Expedia 2013 Annual Report Download - page 44

agreed to accept transfer and review of the case. On May 20, 2013, the Department issued final assessments
against the Expedia subsidiaries, for transient accommodations tax that the state claims are due for the year 2012
totaling $41.7 million. The Department’s claim for these subsequent tax amounts has been stayed by the tax court
pending appellate review.
City of Portland Litigation. On February 17, 2012, the online travel companies brought suit seeking a
declaration that taxes are not due to the city of Portland or Multnomah County. Expedia, Inc. v. City of Portland,
Case No. 1202-02223 (In the Circuit Court of the State of Oregon for the County of Multnomah). On March 30,
2012, the city and county filed a motion to dismiss on the basis that the online travel companies should be
required to exhaust their administrative remedies including the payment of any taxes allegedly owed before
proceeding in a lawsuit. On June 15, 2012, the court denied the city and county’s motion to dismiss and the case
will proceed in court without the prepayment of the city and county’s claims for taxes. After the court granted
their motion for leave to amend, the city and county filed their amended answer, affirmative defenses and
counterclaims on June 11, 2013. The trial date of October 14, 2013 has been stricken and no new court date has
been set.
Denver, Colorado Litigation. On February 3, 2012, the City and County of Denver’s Hearing Officer issued
a final decision on tax assessments against the online travel companies. On March 7, 2012, the online travel
companies filed a timely notice of appeal and complaint in state court seeking relief under two separate
procedural bases of appeal. Expedia, Inc., et al. v. City and County of Denver, Colorado, et al. (Case
No. 2012cv1446, District Court for the City and County of Denver, Colorado). On March 12, 2013, the trial court
held that the online travel companies are liable for hotel occupancy taxes to the city and county of Denver, but
held that taxes may not be collected for periods prior to April 2007 due to the bar of the statute of limitations.
Both the city and county of Denver and the online travel companies have appealed from the trial court’s decision.
These appeals remain pending.
State of Wyoming Litigation. On February 28, 2013, the Wyoming Board of Equalization ruled that the
online travel companies are liable for sales tax on their online services to the State of Wyoming. The online
travel companies have appealed. The Wyoming District Court certified the appeal to the Wyoming Supreme
Court and on April 23, 2013, the Wyoming Supreme Court accepted review of the online travel companies’
appeal. The Wyoming Supreme Court heard oral argument regarding the online travel companies’ appeal of the
Wyoming Board of Equalization ruling that online travel companies are liable for hotel occupancy taxes on
November 21, 2013.
Other Tax Litigation
Hawaii Tax Court Litigation (General Excise Tax). On January 31, 2011, the online travel companies
received final notices of assessment for general excise taxes for the tax years 2000 to 2011 on their services
relating to non-commissioned hotel room reservations. The companies appealed these assessments to the Hawaii
tax court. On January 11, 2013, the Hawaii tax court ruled that the online travel companies are obligated to remit
past Hawaii general excise taxes with interest on both the amount paid to the online travel companies for their
services and the amount paid to the hotel for the room; thus subjecting the hotel’s charge for the room to double
taxation because general excise taxes on the hotel room had already been paid for all of the years at issue. On
March 15, 2013, the Hawaii tax court issued penalties against the online travel companies for their failure to file
returns and pay general excise taxes. On August 12, 2013, the court further held that interest is due on such
penalties. During the pendency of the tax court proceeding, the online travel companies petitioned the Hawaii
Supreme Court for immediate review of the tax court’s January 11, 2013 ruling holding the companies liable for
general excise tax. The Hawaii Supreme Court denied the online travel companies’ petition on April 22, 2013.
The tax court proceeding subsequently concluded and on September 11, 2013, the online travel companies filed
their notice of appeal. On December 24, 2013, the Hawaii Supreme Court agreed to accept transfer and review of
the case. The case will now proceed in front of the Hawaii Supreme Court for review and will not be considered
by the Hawaii Court of Appeals. We strongly believe that the tax court ruling regarding the general excise tax is
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