McCollum Sues Travel Sites
Attorney General Bill McCollum sued two of the leading Internet travel companies Tuesday, claiming they owe the state millions of dollars in back taxes over disputed billing practices.
Expedia and Orbitz, the two firms targeted by McCollum, are among several online booking firms that obtain rooms from hotels at a base booking cost and then mark up the price of those rooms when reserving them for customers. The companies assess the state’s 6 percent “transient rentals” tax on the lower rate, but are able to keep the difference between the two rates as profit – with no tax remitted to the state or county governments.
“This has been going on way too long,” said McCollum, who said his suit against the online companies was the first in the nation but expected to be followed by several Florida counties.
Florida law is unclear on the tax liability, the attorney general conceded. Last week, McCollum and fellow Cabinet members reviewed the issue – with representatives of Expedia and Orbitz defending their billing approach as complying with state law. Paul Chronis, a lawyer for Orbitz, also said that making the companies pay more in taxes could turn into higher prices for tourists – blunting visits at a tough economic time.
McCollum on Tuesday countered saying, “Consumers are already paying taxes and fees when purchasing a Florida hotel room online, yet the online travel companies have been keeping too much of those taxes as profit. If taxes are due to the state, the companies should pay them for the benefit of the people of Florida.”
Six Florida counties -- Orange, Pinellas, Polk, Duval, Leon and Broward – plan to file a similar suit Tuesday to seek clarification of the law related to county tourist development taxes assessed on online bookings, McCollum’s office said.
In a separate matter, McCollum sent a letter this week to legislative leaders asking them to approve measures expanding the role of the attorney general in determining deceptive trade practices by out-of-state debt collectors, a thriving industry as Florida unemployment hovers at 11 percent.
Thousands of consumer inquiries have flooded McCollum’s office, but the attorney general has said he has little regulatory control over the matter – instead referring callers to Chief Financial Officer Alex Sink, his Democratic rival for governor, who licenses debt collectors.
McCollum said he'd like the Legislature to make it clear he has the authority to pursue such offenses. “It would allow us to go into court, or at least know what actions should be taken,” McCollum said.
Sink on Tuesday also proposed that lawmakers take steps to crack down on abusive debt collectors.