Jefferson County Circuit Judge Rob Wyatt Jr. has ordered online booking agencies to enter into mediation with representatives of the Pine Bluff Advertising and Promotions Commission and others who were involved in a lawsuit alleging that the companies failed to collect local taxes when they booked hotel rooms in various states, including Arkansas.
Wyatt signed an order last week ruling that Pine Bluff and other cities, including North Little Rock, had proven their case and granted summary judgment, rejecting a request from the online companies.
In a letter sent by email to attorneys representing both sides, Wyatt said that because he had found for the cities on the issue of liability, it was time to move on to damages, and he believed that both sides would benefit from the services of a mediator.
He appointed James W. (Jim) Tilley of Little Rock to act as a mediator and said both sides would share the expenses for the service.
Online companies such as Travelocity and others contact hotels and negotiate reduced rates for rooms, then sell those rooms to customers at the reduced rate while charging a fee.
Pine Bluff officials and others had contended in the lawsuit that the companies must collect and send to the cities the full amount of taxes owed on the price they charge people for the rooms, not the discounted price they received from the hotels after negotiations.
The decision by Wyatt also rejected an opinion from the State Department of Finance and Administration that contended that the companies were not required to collect the local hotel tax, saying in the ruling that “The record developed in this case is far superior to the ‘scenario’ upon which the DF&A based their decision. In other words, the DF&A Opinion is based on incomplete facts.”
Pine Bluff collects a 3 percent sales tax on hotel rooms.
The online companies can appeal Wyatt’s decision to the Arkansas Court of Appeals.