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Commissioners for Clark County, Nevada Have Little Appetite to Sue Online Firms
for Room Taxes; Belief is Litigation Could Jeopardize Partnerships

By Scott Wyland, Las Vegas Review-JournalMcClatchy-Tribune Regional News

Nov. 18, 2009--Clark County commissioners expressed little appetite Tuesday to go after online travel companies for unpaid room taxes.

Commissioner Chris Giunchigliani asked the board to consider following the lead of 45 governments in suing online travel agencies for room taxes an attorney estimates could total $500 million.

Internet companies like Expedia, Travelocity and Orbitz pay local taxes on hotel rooms they buy wholesale but none on the marked-up prices they charge customers. However, most commissioners seemed swayed by arguments that litigation could jeopardize a "partnership" between hotel casinos and agents, hurting tourism and costing jobs.

"We don't end up winning; nor do the customers," Commissioner Larry Brown said. "A couple of the law firms do."

Wholesalers who book hotel rooms, including online agents, usher in about 30 percent of the area's guests, said Kevin Bagger of the Las Vegas Convention and Visitors Authority.

Brown described that contribution as part of the bridge that will get the county from recession to recovery. "That's the number we should be focused on."

Giunchigliani wanted to see how willing the commission was to hire a law firm for a possible lawsuit. After her idea got a cool reception, she told county staff to get a more detailed interpretation of the state's room tax laws.

The state Tax Commission didn't issue an opinion in 2005 stating that online travel agents had done no wrong, she said. The commission's head was responding to a letter a Hotels.com lawyer sent to governments across the country.

If Nevada's laws are different from other states' that have won settlements, that should be made clear, Giunchigliani said. The county needs to ensure online companies pay taxes they owe, she said.

Attorney Todd Bice, representing the Nevada Resort Association, said the law states that whoever provides the lodging collects the room tax from guests and pays what is owed to the government.

Bice said he understands why the county is looking for added revenue during a tough economy. "But the law doesn't change just because the economic times are tough right now," he said.

Steven Wolens, a Dallas-Texas attorney who has worked on room-tax lawsuits, argued that Nevada law calls for taxing operators who are in joint ventures with hoteliers. Online travel agencies fit that legal description, Wolens said.

He said that because these companies are losing lawsuits, they are lobbying Congress to exempt them from paying local taxes.

Contact reporter Scott Wyland at swyland@reviewjournal.com or 702-455-4519.

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