Broke cities accuse Travelocity, Priceline and other sites of dodging local taxes

Are sites like Expedia, Priceline, and Travelocity only paying a fraction of the taxes they owe for hotel bookings? A lot of American cities think so.

Hotel web bookers such as Orbitz, Travelocity, Expedia, Priceline, and Hotels.com all buy hotel rooms at a wholesale price. When a customer like you or me buys a room through them, we're actually often paying a rate that's marked up from what the website originally paid to obtain it (but a rate that's still probably lower than what we'd have to pay if we did it on our own). That's how the sites make money.

As budgets tighten, cities have decided they don't like the current set-up. They get tax on the wholesale price that Orbitz & Co. are paying on the rooms, but they want tax based on the final, higher price paid by the guest. Count Broward County, Florida, which includes Fort Lauderdale and Wilton Manors, as the latest American destination to pig-pile on the internet travel sellers. Atlanta, Philadelphia, Miami, Houston, Los Angeles, San Antonio, and Chicago also want a piece of the tax action. Even a coalition of counties in Maryland and New Jersey, not normally known as a big tourism centers, are clamoring at the benches of the U.S. District Court for a ruling.