The Associated Press State & Local Wire
DATELINE: PORTLAND Ore.
Ten online travel companies have gone to court in Portland to fight an effort by local officials to collect millions in hotel tax revenue.
The city of Portland hired a law firm in October to collect an estimated $5 million to $8 million in back taxes, The Oregonian reports. Future revenues were estimated at up to $1 million a year.
The companies have asked a Multnomah County judge to declare that local taxes do not apply to their businesses because they are not hotel operators.
They also argued in a 22-page complaint that trying to collect taxes on online hotel reservations violates the Commerce Clause of the U.S. Constitution.
“Defendants cannot impose the local taxes at issue here on plaintiffs for services provided outside the City and County and where the bulk of the transactions in question are for travelers located outside those jurisdictions,” the complaint says.
Although similar disputes across the country have had mixed results, city attorneys said their chances of winning were “moderate to high.” If that’s wrong, the litigation could cost the city an estimated $400,000.
The city sent the companies warning in December that it was attempting to collect the taxes.
The companies named in the suit filed Friday in Multnomah County are Orbitz, Expedia, Hotwire, Priceline, Travelocity, Travelweb, Hotels.com, Cheaptickets.com, Lodging.com and Site59.com.
Named as defendants are the city of Portland, Multnomah County and Thomas Lannom, director of the city’s Revenue Bureau.
Amy Ruiz, spokesman for Mayor Sam Adams, said the local officials couldn’t comment on a pending lawsuit.
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