The Internet Booking Tax Controversy: The OTA Merchant Model has caused another major controversy that is alienating the OTAs from local governments and tourism promotion authorities. A number of local jurisdictions in the U.S. have filed at least 40 lawsuits against some of the OTAs for unpaid tax revenue because the OTAs have been remitting room taxes calculated on the merchant net room rates rather than what the guest paid for the room. Government officials claim that municipalities across the nation are losing an estimated $1 billion per year in tax revenue that can be used toward promoting tourism to the city or in some cases, paying for schools and law enforcement. (Source USA Today, Wall Street Journal and AH&LA)
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