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Online travel companies sue NC over tax law change

Posted February 8, 2011

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— Several online travel companies have filed suit against the state Department of Revenue, saying a recent change to the state's tax laws requires them to collect sales and hotel room taxes.

Orbitz, Travelocity.com, Hotels.com, Hotwire Inc., Travelscape and Trip Network Inc. want the tax law declared unconstitutional and voided. They maintain they aren't retailers and shouldn't be subject to collecting sales tax.

The companies allege in the suit, which was filed last Friday in Wake County, that state lawmakers amended the tax code last year, requiring fees they collect from consumers for lining up cheap hotel rooms should be included in each hotel's gross receipts and subject to state and local sales and occupancy taxes.

The suit contends that the new law, which went into effect last month, arbitrarily changes the contracts the online travel companies have with hotels in North Carolina and would force consumers to pay more in taxes for hotel rooms than they have in the past.

13 Comments

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  • FuckYouWRAL Feb 9, 2011

    Come on folks...have a little heart...Granny B needs money to hire people for elected positions in the state & to put attorneys on retainer, and since she can't get it from Amazon.com she's got to get it from SOMEWHERE!!

  • ConcernedNCC Feb 9, 2011

    The hotels already secure taxes paulej

  • Alexia.1 Feb 8, 2011

    Why not just require the hotel to collect an occupancy tax when the guest checks in? That avoids any inter-state tax issue.

  • nighttrain2010 Feb 8, 2011

    >>It (government) is responsible for the general welfare of its residents

    Where did you get THAT idea from?!?

    Basically what this boils down to is the state of North Carolina has taken so much from us from a frontal assault they're going after every last time they can from a side assault believing no one will notice.

  • 112006 Feb 8, 2011

    The way I read the story is, they want to add the fee that orbitz or whoever charges you, into the hotel receipt, so that the taxable amount becomes higher. I think that is what they are unhappy about. They provide a service, not a product to be taxed.

  • whatelseisnew Feb 8, 2011

    "Government is neither a household nor a business. It is responsible for the general welfare of its residents,"

    No it is not. If you need proof, rely solely on the Government for YOUR WELFARE. Let me know if you survive the experience.

  • whatelseisnew Feb 8, 2011

    "You guys obviously fail to consider how this works. To simplify, if you deal directly with the hotel, they charge you the tax. But if you use one of these agencies, they charge you one rate, but pay the hotel a lesser rate. The Hotel, may, or may not, remit the tax on the lesser rate. The state loses the tax on the difference. It's unequitable by definition. Bottom line, they want to do business in the State, and gain profit from the marketplace within the State, they just don't want to pay their share of the tax, sales or otherwise, on monies made from within the state."

    It is not their responsibility to pay the tax, nor is it their responsibility to collect it. I hope they win the suit. Should not be a tax on this in the first place. Taxing income is more than enough.

  • Garnerwolf1 Feb 8, 2011

    You guys obviously fail to consider how this works. To simplify, if you deal directly with the hotel, they charge you the tax. But if you use one of these agencies, they charge you one rate, but pay the hotel a lesser rate. The Hotel, may, or may not, remit the tax on the lesser rate. The state loses the tax on the difference. It's unequitable by definition. Bottom line, they want to do business in the State, and gain profit from the marketplace within the State, they just don't want to pay their share of the tax, sales or otherwise, on monies made from within the state.

  • seankelly15 Feb 8, 2011

    fjoyner6288 - "I wish I could run my house hold expenses this way."

    You do unless you have no credit cards (not zero balances but no cards) and you own your car and you own your home (actually hold the deed) or you rent.

  • eded Feb 8, 2011

    This has to be on room reservations that are out of North Carolina. On NC reservations the hotel or Inn will collect the tax. But if it is intended be an additional tax paid by the service provider then that would be double taxation. This law
    will fail on several grounds.

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