Last updated: 09:27 PM ET, Thu October 01 2015

Hawaii's Courts Rule Online Travel Companies Owe $53 Million in Taxes

Impacting Travel | Donald Wood | October 01, 2015

Hawaii's Courts Rule Online Travel Companies Owe $53 Million in Taxes

The Hawaiian Tax Appeal Court announced Wednesday that travel websites like Expedia, Orbitz, Priceline, Travelocity and others owed the state $53.1 million in back taxes, penalties and interest.

According to Lorin Eleni Gill of the Pacific Business News, the state’s Tax Appeal Court had initially ruled that nine online travel companies involved in the legal dispute owed general excise taxes, but not state transient accommodations taxes, and the matter was appealed to the Supreme Court of Hawaii.

The Hawaiian Supreme Court handed down its ruling earlier this year stating that the online travel companies must pay the same taxes levied against brick-and-mortar businesses that are based in the state.

After making their judgment, the Hawaiian Supreme Court sent the case to the Tax Appeal Court once again to determine the amount owed by Expedia, Orbitz and the other companies involved in the legal action. The final ruling determined the companies owed $53.1 million in back taxes.

Hawaiian Attorney General Doug Chin released a statement to the Pacific Business News, saying, “Online travel companies derive substantial profits from the sale of hotel rooms, rental cars and other services in Hawaii. The importance of the Hawaii Supreme Court ruling is the precedent it establishes. People or companies who provide goods and services through the Internet that are used or consumed in Hawaii are subject to Hawaii taxation, despite being domiciled in other states.”

In addition to the court’s ruling, the attorney general’s office told Eleni Gill that they are in the midst of ongoing litigation against the online travel companies in regard to tax obligations during the period between 2000 and 2013.


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