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Posted at 11:05 AM ET, 03/22/2011

City to sue online travel companies to recoup taxes

The District is filing a lawsuit against Expedia, Orbitz, and Travelocity on Tuesday to recoup taxes the city says it is owed.

According to acting Attorney General Irvin B. Nathan, the companies arrange for hotel rooms at wholesale prices and charge customers retail prices, but only remit taxes on the wholesale prices.

Nathan said it’s “very difficult” to estimate how much money the city has lost, but estimates range from $4 million to $10 million annually.

Nathan said there’s no statute of limitations, so the city’s going back to 1998 for taxes, penalties and interest.

Mayor Vincent C. Gray (D) said he did not believe the action would hurt the city’s tourism industry since the nation’s capital is a place people want to visit.

By  |  11:05 AM ET, 03/22/2011

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