Las Vegas Strip Jurisdiction Joins Fight Against Travel Agency Taxes | News from USA®

By KEN RITTER, Associated Press

LAS VEGAS (AP) – The county with jurisdiction over the Las Vegas Strip has joined a legal fight to try to collect what lawyers maintain could be hundreds of millions of dollars in unpaid hotel room taxes owed by over 20 online travel agencies.

A Clark County lawsuit echoes allegations raised last year by two Las Vegas communications officials against online hotel reservation services, including Orbitz, Hotwire, Expedia, Travelocity, Priceline and Hotels. com.

What is at stake are “hundreds of millions of dollars in room tax revenue that has been avoided by online travel agencies for years and years,” said Michael Cristalli, a lawyer responsible for legal matters, on Tuesday. two cases.

“The county has decided it is in its best interests and in the best interests of Nevada taxpayers to pursue deficient and continuing tax liability,” he said.

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Officials for most of the 13 named defendants did not immediately respond to emails on Monday and Tuesday regarding the case. A spokesperson for Hotel Tonight Inc. declined to comment.

Cristalli and attorney Dominic Gentile also represent communications executives Mark Fierro and Sig Rogich in a case they filed last year over similar allegations of consumer fraud and unjust enrichment.

The lawsuits accuse online booking companies of chronically underpaying taxes ranging from 10.5% to 13.38%, calculated as a percentage of gross rental revenue.

Both court cases used the example of an online travel agency obtaining a hotel room for $ 150 and selling it online to a customer for $ 200, then paying state tax based on the price. wholesale less than $ 150.

“This business model deprives the Nevada tax authorities, including Clark County, of taxes owed to them on the full value of the transaction,” the county lawsuit said.

The amount in dispute includes more than $ 100 million in unpaid taxes, plus possibly an additional $ 100 million in damages, Cristalli said.

The proceeds would benefit tourism, schools, transportation and local government general fund accounts, according to the county lawsuit filed May 14 in Clark County District Court.

Lawyers representing at least 16 named defendants moved the case in July from state court to federal court, where a judge is now being asked whether he should send it to state court.

In state court, a hearing is scheduled for September 2 before a Las Vegas judge who ruled in May not to dismiss the unusual “qui tam” civil lawsuit filed in April 2020 by Fierro and Rogich.

The deposit allows private whistleblowers to be rewarded for the positive results where they act and the government recovers money lost due to misrepresentation or other types of fraud.

Fierro and Rogich, namesakes of Fierro Communications and The Rogich Communications Group, would get up to 30% of the money won in their case, according to their court records.

Tax cases involving similar practices in other states involving online travel agencies, or OTCs, have had mixed success.

The nonprofit Independent Tax Foundation investigated similar lawsuits in 34 states and the District of Columbia for a 2016 report. It found that courts in 23 states, including three federal appellate courts, found that online travel services were not subject to hotel occupancy taxes. Courts in six states have ruled that they are.

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