Missouri High Court Sides with Travel Firms in Tax Case

Associated Press

JEFFERSON CITY, Mo. — The Missouri Supreme Court on Tuesday sided with several online travel companies in a dispute over hotel and tourism taxes.

At issue was a lawsuit filed by St. Louis County and the St. Louis Convention and Visitors Commission against several companies that help with hotel and motel bookings. The companies contract with hotels for discounted prices and then sell the rooms to the public for a higher price while remitting the discounted price to the hotel operator and keeping the remainder. According to court documents, St. Louis County and the commission had argued that the booking companies should pay the taxes for the price difference.

But a unanimous state Supreme Court disagreed Tuesday and ruled for the companies, concluding that they were not required to pay the taxes.

Defendants included companies such as Prestige Travel Inc., Expedia Inc., Hotels.com, Priceline.com and Orbitz Inc. The companies argued, according to court documents, that the taxes applied to hotel or motel operators and that the businesses ran travel websites. The firms said that the difference between the discounted price the businesses got from a hotel and the higher price charged to customers was compensation for the reservation services and not a room charge.

A trial court had dismissed the lawsuit over the tax dispute after a new Missouri law took effect that stated the taxes were limited to the payment received by the hotel operator while stating that travel agents and other intermediaries were not to be considered hotel operators.

The Missouri Supreme Court on Tuesday upheld the constitutionality of that law. The court said the online travel companies would not have had an obligation to pay the hotel tax because it was levied only on those operating a hotel or motel. In addition, the state high court said the online travel companies would not have been liable for the tourism tax because they do not provide sleeping rooms and that tax was focused on those who receive payment for use of a sleeping room.

An attorney who represented the companies did not return a call seeking comment. A lawyer who represented St. Louis County and the St. Louis Convention and Visitors Commission before the state Supreme Court was involved in a case outside of Missouri and not immediately available to comment Tuesday.

Sourced from: Forbes, MSNBC, St. Louis Post-Dispatch

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