Nevada's Highest Court to Decide if Booking Websites Remitted Proper Room Taxes
The Nevada Supreme Court recently addressed a case accusing popular travel websites, such as Orbitz and Expedia, of not paying their fair share of room taxes to the state.
A lawsuit was filed by Sig Rogich and Mark Fierro last year through a private action. Rogich is the founder of R&R Partners, which has been the primary marketing force for the Las Vegas Convention and Visitors Authority (LVCVA) since 1974, and Fierro is a litigation expert whose company, Fierro Communications, assists attorneys in high-profile cases. Although not attorneys themselves, they hired lawyers to handle the case.
The lawsuit asserts that these booking platforms developed a strategy for paying less room tax to Clark County and Nevada on the hotel rooms they sold to customers on behalf of casinos and other lodging establishments. Nevada Attorney General Aaron Ford supports the plaintiffs but declined to participate in the case.
The attorneys representing Rogich and Fierro argue that these booking sites secured discounted room rates from casinos and hotels and later sold them at higher retail prices to customers. They claim the travel sites paid the hotel occupancy taxes based on the negotiated, discounted rate, not the cost the guest paid to the booking site.
Rogich and Fierro believe that this ongoing scheme has resulted in Nevada losing at least $1 billion in hotel occupancy tax revenue, money that would ordinarily go to the LVCVA, public schools, and the Nevada Department of Tourism. In addition, hotel occupancy taxes benefit state and local general funds.
Qui Tam Case
Qui tam cases, like this one, are described by the Nevada Supreme Court as rare. These legal challenges are permitted under the federal False Claims Act and grant whistleblowers the ability to sue parties suspected of defrauding governments. In this case, Rogich and Fierro are representing the state and affected counties.
Among the defendants are Orbitz, Travelscape, Travelocity, Expedia, Hotels.com, Hotwire, Priceline, Agoda, and Hotel Tonight.
The legal representatives for the online travel sites petitioned the Nevada Supreme Court to dismiss the legal action, citing a previous lawsuit filed by Clark County that was dismissed in federal court against these same defendants. While the county is appealing the case, the Nevada Supreme Court's en banc ruling states that since the state wasn't involved in the federal lawsuit, they can independently evaluate Rogich and Fierro's litigation.
The oral arguments were held in April, and the court's decision to consider the case fully was issued on September 28.
Hotel Tax Breakdown
The transient lodging tax for hotel accommodations on the Las Vegas Strip, within the county's defined "Primary Gaming Corridor," amounts to an effective rate of 13.38%. Out of the total bill, 12% goes to Clark County, 0.5% is allocated for the expansion of the Las Vegas Convention Center, and 0.88% is directed to the Las Vegas Stadium Authority to clear the $1.9 billion loan for Allegiant Stadium.
Room rates on the Strip can be expensive, given the Sphere's presence, U2's residency launch, a hectic convention schedule, and the Raiders hosting a Monday Night Football game.
Even with a stay at The Venetian Resort, the base cost is $322, but when factoring in the $45 nightly resort fee, the total comes close to $367. The hotel taxes add up to nearly $216 for the stay.
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Source: www.casino.org
