Orbitz 2010 Annual Report Download - page 31

Publishing Corp. (d/b/a Lodging.com) intend to continue to defend themselves vigorously in this matter,
including an appeal to the United States Court of Appeals for the Fifth Circuit, if necessary.
We have also been contacted by several municipalities or other taxing bodies concerning our possible
obligations with respect to state or local hotel occupancy or related taxes. The cities of Phoenix, Arizona;
North Little Rock and Pine Bluff, Arkansas; Colorado Springs and Steamboat Springs, Colorado; Osceola
County, Florida; 42 cities in California; an entity representing 84 cities and 14 counties in Alabama; the
counties of Jefferson, Arkansas; Brunswick and Stanly, North Carolina; Duval County, Florida; Davis, Summit,
Salt Lake, Utah and Weber, Utah; the South Carolina Department of Revenue; the Colorado Department of
Revenue and the Hawaii Department of Taxation have issued notices to the Company. These taxing authorities
have not issued assessments, but have requested information to conduct an audit and/or have requested that the
Company register to pay local hotel occupancy taxes.
In addition, the cities of Anaheim, Los Angeles, San Diego and San Francisco, California; the counties of
Miami-Dade and Broward, Florida; the cities of Alpharetta, Cartersville, Cedartown, College Park, Dalton,
East Point, Hartwell, Macon, Rockmart, Rome, Tybee Island and Warner Robins, Georgia; the counties of
Augusta, Clayton, Cobb, DeKalb, Fulton, Gwinnett, Hart and Richmond, Georgia; the city of Philadelphia,
Pennsylvania, and state tax officials from Indiana and Wisconsin have begun audit proceedings and some have
issued assessments against the Company, ranging from almost nil to approximately $3 million, and totaling
approximately $10 million.
Certain assessments made in these audit proceedings have become final, and the Company has filed
lawsuits challenging the final assessments. The following is a list of lawsuits brought by the Company
challenging such final assessments:
On January 12, 2009, Orbitz, LLC and Internetwork Publishing Corp. (d/b/a Lodging.com) filed a
complaint against Broward County and the Florida Department of Revenue asserting that they are not subject
to the Tourist Development Tax. On August 25, 2009, the Company filed a second complaint against Broward
County and the Florida Department of Revenue asserting the same claims but addressing additional
assessments issued by the County.
On February 11, 2009, Orbitz, LLC, Trip Network, Inc. (d/b/a Cheaptickets.com) and Internetwork
Publishing Corp. (d/b/a Lodging.com) field a writ of administrative mandamus against the City of Anaheim,
California challenging their liability under the transient occupancy tax. On February 1, 2010, the Superior
Court for the County of Los Angeles, California granted a writ of mandate finding that the City of Anaheim’s
ordinance does not impose transient occupancy tax on the service provided by OTCs, including Orbitz, LLC,
Trip Network, Inc. (d/b/a Cheaptickets.com) and Internetwork Publishing Corp. (d/b/a Lodging.com). The
court’s decision set aside the hearing officer’s finding that the Company and other OTCs were subject to the
transient occupancy tax and owed taxes, interest and penalties to the City of Anaheim.
On March 30, 2009, Orbitz, LLC filed a Petition Appealing Final Determination of the Indiana
Department of Revenue and a Petition to Enjoin Collection of Tax seeking a determination that Orbitz, LLC is
not subject to the Indiana Gross Retail Tax and the County Innkeeper’s Tax and that the Indiana Department
of Revenue violated the Internet Tax Freedom Act, the Supremacy Clause, the Commerce Clause and the Due
Process Clause.
On December 21, 2009, Orbitz, LLC, Trip Network, Inc. (d/b/a Cheaptickets.com) and Internetwork
Publishing Corp. (d/b/a Lodging.com) filed a complaint against Miami-Dade, Florida and the Florida
Department of Revenue challenging their liability under the Tourist Development Tax and Convention
Development Tax.
The Company disputes that any hotel occupancy or related tax is owed under these ordinances and is
challenging the assessments made against the Company. If the Company is found to be subject to the hotel
occupancy tax ordinance by a taxing authority and appeals the decision in court, certain jurisdictions may
attempt to require us to provide financial security or pay the assessment to the municipality in order to
challenge the tax assessment in court.
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