Grounding of Tax Law Sought by Travel Companies

Grounding of Tax Law Sought by Travel Companies

03/7/2011

Durham County and the state of North Carolina is being sued by Orbitz, as well as five other travel companies, over a new law that obliges them to pay sales and occupancy levy  on Internet-arranged hotel stays.

The lawsuit, which was filed Feb 4, claims the governments are in violation of both the US and North Carolina constitutions by imposing multiple or discriminatory taxes. The suit pushes Durham in the frontline of a major nationwide battle between the online travel industry and the states that believe they are being cheated out of tax revenue.

The reason why Durham County was also named as a defendant in the new lawsuit was not altogether clear. Except for levying an occupancy tax on hotel stays, no other allegations were made in the complaint against the county.

Orbitz, Hotels.com, Travelocity, Cheaptickets.com and Expedia are being represented by Williams Mullen, a Raleigh law firm. The lead lawyer, former state Rep. Chuck Neely, could not be reached for comment.

The new law, which was passed last summer by the N.C. General Assembly as part of the state budget, is being sought by the plaintiffs to be declared as invalid by the judge. The lawsuit also asks that the defendants, including Durham County, be made to pay the legal bills of the companies.

As of Tuesday, local officials are still assessing the situation. Durham County Attorney Lowell Siler stated he still has to receive a copy of the lawsuit.

WRITTEN BY:

blakeh@wellsdrew.com