Court Rules Online Travel Companies Must Pay Taxes On Hotel Rooms Sold in Chicago

  Court Rules Online Travel Companies Must Pay Taxes On Hotel Rooms Sold in
  Chicago

Business Wire

CHICAGO -- June 21, 2013

In a major win for taxpayers, Judge Robert Lopez Cepero of the Cook County
Circuit Court ruled today that online travel companies such as Expedia, Orbitz
and Priceline are required to remit taxes to the City of Chicago on gross
receipts from hotel room sales in Chicago, according to Cohen Milstein Sellers
& Toll PLLC, which represents the City of Chicago.

Chicago’s lawsuit against the online travel companies was based upon
violations of the Chicago Hotel Accommodations Tax, at Chapter 3-24 of the
Municipal Code. Judge Lopez Cepero granted the City’s motion for summary
judgment, finding that the defendants violated the Code by failing to remit
the proper amount of hotel taxes to the City on their rentals of hotel
accommodations to their customers, the hotel guests. The Court found that by
refusing to remit taxes to the City based on the gross rental charges paid to
them by their customers the online travel companies violated the Code.

In the ruling, Judge Lopez Cepero found that “Defendants attempt to wag the
dog by arguing that they provide ‘travel services,’ which merely include the
rental of hotel accommodations.” He added that regardless of how Defendants
seek to classify their transactions, “it would be absurd to find that they do
not rent rooms to the public.” He pointed out that the customer's transaction
is with the OTC's, “When Defendants accept money from the customer, they are
granting the customer the right to lease or occupy the room.”

“We are pleased with Judge Lopez Cepero's decision to hold online travel
companies accountable for unpaid taxes owed under the Code. The decision makes
clear that they must collect and remit taxes on the gross amount paid by
customers for hotel rooms in Chicago going forward, as well,” said Plaintiffs’
Lead Counsel Carol V. Gilden, of Cohen Milstein Sellers & Toll PLLC, Chicago
office.

In addition to Gilden, the City was represented by Sherrie Savett and Michael
Fantini of Berger & Montague P.C., as well as Whitney R. Case of Cohen
Milstein Sellers & Toll PLLC, Washington D.C.

For more information about City of Chicago v. Hotels.com, et al., No. Case No.
05-L-051003, http://www.cohenmilstein.com/news.php?NewsID=584

Copy of the decision available. Contact Pam Avery at pam@turnerstrategies.com

Contact:

Cohen Milstein Sellers & Toll PLLC
Pamela Avery, 402-305-0799
pam@turnerstrategies.com