Travel

#Travel booking sites indebted to Hawaii by millions of dollars

Tax season just got even more hellish for nine travel-booking sites that owe Hawaii millions of dollars in back taxes. On Tuesday, the supreme court ruled sites like Orbitz, Priceline, and Expedia must pay up for sales made in Hawaii after a nearly five-year court battle that began in 2010 in Hawaii s Tax Appeal Court. The websites contend that they don t owe said taxes because they do not have physical operations set up in the island state, which is really too bad. They could have been sipping Mai Tais on Waikiki Beach for the last 15 years seeing as the taxes date back t0 2000.

Expedia might be thinking about skimping on umbrella cocktails after being served a bill of as much as $847 million, according to Bloomber g. Expedia has been known to pay taxes on its wholesale rate instead of the entire rate charged to customers, and its lawyers claim the company shouldn t owe anything for the markup. Hawaii isn t the first offense, though. Expedia also owes the city of San Francisco $73.5 million, but the company is appealing the ruling. Meanwhile, according to its SEC filing, there are 35 active cases against Expedia regarding the local room tax debate.

This tax issue doesn t just apply to Expedia, and it represents the first time an online commerce site would be obligated to pay general excise taxes. Added to that, Hawaii could be the first in a windfall of cities and states that decide to go after booking sites for underpaying hotel taxes. Now that would be expensive.