Online travel companies on verge of settling deal with Orange County
A settlement is in the works for Orange County's multi-million-dollar lawsuit against online hotel discounters Expedia and Orbitz, according to sources close to the agreement. The agreement, expected to be taken up at the Tuesday meeting of the Orlando County Board of Commissioners, is very hush-hush.
Orange County comptroller Martha Haynie told the Orlando Sentinel today that the agreement "is not done until it's done" and referred us to her attorney, who is out of the office until the end of the month. The county was seeking $10 million a year, up to $100 million, from the companies in lost tax revenues. Haynie told the Orlando Sentinel Wednesday that those estimates were "too high." Sounds as if the settlement is going to be a fraction of what they thought they could get.
This could be a pretty big deal if the commission approves the settlement and the four-year-old Orlando case is over. First of all, Orlando is one of the largest hotel markets in the world and this settlement is likely to be noticed by several other pending cases in Florida and around the nation. A case involving 16 Florida counties is scheduled for trial in February in Leon County Circuit Court and another involving Broward and Osceola counties is also pending there.
Also, legislation could resurface again attempting to clarify the law and put an end to all those lawsuits and the Florida Cabinet is expected to hear a report from the Department of Revenue on this issue Aug. 16.
This past legislative session, the Florida House passed the bill saying that the online travel companies were not responsible for collecting hotel taxes on the full price of the rooms they book. In previous years, lawmakers have tried and failed to pass bills clarifying that the state's tax laws do apply to the internet sales of hotel rooms.
The Orlando deal follows a January ruling by Circuirt Court Judge Frederick Lauten who said that absent legislation to clarify whether hotel taxes should apply to internet sales of hotel rooms -- something that was never contemplated when the tax laws were written -- he denied a request for summary judgment and let the companies continue to side-step paying the tax.
The companies claim they have never believed they should pay Florida's tax, despite documents that recently surfaced in a Georgia case in which Expedia accountants and a lawyer suggested that in Florida there was a likelihood they should pay the tax.
Lauten seemed to leave the door open to the notion that because the internet companies don't control the hotel rooms and operate as an intermediaries, they probably don't have to pay the tax. He said that the portion of the hotel room that is paid to the hotel should be taxed, but:
"The remainder of the charges to the hotel customers, however, reasonably can be viewed as separate fees or profits made by the online travel companies in exchange for the services they provide in informing customers about hotel accommodations, or in sending customers to hotels." Download OrangeCo-vs-Expedia-lawsuit