This week Columbus, Georgia won an important victory against Expedia.com (an online travel service) in Columbus Superior Court.
First some background: Expedia can keep their prices so low because they negotiate with local hotels to pay discounted/wholesale rates for the rooms, and then they charge customers for the actual cost of the room. The tax charged by Expedia and paid by customers is on the room's actual cost. Here's the kicker: Expedia pockets the difference in tax between the wholesale cost and the room's actual cost.
This obviously leaves localities that levy lodging taxes like Columbus, Atlanta, and San Antonio out in the cold because they aren't collecting needed revenue on the actual cost of hotel stay, but the wholesaler's price. Not to mention the ethical implications of telling customers you are collecting a tax, but then pocketing a portion of it to line company's pockets. Expedia isn't the only travel site spending time in court. A lawsuit before the Georgia Supreme Court targets Orbitz, Travelocity, and fourteen other online travel sites.