High Court Forces Expedia to Pay Taxes

By Terry Green
Jan 24 2011

A federal court ruled this morning that Expedia must pay back taxes on rooms booked through discount services for which they had paid only a single rate because they booked the rooms in blocks rather than singly.

According to the court documents, several states had filed suits against the internet travel site over taxes that were to be charged on hotel rooms. But Expedia was using a loophole to get around paying the full rate. They decided to book entire blocks of rooms at one time and for that they were paying a single room tax.

But the states involved were not pleased and they demanded that the site pay up. But Expedia refused the claims and continued with business as usual. As such the lawsuit was filed and was decided upon today.

The judge in the case imposed a fine of $4.7 million for the failure to pay the taxes and ordered that they pay $1.6 million total to all of the states that filed the lawsuit.

Expedia said that it will appeal the ruling by the judge in the case and will likely file an appeal with the US Supreme Court in the next few weeks. However, the judge ruled that the fines and fees must be paid despite the fact that Expedia is filing an appeal.

He gave them a total of 30 days to pay the fees and fines or make suitable payment arrangements with the states that must be approved by the court.