Online Travel Vendors Spark Lawsuits Over Hotel Taxes

As reported by the Washington Post under Maryland Politics, Montgomery County has filed a federal lawsuit against online travel vendors claiming that the county is not receiving its appropriate share of hotel taxes.

The lawsuit, filed in U.S. District Court in Greenbelt on Dec. 21, mirrors others filed across the country by states and localities that argue that their jurisdictions have been shortchanged.

According to the suit, the online companies pay the county the 7 percent room rental tax based on the wholesale price of each room. But the county argues that the tax should be based on the higher retail rate paid by the consumer.

The county offers this example in the 24-page lawsuit: Expedia.com obtains a room at a $60 rate and charges a customer $100. According to the lawsuit, Expedia.com calculates the room rental tax based on the $100 payment, for a total tax of $7, but only remits $4.20 to the county.

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