The Westchester County Board of Legislators voted 16-0 tonight not to opt out of a class action that alleges online travel companies have not paid local governments all the hotel taxes they are due. Nassau County initiated the lawsuit a few years ago, and a judge designated it as a class action in the spring. All counties, cities and towns that levy hotel taxes are plaintiffs unless they opt out by Oct. 11.
Westchester County Executive Rob Astorino recently submitted a recommendation to the Board of Legislators that it take part in the litigation, which charges that Priceline.com, Expedia, Orbitz and other online travel companies are holding back some of the taxes due to local governments. The plaintiffs contend that the travel companies are collecting hotel taxes based on the discounted rates they purchase blocks of rooms for, rather than the higher price consumers pay for them.
Westchester’s 3 percent hotel tax brought in $5.3 million last year. Rye Brook, White Plains, New Rochelle and the city of Rye also have 3 percent hotel taxes, Tax Watch has reported.
Putnam County doesn’t have a hotel tax, and officials in Rockland County, which implemented a hotel tax in April 2012, said they are opting out of the class action.
Customers already pay full taxes on room rates, which hotels remit to local governments, according to the Travel Technology Association, a trade group. “The misunderstanding of the business model appears to be based on efforts to expand the bed tax to the gross transaction, which includes the OTCs’ service fees, making it a new tax on our services,” Robin Reck, spokeswoman for the trade group, wrote in a recent email.
But a spokeswoman for Astorino recently said that the online companies collect a higher tax from consumers and pocket money that is due to the county.
This is the lawsuit:
(File photo of Westchester Mariott in Tarrytown.)