HOTEL TAX LAWSUIT CLEARS HURDLE
The City of San Antonio was recently successful in certifying a class action lawsuit against various Web-based hotel-booking companies. On May 28, the judge of the U.S. District Court in San Antonio issued an opinion in City of San Antonio vs. Hotels.com, et al, that Web-based hotel companies have been paying city hotel occupancy taxes on the "wholesale" price of rooms (the price at which the rooms are obtained from the hotel), but not paying taxes on the "retail" price of the room (the price paid by the customer). Doing so appears to be a violation of most municipal hotel occupancy tax ordinances.
The court's opinion is not final on the merits of the lawsuit, but does hold that San Antonio has made enough of a showing to allow a class action comprising 175 similarly-situated cities to move forward. The class action suit is of the “opt-out” variety, meaning that each of the 175 cities is automatically a participant unless it acts to withdraw. Cities interested in the class action lawsuit will wish to have their city attorney consider the court's opinion, which can be read here: http://www.tml.org/legal_pdf/unsealed-memorandum-hl.pdf. The opinion also lists the 175 cities currently in the class on pp. 23-24. City attorneys or other interested city officials may contact Steve Wolens, San Antonio's attorney for the lawsuit, at (214) 389-5300.