Village Could Join Possible Legal Action Against Travel Websites

Whether it's for vacation or for work, traveling can be an expensive proposition. The costs of food, transportation and lodging add up quickly. 

As a way to keep expenses low without sacrificing quality, travelers check out discount websites, such as Expedia or Priceline, for deals that make out-of-town trips easier to afford.

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But while booking a good price for two nights in a king-bed suite at a nice hotel might save you a few extra dollars, a travel website's discount rate could be costing some communities, such as Tinley Park, quite a few dollars in tax money it should be receiving.

That's why the village board is considering becoming part of potential legal action that would try to recoup those alleged lost tax dollars. A resolution goes before the board Tuesday, April 16, that, if approved, would let Bird Law Group, an Atlanta law firm, represent the village in a possible federal class-action lawsuit against 17 travel websites, alleging they are withholding tax money. (One of the sites, Orbitz, is based in Illinois and will be filed in state court.)

"This was a bit of a revelation to us, that these taxes weren't being collected," said Trustee Dave Seaman.

If Tinley comes on board, it would join other south suburban communities, such as Orland Park, Orland Hills and Oak Lawn, Seaman said. Other Chicago-area municipalities already involved include Bedford Park, Warrenville and Oakbrook Terrace, according to village board documents.

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Here's the argument on how these travel sites allegedly aren't paying what they should in hotel-related taxes, according to board documents and Village Manager Scott Niehaus:  

• To get the rooms they offer, the deal websites book them from the hotels at a wholesale rate, thereby paying the applicable taxes on that rate.
• The sites then charge customers a higher retail rate, but the contention is that the taxes collected at this rate are not paid back to the municipalities.
• Village board documents show that Expedia defines its "taxes & fees" charges as "tax recovery charges Expedia pays to its vendors (e.g. hotels). … We retain our service fees and compensation in servicing your travel reservation."

Niehaus and Seaman agreed that it's unknown how much tax money the village is losing out on. But if the trustees approve the resolution, the village won't be pouring funds into a losing effort; the law firm is working on contingency.

"The feeling is that there's nothing to lose," Seaman said. "This is money due to the village."

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