Baron & Budd currently represents 41 cities for past-due hotel occupancy taxes against online travel companies, including the City of Los Angeles in the first class action of its kind ever filed, as well as the California cities of San Diego, Anaheim and Santa Monica and San Antonio, Texas.  Check back with us regularly for updates on these ongoing cases as they develop.

Baron & Budd and its co-counsel represent City of San Antonio in trial victory against online travel companies

On October 30, 2009, a federal jury rendered an the first jury verdict of its kind in the case of the City of San Antonio, Texas, et al v. HOTELS.COM, et al., in the U.S. District Court for the Western District of Texas.

The jury found that a dozen online travel companies have been or are currently “controlling hotels” under the cities’ hotel occupancy tax ordinances, making them liable for the payment of the full amount of hotel occupancy taxes due.  The jury then found that these companies owed back taxes in the aggregate amount of $20,579,486, not including interest.  The trial judge has not yet entered a final judgment in this case.

Baron & Budd and its co-counsel represent City of San Diego in important administrative ruling against online travel companies

In a May 2010 administrative ruling, Baron & Budd helped win an important victory for the City of San Diego against online travel companies to recoup millions of dollars in taxes owed the city.  The 29-page ruling provides a powerful precedent for the cases of more than 275 municipalities and other public entities around the country seeking millions in unpaid hotel occupancy taxes from several online travel companies.

In his written decision, the hearing officer ruled that the city’s tax ordinance requires online travel companies to collect transient occupancy taxes on 100% of the amounts the companies charge for hotel rooms and related services.  However, these companies have only remitted taxes to the city on the wholesale price they paid the hotel companies for the rooms instead of the “marked-up” price charged to consumers.  Additionally, the companies did not pay any taxes at all on service fees charged to consumers.  In his detailed analysis of the purpose and intent of the tax ordinance, the hearing officer ruled that the companies were required to pay the city taxes on the “marked-up” rate paid by consumers, as well as taxes on service fees charged to consumers.   In addition to owing back taxes on the marked-up hotel rate and service fees, the companies were also liable for a 25 % penalty on the delinquent taxes due.