Florida Attorney General Bondi Urged to Revive Hotel Tax Lawsuit

Jun 11, 2011

The following article was published in the Lakeland Ledger on June 11, 2011:

Bondi urged to revive hotel tax lawsuit

By Mary Ellen Klas

Armed with fresh documents that show online travel companies may have conspired to avoid paying about $440 million in taxes in Florida, St. Petersburg state Rep. Rick Kriseman is urging Attorney General Pam Bondi to force the travel giants to pay up.

The issue has been the focus of legal and political fights for years as counties and hotel companies have fought the online companies that sell unused hotel rooms to travelers looking for deals.

Counties argue that the companies should pay tourist development taxes on the total cost of the room charged to customers. The online travel companies say they should pay taxes only on the negotiated rate they pay the hotels — not on what they keep in profit.

Former Attorney General Bill McCollum sued Expedia and Orbitz in 2009 for unfair trade practices. But Bondi, who succeeded him in January, put the lawsuit on hold during the legislative session as lawmakers attempted to exempt the travel companies from paying the additional taxes, said Bondi spokeswoman Jennifer Krell Davis.

The bill died, but Bondi has neither revived the stalled lawsuit nor started her own investigation.

In a May 17 letter to Bondi, Kriseman, a Democrat, urged her to prosecute the companies based on newly discovered company documents. The documents show that lawyers for the companies advised their clients since 2003 to “make it as difficult as possible for any state to require us to collect occupancy tax” until they could change the laws to exempt them from paying it.

The documents, considered confidential by the companies, were released by a Georgia appeals court in January. They indicate that lawyers and accountants for Expedia and other travel companies believed they were at “high risk” of being required to pay hotel taxes in Florida. Although Expedia was not collecting the tax, the documents say the company was holding money in reserve “based on an estimate of uncollected taxes that we may ultimately owe.”

Kriseman said that the emergence of the documents is evidence enough that Bondi should pursue the case and collect what the Department of Revenue says is as much as $440 million in unpaid state sales taxes and fees since 1999.

“The attorney general ought to be demanding that all of the money go to the state of Florida,” he said. “If you or I failed to pay taxes, we’d be prosecuted for it. There seems to be a pattern here from both the Attorney General’s Office — and the Governor’s Office — that they are willing to let big business off the hook.”

Kriseman said he quietly sent the letter to Bondi a month ago because he wanted to alert her to the documents and hoped she would prosecute. Instead, he has gotten no response. “Not even a courtesy phone call or form letter,” he said. “I’m stunned they wouldn’t respond whatsoever. ※ If they don’t respond to a representative, what do they do to the general public?”

Bondi’s office told the Times/Herald that “the lawsuit is pending” and would not acknowledge receipt of Kriseman’s letter.

The issue is a dicey one for Bondi. She inherited the lawsuit after McCollum left office and quickly faced pressure from tax-averse lawmakers who filed a bill to clarify what they considered a vague law.

Current law requires Florida hotels to pay a “transient rentals tax” — similar to the state sales tax — on the rate they charge the consumer for the room. But the online travel companies say they are not obligated to pay taxes on the difference between their negotiated rate and the rate the customer pays.

Jennifer Green, a lobbyist for Expedia, said the documents “have been taken out of context to make it look like these companies are basically committing fraud,” she said. “No court has ever indicated that they have stolen tax dollars.”

Others states — including Texas, Georgia and Hawaii — have filed claims against the companies for withholding taxes and several cities in California, and Washington, D.C., also have pending lawsuits.

And several Florida counties have sued the companies for unpaid taxes, with some having reached settlements. Broward County, one of the most aggressive jurisdictions in the nation, has ordered the companies to pay $484,000 in tourist-development taxes, interest and penalties for taxes owed between July 2009 to June 30, 2010. Travelocity.com and Priceline.com countersued earlier this month, saying Broward acted unconstitutionally.

Find this article here:  http://www.theledger.com/article/20110611/NEWS/106115008/-1/NEWS99?p=all&tc=pgall