More SC tax collectors and ‘nonexistent’ business join short-term rental lawsuit | Business

One of the biggest names in the online travel industry is being arraigned in South Carolina courts, if only in name.

The Expedia Group has argued unsuccessfully to keep its well-known corporate brand out of the growing litigation the City of Charleston and other local governments have engaged in over the past year to collect lodging taxes and fees. business license with short-term rental companies and websites.

It’s the latest legal and accounting headache for the Seattle-based online booking giant, which has estimated more than 100 similar cases have been filed across the country since 2004, when Los Angeles opened the floodgates.

Nine lawsuits involving Expedia remain unresolved, according to a recent quarterly financial report.

The company’s first tax battle in South Carolina finally reached the top of the state’s legal system more than a decade ago – and laid the groundwork for the latest lawsuit.

In this case, the SC Department of Revenue required Expedia-owned Travelscape to pay approximately $6.4 million after an audit of hotel room reservations between 2002 and 2006. The agency determined that the website operator was not paying state sales taxes on some of the fees it charged.

Travelscape postponed. She argued that the earnings in question were not taxable because they related to the services they provided. The company also said it was only a “middleman” that provided an online booking platform for consumers and did not own or supply the hotel rooms.


Expedia, Travelocity and Other Online Travel Agencies to Pay $4.4 Million to SC Municipalities

The dispute made its way all the way to the SC Supreme Court, which sent shivers down the spine of the then-mostly zero-rated e-commerce landscape with two words in its January 2011 report. decision.

“We disagree,” the judges wrote.

Revenue-hungry local governments from Aiken to Charleston to North Myrtle Beach spotted the legal opening and raced towards it. They sued Expedia and other well-known travel websites to recoup hospitality taxes and business license fees from years past. Three of the cases resulted in combined settlements of $7.3 million.

The action has now shifted from conventional day-rate hotels to the growing short-term rental industry.


The lawsuit against the hotel tax is coming to an end

The 2021 lawsuit filed in Charleston County is a next-gen version of Travelscape, which local governments say is basically indistinguishable from the case they are pursuing.

The cities that filed the complaints are among the most popular tourist destinations in Palmetto State: Charleston, Columbia, North Charleston, Myrtle Beach, Folly Beach, Isle of Palms, North Myrtle Beach and Hilton Head Island.

And they’re chasing some of the biggest names in the short-term rental game led by Airbnb and Vrbo, as well as some smaller operators.

Barring a settlement, financial audits will determine how much money is up for grabs.

For now, the litigation is bogged down, in part because the number of public bodies that want a piece of the action keeps growing. The list has doubled to 16 in the past 13 months. Just last week, the lawsuit was revised for the second time to add several newcomers, including Horry County and Surfside Beach, giving defense attorneys more time to respond.

The most intriguing wrinkle to date has been a corporate identity dispute over former Vacation Rental By Owner, now Vrbo, which Expedia acquired when it was acquired. HomeAway.com in 2015.

The debate erupted when local governments last year sought permission to add “VRBO, an Expedia Group company” to the list of companies they are suing.







Vrbo

A May 20 press release from Vrbo shows the use of the phrase “Vrbo, an Expedia Group Company” in a copyright disclosure. Staff


It was unexpected, according to court documents, and it apparently touched a nerve at Expedia. Michael Marron, a Seattle-based senior vice president, said in a sworn affidavit in January that HomeAway.com Inc. is “the sole legal entity…operating Vrbo’s business.” He also pointed out that an all-caps version of the rental platform is not affiliated with or owned by Expedia.

HomeAway’s attorneys further argued that Vrbo was already a defendant in the case, adding that the slogan “Expedia Group Company” is a phrase that appears online for copyright reasons. They warned that if the name was added to the complaint, delays and red tape would ensue. They also pointed out that “a non-existent entity” cannot be sued “nor can HomeAway’s attorney represent one.”

“There is no such business,” they wrote in bold for emphasis.

Jesse Kirchner, who represents local governments, did not respond to a request for comment.

HomeAway, and by extension Expedia Group, was unable to influence the court. Regardless of its existence, “VRBO, an Expedia Group Company,” was listed as a defendant when the updated lawsuit was filed on Tuesday. The name has been highlighted in bold.

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