More Reasons to Avoid Mainstream Travel Sites

More Reasons to Avoid Mainstream Travel Sites

Sites such as Travelocity, Cheap Tickets, Orbitz, Expedia, and PriceLine are doing some dirty dealings according to the state of Montana. Taxes that are required to be paid on all transactions are being dodged by these companies when it comes to hotel booking. Hotel booking, like any other transaction, is required to have a tax paid on it. This eventually gets very confusing, so allow me to try and explain it a bit more simply.

For the sake of argument let's say that Montana's state tax rate is seven percent, which I think it actually is. Now, let's say that you book a hotel through Orbitz that would normally cost you $100. Orbitz has a deal with this hotel and only charges you $75. Orbitz now only pays the tax on what you pay of $75, which is $5.25 instead of the tax on $100, which is $7.00 (a difference of $2.75). These sites pay their taxes on what is called a 'reduced negotiated retail rate,' which allows them to only charge taxes on that $75 instead of the $100. The amount of taxes that need to be made up may not seem like much, but if you figure that a large number of users frequent these sites, which they do, it adds up pretty quickly. The argument here is that Orbitz is not paying the taxes that they should. Even though it doesn't seem like a whole hell of a lot, it really is. Of course, these companies are arguing against the claim.

First of all, the amount of money in question totals only to $100,000 in the state of Montana (bringing the total of unpaid taxes to under $700 depending on each individual transaction). Plus, the taxes being paid are not on what the customer doles out, but rather what the hotel receives in the transaction. Again, this gets very foggy after a while, but the basic argument of these travel sites is that they're doing absolutely nothing wrong. The state government of Montana, on the other hand, thinks that they are owed some taxes.

Montana has already filed a lawsuit against Priceline.com, Expedia, Orbitz, Travelocity and all subsidiaries. This case will likely be in court for a while and, quite honestly, I'd stay away from these companies for a while. It's a menial amount of money, but something they'll have to spend money on to keep. Who knows what this will do to the industry in Montana or the country at large. But, if I were you, I wouldn't use them for quite a while. Instead, deal with MetroFlats, which is in no legal trouble at all! Sounds pretty good to me, don't you think?

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