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Taxman After Travel Sites

The city of Atlanta recently joined a host of other cities in filing charges against Travelocity, Orbitz, Expedia and 14 other online travel companies. Officials there, as well as in Los Angeles, Philadelphia, Miami, Chicago and Branson, Mo., believe that the sites owe local taxes on revenues generated from visitors booking through their services. When booking through one of the sites, users pay a rate but the sites pay the hotels a lower, pre-negotiated rate, keeping the difference as profit. The cities take issue with the sites paying local taxes on the rate they paid for the room and not the rate the users paid. The difference would potentially add up to millions of dollars of revenue for the cities.