(CN) – A Kentucky town cannot collect accommodation taxes from online travel companies like Priceline or Hotels.com, a state appeals court ruled.
The city of Bowling Green sued 11 online travel companies, including Expedia and Travelocity, for failing to pay taxes on the rooms they buy from the hotels and resell to consumers.
The hotels are taxed only on the discounted prices paid by the online companies, which then sell the rooms to consumers at a higher rate.
The trial court ruled in the travel companies’ favor, stating that online travel companies “provide a service that was never anticipated by these ordinances.”
Citing Louisville/Jefferson County Metro Government v. Hotels.com, a 6th Circuit decision issued in 2009, a three-judge panel of the Kentucky Court of Appeals agreed that the statute should be interpreted “so broadly” online travel companies.
“In Louisville/Jefferson Count, the court properly held that ‘the Kentucky General Assembly, not the court, is the proper entity to close any such potential loophole,'” Judge Denise Clayton wrote for the court.