|By Rhonda Cook, The Atlanta
Knight Ridder/Tribune Business News
Mar. 30, 2006 - --The city of Atlanta filed suit Wednesday against 12 Internet-based companies that book hotel rooms, claiming they charge customers for taxes that are never forwarded to the city.
Atlanta's suit, filed in Fulton County Superior Court, makes the same claims in a federal lawsuit Fulton and Hart counties and several North Georgia cities filed last year. The federal suit, filed last fall, is pending.
Atlanta's complaint says third-party hotel and motel booking services offered by Internet sites like Travelocity, Orbitz, Expedia and Hotwire charge customers "taxes and fees" but never pass along all the tax that is due.
According to the suit, the companies buy blocks of rooms at a cost lower than what they charge customers, who book services on their sites. The suit said the sites charge customers a 7 percent tax based on a higher room rate but only pass along to the city the tax that would apply to the lower room rates they get by buying rooms in bulk.
The city claims it has lost millions of dollars that could be used to pay for tourist attractions such as Underground Atlanta and the Georgia Dome and to promote tourism and conventions. The suit accuses the Internet companies of retaining those taxes as profits.
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