California Business Minute™

Hi, I am Tim Johnson and welcome to the California Business Minute.

This week, a California state court rejected the City of San Diego's attempts to
impose hotel occupancy taxes on online travel companies (OTCs).  Ruling that OTCs
are neither owners nor operators of hotels, the Los Angeles Superior Court held
that San Diego's occupancy tax ordinance did not apply to the booking services
offered by the OTCs.  In doing so, the Court overturned a decision by a San Diego
administrative hearing officer assessing more than $21 million in taxes and penalties
against the OTCs, and joined a large majority of courts nationwide that have ruled
against municipalities and states in similar hotel tax cases decided on the merits.

This is now the third California court decision ordering judgment in favor of the OTCs. 
No court in California has ruled against the OTCs, and California courts have now
overturned two separate administrative decisions holding the OTCs liable for the hotel tax."

The OTCs have now prevailed completely in 15 of the 19 cases nationwide where courts
have ordered judgment, and appellate courts have affirmed four of those favorable
judgments.  In two of the remaining cases, the courts ruled that the OTCs owe no back
taxes.  "Online travel sales provide global marketing opportunities for local tourism,"
said Interactive Travel Services Association Executive Director Art Sackler. 
"Municipalities and OTCs should work together to promote travel and tourism for
everyone's benefit, rather than both sides' expending precious resources on futile
litigation."

I am Tim Johnson and this has been the California Business Minute.