Hotel Tax Suit Dismissed

by Rick Howlett on September 30, 2008

A federal judge has dismissed a lawsuit in which officials in Louisville and Lexington tried to collect taxes from hundreds of online hotel room brokers.

U.S. District Judge Thomas Russell says city and state hotel laws are outdated and don’t cover the web brokers.

Jefferson County Attorney Mike O’Connell says he’ll appeal the ruling.

He says the companies are not paying their fair share of taxes when they reserve hotel rooms at a discounted rate then charge another rate to consumers.

“(They) only pay the transient room tax on what we would call the wholesale amount and we believe they should pay the tax on the amount they receive for the room itself, and thus it’s deprived Metro Louisville of a substantial amount of tax revenue,” O’Connell said.

Several other cities have filed similar suits againg the online companies, which claim they’re doing nothing wrong.

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