On Friday, the Legislature’s Fiscal Committee will hear a request from Attorney General Michael Delaney to allow his office to pursue litigation against online travel companies for meals and rooms taxes they may owe. Not only should the Committee approve the request, but the Legislature as a whole should consider ways to strengthen the collection of the meals and rooms tax.
As this study from the Center on Budget and Policy Priorities (CBPP) explains, New Hampshire is among a number of states with loopholes in their laws related to the taxation of hotel room rentals. Online travel companies, such as Travelocity and Expedia, have been able to exploit those loopholes, asserting that they owe room rental taxes solely on the wholesale price that they pay hotels for the rooms, rather than on the retail price that they charge their customers. CBPP estimates that the loss from these practices could cost New Hampshire on the order of $1 million per year.
In response, numerous lawsuits have been brought by states and municipalities against online travel companies to try to recover the funds that are properly due. As the Union Leader’s Gary Rayno points out in a recent column, many of those suits have either been decided in favor of state or local governments or have produced negotiated settlements. The request from the Attorney General would, if approved, permit him to hire the National Online Travel Litigation Group, which has developed expertise in this area, to recover any unpaid meals and rooms taxes.