Today’s Philadelphia Inquirer has an article on a ruling by that dismissed a lawsuit brought by the city of Philadelphia against 17 online travel services. The judge contended that the city should seek relief from the city’s Tax Review Board, and not his court while noting that he is troubled by the fact “that it does not appear that the city ever performed an audit, provided notice, or attempted to collect the tax from defendants, other than by filing the instant lawsuit”.
However, neither Expedia nor any of the 16 other defendant should rush to bring out the champagne as the judge withheld judgment on the merits of the case. The city (and other jurisdictions around the country such as Los Angeles and Chicago) ought to rework the premise of their case as suggested by the Philadelphia judge. Tax review boards around the country ought to consider the online agencies as resellers. The consumer in this instance “buys” the “product” from reseller and as is the case with sales tax, the tax ought to be paid on what the consumer pays the reseller. This case is likely to have long legs and in the end, jurisdictions are rightly going to have the ability to tag on occupancy taxes to online prices.