Online travel companies have been ordered to pay the state about $150 million in back taxes by a state judge.
State Tax Appeals Judge Gary W.B. Chang granted summary judgment to the state against Expedia, Hotels.com, Hotwire, Orbitz, Travelocity and Priceline, siding with the state position that the companies must pay Hawaii’s general excise tax on the sale of Hawaii hotel rooms.
The companies had argued that the GET doesn’t apply to them because their business is done outside of Hawaii. But Chang ruled that the GET is a privilege tax imposed on businesses for the privilege of doing business in the state.
The ruling includes the sale of Hawaii hotel rooms by online travel companies.
The state estimated the amount of unpaid taxes at about $110 million with about $40 million owed in interest from that amount.
Ron Heller, an attorney for the companies, said in a statement today: "We are in the process of analyzing the ruling and determining appropriate steps to take, but an appeal is certain."
State Attorney General David Louie, however, said the taxes are justified.
“Hawaii hotels are good corporate citizens, paying their fair share of taxes to support the state’s infrastructure such as roads, schools, personnel and other costs and the (online travel companies) need to also play by the rules and pay their fair share,” Louie said in a statement.