Business

Online travel companies sue NC over tax law change

Posted February 8, 2011 1:25 p.m. EST

— 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.