues online travel companies over taxesGazette News Service The Billings Gazette
November 08, 2010 6:01 pm  • 

HELENA — Montana sued more than a dozen online travel companies on Monday, claiming the companies shortchange the state on hotel taxes.

The state Department of Revenue's lawsuit is an escalation of Gov. Brian Schweitzer's ongoing dispute with the online travel booking industry. The state claims the industry is not paying the hotel bed tax on the full amount it collects from consumers.

The travel industry counters that the lodging tax should only be charged to the hotel operators, and the portion they pay.

The Montana Department of Revenue said that Priceline, Expedia, Orbitz, Travelocity and others only pay the taxes on the wholesale portion of the room. It says the industry faces dozens of similar lawsuits elsewhere.

Schweitzer even confronted Travelocity officials during a promotional event this summer in the state as the dispute was brewing.

The lawsuit, filed in state district court in Helena, said the state wants to get the taxes it is owed, make sure that the industry pays its share of taxes like others, even the playing field for other hotels and others that book directly with the consumers, and eliminate a "tax scheme" that shortchanges the state.

The industry estimates that the difference between the wholesale and retail amounts in online bookings is so small that the tax would only generate an extra $100,000 for the state.

Andrew Weinstein, spokesman for Interactive Travel Services Association, said the state is wrong on the facts and the law. He said it is a waste of money to sue an industry that brings tourists to the state.

"The state is really stepping over dollars to collect pennies," he said. "It creates an adversarial relationship with some of their best travel partners. We think cooperation instead of litigation is a much better way of improving Montana's travel revenues."

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