Members of the city council in Portland, Oregon have decided to join in on a commercial litigation process already involving several other cities throughout the United States.
The pending suit takes aim at a number of online travel agencies, demanding that they pony up money that is late on transient lodging taxes. Cities point out that when these websites sell trips, they charge the customer taxes, but keep that money for themselves.
Joining in on the lawsuit is somewhat of a gamble as the city of Portland stands to either gain or lose a significant amount of money.
If a court sides in favor of the online travel sites, Portland would be out $400,000 in legal costs incurred from going through a Dallas law firm. However, if the city comes out on the winning end, it could bring in up to $8 million, which would be lumped in with the city's general fund. However, 30 percent of those winnings would go to the lawyers.
While Portland and the lawyers representing the city say the chances of a victory are high, representatives from the Interactive Travel Services Association say otherwise. Members of the ITSA point to the fact that many cities have also attempted to collect similar sums of money from the travel websites and were unsuccessful in doing so. A representative for the association urged Portland officials to reconsidering the lawsuit.
Popular websites like Travelocity.com, Expedia.com and Hotels.com are some of the websites in the crosshairs of the lawsuit.
Even if the cash-strapped city does win, Portland will still have to cut bureau budgets in 2012 as there is no telling when they will receive the money owed to them.
Source: Oregon Live, "Portland joins lawsuit to collect back taxes from online travel companies: Portland City Hall roundup," Beth Slovic, Oct. 7, 2011