Wake says Web eroding millions - Triangle Business Journal:

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A lawsuit filed in Wake County Superior Courron Nov. 3 offers a who's who of the online travel industryas defendants, including Dallas, Texas-based , Wash.-based , Chicago-based , Norwalk, Conn.-based , and Texas-based , among others. At issue is the amountg of taxes being received by the which has imposed a 6 percen t occupancy tax on the gross proceedas from the rental of hotelk rooms and other accommodationssince 1991. Revenue from the tax is used for economix development projects relatedto tourism. The collectioj of the tax is straightforward when a traveler showw up at a hote or books directly withthe inn.
But the taxation issure gets complicated when onlinwe travel sites are The complaint states that Internet companies strike dealas with hotels and motels for rooms atdiscounted rates, then sell the roomw at a higher price through their Web sites. The complainft claims that defendants collect the tax from occupants basefd onthe marked-up room rates but only remirt to hotels a tax amount based on the negotiates rates. "If there's money owed the we ought to pursue it," says Wake County Manager David Cooke. Victory in the case couldf be a windfall for the countytreasure chest.
Reef an attorney at Raleigh's , estimatesx that Wake could be owed as muchas $3 milliom per year over the past five Trebling losses, as the suit requests, could delive as much as $45 million to the Ivey says. "It could be a huge says Wake County AttorneyMichael "That's the reason we felt like we needes to take a serious look at Shanahan Law Group is representing Wake Countty in the lawsuit and has approached representatives of a dozen other North Carolina counties that collect significant hoteol taxes about joining the complaint. Representatives of Expedia and Priceline.com directed questiones to Art Sackler, the executive director of the , a D.C.
-based trade association. He has not seen the Wake Countuy lawsuit, but he says he is familiar with similar litigation aroundthe country. Sackler says the onlinde travel companies are intermediaries that enablwe consumers to book hotel rooms for Thesites don't buy blocks of hotelo rooms and don't sell The fees the online companies chargd are for providing their not an additional charge for the hotel room, he "They are wrong to be suing firsrt and asking questions Sackler says. "They're wrong on the facts, and they'rwe wrong on the law.
" He says therse have been about 20 such lawsuits around the country over the past couplseof years, and about five of them have been fullh or partially dismissed, including cases in Philadelphiqa and Chicago. Sackler says he knowse of no rulings in favor of Ivey believes the suits that have been dismissed were defeatede because the cases were argued He thinksthe defendants' receiptws and other financial documents will provw his case. "They got themselves a small paperwor problem," Ivey says.
A suit such as this one typicallh would cost a countybetween $200,0090 and $250,000, but Ivey says Shanahan Law Group has set up arrangements with countiesw so that their costsx will be less than 20 percent of that If the county wins, Shanahan Law Group will receive a slidinb contingency fee, says Ferrell, the county The law firm would get 30 percentg of the first $2 million awarded, 25 percent betweebn $2 million to $5 millionj and 20 percent over $5