Atlanta Sues Internet Travel Companies for Back Taxes

In 2006, the city of Atlanta filed suit in Fulton County, Ga., Superior Court, alleging that online travel companies -- including Expedia, Orbitz, Priceline and Travelocity -- have failed to remit the hotel/motel room taxes the city says it is owed. The case has worked its way up to the Georgia Supreme Court, which yesterday heard arguments as to whether the case should continue or be dismissed.

The main issue appears to be that travel companies pay wholesale rates for blocks of rooms, and remit taxes based on those rates, while charging a higher rate to their customers. The city wants taxes on the higher rate.