The hotel merchant tax issue is creating havoc for online travel agencies. At the present time, more than 200 municipalities, counties and states have lawsuits pending in an attempt to claim additional tax revenues based on the markups applied by Online Travel Agencies (OTAs.) In some cases, the suits are groundless as the current hotel occupancy tax laws are based on the revenue received by the hotel. However, some cities are changing their tax laws to base the taxes on the retail price paid by traveler. Unfortunately, there is widespread confusion – this article attempts to provide clarity on the key issues and a recommendation for resolving the hotel merchant tax problem.
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