We all know a hotel bill includes a complex list of taxes and occupancy surcharges. But how such payments are collected and processed by third-party travel sites has come under close scrutiny. As noted on this site several months ago, online travel agencies have been facing lawsuits from municipalities across the country, which claim these cities have been cheated out of tens of millions of dollars in hotel and occupancy taxes. Some reports estimate the number of cities has reached 200 and the list includes such major destinations as Atlanta, Chicago, Los Angeles, Miami and Philadelphia.

In essence, these municipalities claim they receive taxes from travel sites based on the wholesale rates the sites pay for the rooms, not the higher retail rates the sites charge consumers?and that gap can equal millions for many local governments. Earlier this month, for example, an administrative hearing officer awarded the City of Anaheim $21.3 million in back taxes, interest, and penalties from Expedia, Orbitz, Priceline, and Travelocity. Anaheim Mayor Curt Pringle explains, "The issue at hand is full reimbursement of the taxes collected. There is no reason why online travel companies should be paying a different amount of taxes than others who book the same hotel rooms."

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