Las Vegas Strip jurisdiction joins travel firms' taxes fight
The county with jurisdiction over the Las Vegas Strip has joined a legal fight to try to collect what attorneys maintain could be hundreds of millions of dollars of unpaid hotel room taxes owed by more than 20 online travel companies
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.The county with jurisdiction over the Las Vegas Strip has joined a legal fight to try to collect what attorneys maintain could be be hundreds of millions of dollars in unpaid hotel room taxes owed by more than 20 online travel companies.
A lawsuit by Clark County echoes claims raised last year by two Las Vegas communications executives against online hotel booking services including Orbitz, Hotwire, Expedia, Travelocity, Priceline and Hotels.com
At stake are “hundreds of millions of dollars in room tax revenue that have been avoided by online travel companies for years and years,” Michael Cristalli, an attorney handling both cases, said Tuesday.
“The county made the determination that it’s in their best interest and the interest of the taxpayers of Nevada to pursue the deficient and continuing tax liability,” he said.
Officials with most of the 13 named defendants did not immediately respond to email messages Monday and Tuesday about the case. A spokesperson for Hotel Tonight Inc. declined to comment.
Cristalli and attorney Dominic Gentile also represent communications executives Mark Fierro and Sig Rogich in a case they filed last year making similar consumer fraud and unjust enrichment claims.
The lawsuits accuse online booking companies of chronically underpaying taxes ranging from 10.5% to 13.38%, calculated as a percentage of gross rental receipts.
Both court filings used an example of an online travel company obtaining a room from a hotel for $150 and selling it online to a customer for $200, then paying the state tax based on the lower wholesale price of $150.
“This business model deprives Nevada taxing authorities including Clark County of taxes due them on the full value of the transaction,” the county lawsuit said.
The amount in dispute includes more than $100 million in unpaid taxes, plus perhaps another $100 million in damages and penalties, Cristalli said.
The revenue would benefit tourism, school, transportation and local government general fund accounts, according to the county lawsuit filed May 14 in Clark County District Court.
Attorneys representing at least 16 named defendants moved the case in July from state to federal court, where a judge now is being asked whether to send it back to state court.
In state court, a hearing is scheduled Sept. 2 before a judge in Las Vegas who decided in May not to throw out the unusual “qui tam” civil lawsuit filed in April 2020 by Fierro and Rogich.
The filing lets private citizen whistleblowers be rewarded for successful outcomes where they act and the government recovers money lost to false claims or other kinds of fraud.
Fierro and Rogich, namesakes of Fierro Communications and The Rogich Communications Group, would get up to 30% of money won in their case, according to their court filing.
Tax cases aimed at similar practices in other states involving online travel companies, or OTCs, have had mixed success.
The independent nonprofit Tax Foundation surveyed similar lawsuits in 34 states and the District of Columbia for a 2016 report. It found courts in 23 states, including three federal courts of appeal, concluded that online travel services weren’t subject to hotel occupancy taxes. Courts in six states ruled they were.