Washington, DC – This week, the City of Los Angeles sued online resellers of hotel rooms, seeking to collect occupancy taxes on the amount of markup charged by resellers. In response to these lawsuits, NetChoice executive director Steve DelBianco made the following remarks:
“Not only is this lawsuit without merit, but it also seems to run afoul of federal law. By targeting only online entities and ignoring local travel agents and vacation consultants, the city is on a collision course with federal law that specifically prohibits discriminatory taxes on internet commerce.
The Internet Tax Nondiscrimination Act, signed into law in December of 2004 prevents the imposition of “discriminatory taxes on electronic commerce.” If the city is only going after online companies, this is clearly a discriminatory tax against e-commerce.
Despite the claims of the lawsuit, it seems what city is really attempting to do is levy a new tax on the fees that Internet brokers charge hotel chains for selling their rooms. Rather than taking this tax increase to the public, it seems the city of Los Angeles is trying to use a legal back door.”