Hawaii fights Expedia, Orbitz, etc. in tax non-compliance

The State of Hawaii Department of Taxation wins a $150M ruling in its favour to collect taxes owing from a consortium of online travel booking agencies led by Expedia, and Travelocity.  Hawaii has on its state tax books a General Excise Tax (GET) of 4% where a business must pay for the privilege of doing business in Hawaii.  The online travel companies were only paying the GET at the wholesale rate that they purchase from the hotels, airlines, and tour operators, but not at the retail rate they were selling those same flights, hotel stays, and rentals to tourists.

Another key part of the ruling is that although the online travel booking companies did owe GET, they did not owe the TAT (Transient Accommodations Tax) which Hawaii was also claiming.   The damages are accumulated from 2000 to 2011, but it also means an additional $20M/year tax revenue for Hawaii.

Check out this press release from the Hawaii Attorney General’s office