Posted on: October 2, 2023, 12:18h.
Last updated on: October 2, 2023, 12:18h.
The Nevada Supreme Court recently advanced a lawsuit accusing third-party travel sites like Orbitz and Expedia of underpaying room taxes to the state. The lawsuit, brought forth by Sig Rogich and Mark Fierro, alleges that these platforms have not properly paid their share of taxes for stays booked through their websites.
Sig Rogich, the founder of R&R Partners, and Mark Fierro, a litigation expert, brought the lawsuit last year through private action. The suit claims that booking sites have negotiated discounted rates with hotels and then sold them at higher retail rates to consumers, resulting in underpaid taxes.
The lawsuit alleges that this scheme has caused Nevada to miss out on over $1 billion in hotel occupancy tax revenue. These taxes are crucial for funding organizations like the Las Vegas Convention and Visitors Authority, public schools, and the Nevada Department of Tourism, as well as state and local general funds.
‘Qui Tam Case’
The Nevada Supreme Court explains that Rogich and Fierro’s lawsuit falls under what is known as a “qui tam case” – a legal challenge permitted under the federal False Claims Act. In this case, the plaintiffs are acting as whistleblowers, bringing litigation against the travel sites that allegedly defrauded the government.
The defendants in the lawsuit include Orbitz, Travelscape, Travelocity, Expedia, Hotels.com, Hotwire, Priceline, Agoda, and Hotel Tonight.
While the legal teams representing the online travel sites have requested the dismissal of the litigation based on a similar lawsuit brought by Clark County in federal court, the Nevada Supreme Court has decided to fully consider Rogich and Fierro’s lawsuit on behalf of the state.
Oral arguments were heard before the Nevada Supreme Court in April, and on September 28, the court issued a ruling agreeing to fully consider the appeal.
Hotel Taxes Add Up
Hotel stays on the Las Vegas Strip are subject to a transient lodging tax with an effective rate of 13.38%. Of this tax, 12% goes to Clark County, 0.5% is allocated for the Las Vegas Convention Center’s expansion, and 0.88% is used to pay off the Allegiant Stadium’s $1.9 billion debt.
With upcoming events such as the Sphere and U2’s residency opening, the Global Gaming Expo, and a Monday Night Football game with the Raiders, room rates on the Strip are expensive this weekend for a two-night stay. The cheapest room at The Venetian Resort costs $322 before the resort fee, with hotel taxes adding up to nearly $200 for the stay.