County joins Vegas room-tax row with online bookers

Vehicles and crowds move along the strip in Las Vegas in this March 19, 2021, file photo. (Benjamin Hager/Las Vegas Review-Journal via AP)
Vehicles and crowds move along the strip in Las Vegas in this March 19, 2021, file photo. (Benjamin Hager/Las Vegas Review-Journal via AP)

LAS VEGAS -- The county with jurisdiction over the Las Vegas Strip has joined a legal fight to try to collect what attorneys maintain involves 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.

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.

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.

Tax cases aimed at similar practices in other states involving online travel companies 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.

Upcoming Events