The online booking company Expedia displaced travel agents by packaging and selling discounted airfares and hotel rooms. According to dozens of lawsuits filed from Florida to Hawaii, Expedia also shorted local governments by paying taxes on the wholesale rates it negotiated with hotels rather than on the higher rates it charged customers.
The suits seek to claw back what amounts to a few dollars per room per night, but the numbers add up. If it loses appeals across the country, Expedia could face a tax bill of as much as $847 million, an analysis of court documents and tax revenue records shows. “Taxing is a zero-sum game,” says Owen Clements, chief of special litigation for the city of San Francisco, which was awarded $73.5 million by a city hearings examiner in a decision Expedia is appealing. “If we’re not getting tens of millions of dollars from the online travel companies, then other people will have to pay more” in taxes, he says.