Court ruling could mean hotel tax windfall for Rosemont
Rosemont could get a windfall of back taxes — potentially between $3 million and $6 million — from discounted travel websites such as Priceline, Travelocity, Expedia, Hotwire and Hotels.com, after a federal court sided with the village in its lawsuit against the sites.
U.S. District Court Judge Ronald A. Guzman ruled Oct. 14 that seven online travel companies named in the lawsuit must pay taxes on the fees they charge customers for booking hotel rooms in Rosemont. Village ordinance imposes a 7 percent hotel/motel tax on room rentals.
The judge rejected the online travel companies' argument that the tax should apply only to the amount they pay a hotel or motel for room rental, and not the service fee they charge customers.
While the judgment applies only to Rosemont, similar class action lawsuits have been filed in major cities throughout the country, village spokesman Gary Mack said.
Rosemont's lead attorneys in the case, the Chicago law firm of Freed & Weiss LLC, and Hagens, Berman, Sobol, Shapiro LLP in Seattle, specialize in class action litigation and approached the village about filing the suit.
“Rosemont didn't look for this,” Mack said. “My guess is they've approached 20 other communities in Chicago (region). Rosemont is just one of many, many places where this is going on.”
The attorneys get a percentage of whatever Rosemont is owed in taxes, which is estimated to be between $3 million and $6 million.
Mack said the judgment should apply retroactively, as well as for online hotel bookings going forward. However, it's unclear just how far back the village can go to claim unpaid taxes.
“We have no idea how much money this is,” he said. “Hotel rates are an extremely complex issue, and it's difficult for Rosemont to ascertain at any given time how much (customers are being charged).”
The village keeps track of general occupancy, but hotel room rates are what determine how much tax is due.
“This is probably going to take a long time to settle yet,” Mack said. “Obviously, the village is hoping to get its just due, whatever that is.”