Rosemont gets $2.6 million in settlement with online travel sites
Rosemont will receive roughly $2.6 million to settle a village lawsuit against discounted travel booking websites to recover hotel back taxes, according to an agreement obtained by the Daily Herald through the Freedom of Information Act.
The village board earlier this month approved the settlement with the travel websites, including Priceline, Travelocity, Expedia, Orbitz, Hotwire and Hotels.com, after a federal court sided with the village in its lawsuit against the sites.
The U.S. District Court ruling on Oct. 14, 2011, ordered the seven online travel companies named in the lawsuit to 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. Hotel room rates are what determine how much tax is due.
The online travel companies argued 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. The court rejected that claim.
Per the settlement agreement, the village is required to release and discharge the parties from any liability for failure to collect, pay or remit any hotel/motel taxes for the period up to March 31, 2015.
Neither side is conceding to the other’s arguments with the agreement, nor is the settlement an admission that taxes or penalties are owed by the online travel sites. The settlement amounts paid “are not for the purpose of paying past or future tax,” according to the agreement.
The village is barred from making any public statements about the settlement per the agreement.
“We’re happy to have prevailed,” Rosemont Mayor Brad Stephens said Monday. “We just think that the village needs to collect the tax revenue that it’s due.”
Rosemont’s lead attorneys in the case, class-action specialists Freed & Weiss LLC of Chicago, and Hagens, Berman, Sobol, Shapiro LLP of Seattle, approached the village about filing the suit.
Other area municipalities, including Arlington Heights, Warrenville, Oak Brook Terrace, Rockford, Bedford Park, Willowbrook, Tinley Park, Burr Ridge, Orland Park, Orland Hills, Oak Lawn and Des Plaines, have joined a class-action lawsuit seeking to recoup lost hotel taxes. Similar class-action lawsuits have been filed by major cities throughout the country.
Stephens said the online travel sites are likely going to try to get themselves exempted from such taxes by lobbying for federal legislation. He said the village can go after these sites for future hotel/motel taxes after the March 31, 2015, deadline set in the agreement.
“We’re going to hopefully just get them to comply,” Stephens said. “It will be a much bigger class action.”