Fairview Heights aims class action at Internet hotel sales

Steve Gonzalez Oct. 10, 2005, 10:48am

Fairview Heights City Hall

The City of Fairview Heights filed a class action lawsuit against companies that operate Internet travel sites for failing to reimburse it for taxes on gross receipts.

Defendants Priceline.com, Orbitz, Hotels.com, Hotwire, Cheap Tickets, Expedia, Travelnow.com, Travelocity.com, Travelweb, LowestFare.com and Site 59.com are accused of charging consumers taxes based on retail room rates, while only paying taxes on wholesale room rates--then pocketing the difference.

The suit was filed in St. Clair County Circuit Court on Oct. 5.

"Defendants have sold hotel rooms to the public and collected taxes on those rooms, but failed to pay the taxes due and owing to the City of Fairview Heights and other class members on these transactions," the complaint states.

Fairview Heights claim the defendants are charging and collecting taxes from consumers that are not being remitted to the appropriate municipal class members They also claim in addition to the rental price of the hotel rooms, the occupants are required to pay a transient occupancy tax.

According to the complaint, the defendants contract with hotels for rooms and sell the rooms to members of the public and charge and collect taxes from occupants based on the marked up rooms rates, but only remit tax amounts based on the lower negotiated rate, unlawfully retaining the difference.

"All taxing authorities in the State of Illinois authorized to impose a tax upon persons engaging in the business of renting, leasing or letting rooms in a hotel or motel on the gross rental receipts from such renting, leasing or letting," are eligible to join the class.

Fairview Heights and the class will be represented by Kevin Hoerner of Becker, Paulson, Hoerner & Thompson of Belleville, Paul Weiss and William Sweetnam of Freed & Weiss of Chicago, Bradley Lakin and Richard Burke of the Lakin Law Firm in Wood River, William Harte of Chicago and Karl Barth of Lovell Mitchell & Barth in Seattle.

"Defendants acted willfully, wantonly, with oppression, and with a conscious disregard of the rights of plaintiff and class, such that plaintiff requests that the trier of fact, in the exercise of sound discretion, award plaintiff and the class additional damages for the sake of example and in sufficient amount to punish defendants for their conduct," the complaint states.

05 L 576 (20th Circuit)

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