NH Files Suit Against Online Travel Companies

Attorney General Joseph A. Foster and Department of Revenue Administration Commissioner John T. Beardmore announced Friday that the State of New Hampshire has filed suit against Priceline, Orbitz, Expedia, Travelocity and other online travel companies.  

The complaint filed in Merrimack County Superior Court alleges that the companies failed to properly remit the full amount of meals and rooms taxes due on overnight accommodations and vehicle rentals. 

New Hampshire’s Meals and Rooms Tax Law imposes a 9 percent tax on the retail rate paid by the consumer for overnight accommodations and vehicle rentals.  A consumer renting a room or car directly from a hotel or car rental company pays the price of the room or rental plus the meals and rooms tax due on this retail sale. The hotel or car rental company remits the 9 percent tax collected on the retail sale to the state.

In its complaint, the state alleges that online travel companies acquire the right to rent rooms and cars from hotels and rental car companies at low wholesale rates. They then rent the rooms and cars to consumers at higher retail rates, adding an additional charge for "taxes and fees." The online travel companies remit the meals and rooms tax only on the wholesale rate they paid the hotels or car rental companies, rather than on the retail rate paid by the consumer, and retain the difference.  

Given the growing number of hotel rooms and rental cars that consumers now rent from online travel companies, New Hampshire is losing an increasing amount of meals and rooms tax revenue because the online travel companies are remitting taxes on only the wholesale rate rather than on the retail rate as required by the Meals and Rooms Tax Law.

The state claims that the online travel companies’ meals and rooms tax remittance practice is unfair and misleading. Consumers are charged “taxes and fees,” but are not informed how those charges are broken down, and local businesses renting rooms and cars directly to consumers are put at an unfair disadvantage because they are paying the 9 percent tax on the full retail rate. 

The online travel companies will have 30 days to file a response after they have been served with the complaint. New Hampshire is just one of many states and local governments seeking to recover unpaid tax revenue from online travel companies.