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Tourist tax not getting its due?

A Pinellas official wants to sue some online travel firms.

By Steve Huettel, Times Staff Writer
Published March 15, 2007


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CLEARWATER - Pinellas officials are pondering whether to sue Expedia, Travelocity and other online travel companies for allegedly shorting the county on tourist-tax payments.

The companies are underpaying at least $1.3-million a year in taxes on hotel and motel rooms, says Diane Nelson, Pinellas County's tax collector.

The Web sites negotiate discounted room rates from hotels, then sell them at a markup to customers, Nelson said. They collect the 5-percent tax from travelers but at the wholesale room rate, she says.

Nelson is asking county commissioners to support a lawsuit. But she isn't ruling out filing on her own, using a Tampa law firm that would get one-third of any court award for unpaid taxes.

Pinellas would join more than 30 cities and counties nationwide - including Orange, Miami-Dade and Leon counties in Florida - that filed lawsuits against the travel sites.

"I feel it's my fiduciary duty," Nelson said Wednesday before the county's Tourist Development Council.

A spokesman for the online travel sites said Nelson doesn't understand their business model.

Hotels set a room rate and whatever a company charges customers above that is a service fee that's exempt from local taxes, said Art Sackler, executive director of the Interactive Travel Services Association.

No court has ordered the travel sites to pay local taxes, he said, and none of the companies has settled one of the suits.

"Lawyers are leading the county down a garden path, promising a pot of gold that's simply not there," Sackler said.

Hotel executives on the tourist council were wary about suing the popular Web sites that help fill their empty rooms

"They could cut us off," said Russ Kimball, general manager of the Sheraton Sand Key. "It could backlash to us. This makes me very nervous."

Others said the travel sites would simply pass along any increased costs to consumers, making Pinellas hotels less competitive. "I can see this being used against us by other counties," said Anthony Satterfield, general manager of the Alden Beach Resort in St. Pete Beach.

Nelson met with tax collectors from Manatee, Polk and Hillsborough counties about joining in a suit.

Bush Graziano and & Rice, the Tampa law firm that contacted Nelson, pitched Hillsborough's tourism board to sue the travel sites in November. That board suggested county officials try to collect the unpaid taxes before taking legal action.

Steve Huettel can be reached at huettel@sptimes.com or (813) 226-3384.

[Last modified March 14, 2007, 23:12:37]


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