Cities win judgment in case on hotel tax collections

Jefferson County Circuit Judge Robert Wyatt Jr. Thursday issued a summary judgment in favor of plaintiffs in a class action lawsuit arguing that on-line hotel booking agencies such as hotels.com, Hotwire and Travelocity had failed to collect local hotel taxes when they collected payments for hotel bookings.

The suit was brought by the Pine Bluff Advertising and Promotion Commission, the city of North Little Rock and “all others similarly situated.’

Wyatt ruled in favor of the cities when considering competing motions for summary judgment.

Having decided on liability, Wyatt said the case now continues to the question of damages. He appointed Jim Tilley, a Little Rock lawyer, to work as a mediator to attempt to reach an agreement on damages. The defendants could appeal his ruling on liability. The case has been working through the courts since 2009. The Arkansas Supreme Court upheld a class action certification in 2013, which allowed the case to go to trial on liability.

The on-line companies negotiate with hotels for reduced rates. The lawsuit argued  that the companies must collect and remit the full amount of taxes owed on the price they charged buyers for rooms, not the tax on the negotiated discount price with hotels.

This case is one of dozens being brought around the country. Tom Thrash of Little Rock is pursuing the case against the booking firms.

Judge Wyatt’s decision also explicitly rejected an opinion by the state Finance and Administration Department that the on-line travel companies weren’t subject to the local hotel tax. He said the record in the case was “far superior” to the “scenario” on which DF&A based its opinion.