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U.S. cities suing online hotel brokers over taxes, report says

Elinor Mills Former Staff Writer
Elinor Mills covers Internet security and privacy. She joined CNET News in 2005 after working as a foreign correspondent for Reuters in Portugal and writing for The Industry Standard, the IDG News Service and the Associated Press.
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Elinor Mills

A group of U.S. cities have filed lawsuits against online hotel brokers alleging that the firms have failed to pay enough hotel taxes, Ars Technica reported on Monday.

"San Antonio, Los Angeles, San Diego, Philadelphia, Atlanta and Chicago have all filed lawsuits against the major online hotel brokers, alleging that the firms have snapped up rooms at low rates, then turned around and sold them to consumers without paying hotel taxes on the higher prices," the Web site reported. "The dispute centers on this price difference between the wholesale price and the retail price. Online travel sites insist that they are not marking up the price of the hotel room, but simply adding a service fee to the price. Such a service fee would not be taxable."