Online travel companies will avoid additional taxes

Monday, Internet travel companies conquered the first of several pending legal battles to roll back tax assessments by California cities claiming they owe tens of millions of dollars in occupancy taxes.

Los Angeles County Superior Court Judge Carolyn Kuhl granted a request by Priceline.com Inc, Expedia Inc, Trip Network Inc, Orbitz LLC and Travelocity.com LP, Hotels.com LP and Hotwire Inc to repeal $21.3 million in taxes, interest and penalties assessed by the city of Anaheim over the previous nine years.

The companies had claimed that they are not liable for the 15% hotel occupancy taxes as they do not operate hotels, and their fees cannot be considered "rent" under the tax law.

The decision has bearing on similar cases pending or being considered by municipalities around the state that could add up to hundreds of millions in back taxes and future city income.

Kuhl ruled that the Anaheim hearing officer had mistaken in determining the online travel companies were hotel operators and that the fees they charged for reselling rooms were subject to the occupancy tax, according to the order released Monday.

As it became known, similar cases are pending in Los Angeles, San Diego and San Francisco, and eight other courts around the country have ruled in favor of the travel companies.