Online Travel Companies Hit with $246 Million Judgement

A final judgement in the amount of $246 million was entered in tax appeal court against nine Online Travel Companies selling Hawaiʻi hotel rooms, according to information released by the state Attorney General’s Office.

The judgement reportedly includes taxes, penalties and interest for the period between 2000 and 2011.

In the announcement, Attorney General David Louie said the State is pleased that the court determined that the OTCs owe the Hawaiʻi general excise tax, which is imposed on persons for the privilege of doing business in the state.

“Clearly, through the sale of millions of hotel room nights in Hawaiʻi to Hawaiʻi and other consumers, in a substantial number of Hawaiʻi hotels, and collecting room rentals in the billions of dollars, the OTCs are doing business in Hawaiʻi,” said Louie in an agency press release.

The state intends to file another appeal in which it maintains that the “OTCs furnish transient accommodations,” and that under the state’s Transient Accommodations Tax law, such individuals must pay TAT on their gross rentals.

Should the state prevail on the appeal, it is estimated that it would result in additional future annual TAT collections of approximately $60 million, officials with the state Attorney General’s office said.