Expedia Inc., Orbitz LLC and several other online travel companies owe the state of Hawaii up to tens of millions of dollars in back taxes as a result of a state Supreme Court ruling, Hawaii’s attorney general said Tuesday.
The court found online commerce is just as subject to Hawaii’s general excise tax as local brick-and-mortar businesses, said Attorney General Doug Chin.
“It’s a privilege to do business in Hawaii. Bottom line, these online travel companies derived substantial revenues from the sale of Hawaii hotel rooms and they need to pay their fair share,” Chin said in a statement.
Hawaii’s tax department in 2010 assessed general excise and transit accommodations taxes against the online travel companies for back taxes starting from 2000.
The companies refused to pay, saying they didn’t generate revenue in Hawaii.
Unlike many other states, Hawaii doesn’t have a sales tax. The state’s general excise tax applies to all business activities.
Representatives at Expedia, Orbitz and Priceline.com Inc. didn’t immediately respond to email messages seeking comment late Tuesday.
Associate Justice Richard Pollack wrote the unanimous opinion, which was signed by all four other judges hearing the case.
The attorney general’s office said the ruling affirms the Tax Appeal Court’s judgment upholding the state’s assessments of penalties and interest against online travel companies for failing to file tax returns and pay general excise taxes from 2000 through 2011.
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