Lake County CVB Files Suit in Federal Court
22 total local entities possibly deprived of potential tax revenue
U.S. District Court, Northern District, Hammond – The Lake County Convention and Visitors Bureau was selected by a team of national and local law firms to be the lead plaintiff in the Indiana lawsuits against web-based travel booking sites. The LCCVB initiated the first step by filing the lawsuit today at 1:30pm against internet booking sites such as; Expedia.com, Travelocity.com, and Hotels.com. Stating “responsibility to our hotels, our guests, and ensuring a level and fair playing field for all travel retailers.”
Bureau executives expect other destination marketing organizations (CVB’s) from around the state to join the suit in the coming weeks.
Represented locally by Eric Krischner, Esq. with Beckman, Kelly, Smith LLC; Daniel Kuzman, Esq. of Kuzman and Associates, the Lake County Convention and Visitors Bureau and Marshall County, Indiana, have filed their complaint in the United States District Court for the Northern District of Indiana, Hammond Division, as one of several lawsuits being pursued nationally by Bryan Vroon and John Crongeyer of Vroon & Crongeyer, LLP of Atlanta, GA and by Kimberly Keevers Palmer of Richardson, Patrick, Westbrook & Brickman, LLC of Charleston, SC. Richardson Patrick attorney Keevers-Palmer, a Lake County, Indiana native says, “In addition to the tourism bureaus, Lake County’s university medical and nursing programs, public safety departments and local government programs are losing out from this practice. We don’t want to see these important community entities continue to suffer from the loss of these tax dollars.”
Specifically named in the suit are national internet travel companies: Hotels.com LP; Hotwire, Inc.; Cheap Tickets, Inc.; Expedia, Inc.; Lodging.com; Lowestfare.com Inc.; Maupintour Holding, LLC; Cendant Travel Distribution Services Group, Inc.; Orbitz, Inc; Priceline.com Inc.; Site59.com LLC; Travelocity.com, Inc.; Travelweb LLC; TravelNow.com, Inc.; and Onetravel.com.
The court papers allege that the electronic channel markets (booking agencies) contract with hotels for rooms at negotiated discount room rates, mark up their inventory, and then sell the rooms to members of the public at marked-up prices. Although the agencies charge their customers for taxes computed at the marked-up rate, they allegedly remit to the taxing authorities taxes calculated on the discounted rates, shortchanging both the customers and the taxing authorities. According to the legal papers, “Each defendant then pockets the difference.” Claiming that this practice violates Indiana law, the Bureau and county seek the tax revenue due to them, and those similarly situated, along with interest, penalties and other legal remedies.
“In layman’s terms, these internet companies are buying hotel rooms at a wholesale rate, and selling them at an increased price, and then charging taxes on that increased price. These internet travel companies are allegedly keeping the difference in the taxes charged. They are shorting the Lake County CVB, the Lake County Medical Center Development Agency at Indiana University Northwest, the Purdue University Calumet School of Nursing, and every business and employee of the hospitality industry,” said Speros A. Batistatos, President/CEO of the Lake County CVB.
Similar situations have resulted in millions of dollars of lost revenue to tier one cities throughout America. Mr. Batistatos continued to say, “The LCCVB is choosing to be proactive and avoiding such catastrophic losses by involving ourselves now and defending against future costs to the CVB, hospitality industry, and all the cities and towns that receive revenue.”
The Lake County Convention and Visitors Bureau leads and supports the visitor industry through the marketing and development of the county from convention, sports, gaming and special interest travel segments, thereby increasing economic impact, creating employment and enhancing the communities’ quality of life.
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