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D.C. Latest To Sue Online Travel Companies Over Unpaid Taxes

Washington Dc Spring

By JESSICA GRESKO   03/22/11 03:33 PM ET   AP

WASHINGTON -- Attorneys for the District of Columbia filed a lawsuit Tuesday against online travel companies including Expedia, Orbitz, Travelocity and Priceline, alleging the companies owe the city millions of dollars per year in sales tax that they aren't paying.

The lawsuit in Superior Court in Washington is similar to more than 40 others pending around the country, and cities have met with mixed success in cases already decided by courts. The District's lawyers, like their counterparts elsewhere, contend the companies charge customers hotel tax on the full price of a room but only return tax to the city based on the wholesale rate the company paid.

The city's Acting Attorney General, Irvin Nathan, says his office has studied the lawsuits in other places and believes the city can win. The companies owe tens of millions of dollars plus interest for taxes dating back to 1998, the city's lawsuit contends. The lost revenue adds up to between $4 million and $10 million a year, Nathan said.

"We will be opposed vigorously by these companies, which have made this a practice across the country, and they have some of the best law firms in the country to litigate this matter," Nathan said during a press conference Tuesday.

Andrew Weinstein, a spokesman for the Interactive Travel Services Association trade group that represents the online travel companies, said in a statement that the association was disappointed that Washington would "choose to pursue frivolous litigation in this area, when the overwhelming majority of courts around the country have ruled in favor of the online industry on the facts and the merits."

Washington had more than 16 million visitors in 2009. Overnight visitors stayed an average of three nights.

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Associated Press writer Ben Nuckols contributed to this report

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