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NEW HAMPSHIRE AG SUES PRICELINE, ORBITZ, EXPEDIA, TRAVELOCITY


(The following press release from the New Hampshire Attorney General's Office was received by e-mail and was reformatted. The sender verified the statement.)

New Hampshire Sues Online Travel Companies for Failing to Properly Remit Meals and Rooms Tax

Attorney General Joseph A. Foster and N.H. Dept. of Revenue Administration Commissioner John T. Beardmore announce that the State has filed suit against Priceline, Orbitz, Expedia, Travelocity and other online travel companies. The complaint alleges that the companies failed to properly remit the full amount of Meals and Rooms Taxes due on overnight accommodations and vehicle rentals.

New Hampshire's Meals and Rooms Tax Law imposes a 9% tax on the retail rate paid by the consumer for overnight accommodations and vehicle rentals. A consumer renting a room or car directly from a hotel or car rental company pays the price of the room or rental plus the Meals and Rooms Tax due on this retail sale. The hotel or car rental company remits the 9% tax collected on the retail sale to the State.

In its complaint the State alleges that online travel companies acquire the right to rent rooms and cars from hotels and rental car companies at low wholesale rates. They then rent the rooms and cars to consumers at higher retail rates, adding an additional charge for "taxes and fees." The online travel companies remit the Meals and Rooms Tax only on the wholesale rate they paid the hotels or car rental companies, rather than on the retail rate paid by the consumer, and retain the difference. Given the growing number of hotel rooms and rental cars that consumers now rent from online travel companies, New Hampshire is losing an increasing amount of Meals and Rooms Tax revenue because the online travel companies are remitting taxes on only the wholesale rate rather than on the retail rate as required by the Meals and Rooms Tax Law.

The State claims that the online travel companies' Meals and Rooms Tax remittance practice is unfair and misleading. Consumers are charged "taxes and fees," but are not informed how those charges are broken down, and local businesses renting rooms and cars directly to consumers are put at an unfair disadvantage because they are paying the 9% tax on the full retail rate.

A copy of the lawsuit filed in Merrimack County Superior Court is attached. The online travel companies will have 30 days to file a response after they have been served with the complaint. In filing this lawsuit, New Hampshire joins a growing number of States and local governments seeking to recover unpaid tax revenue from online travel companies.

(rml) NY

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