BIRMINGHAM, Ala. (CN) - Nine Alabama cities say online travel Web sites book hotel rooms at a wholesale rate, but charge customers a higher retail rate, then pay taxes based on the discounted price. Birmingham and eight other cities sued Orbitz, Priceline, Travelocity and other online travel firms in Jefferson County Court.
The travel companies claim they are not subject to the cities' transient occupancy taxes. The cities say they are, and they seek declaratory judgment that the online businesses have to pay taxes based on the rate they actually charge their customers.
The plaintiffs are the cities of Birmingham, Huntsville, Decatur, Auburn, Madison, Anniston, Opelika, Fairhope and Gulf Shores. They are represented by Henry I. Frohsin of Birmingham.
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