Siloam Springs has partnered alongside other Arkansas cities in a class-action lawsuit that is seeking the remittance of advertising and promotion taxes from numerous online travel companies, a city official said in a city board meeting Tuesday night.
When a city has an advertising and promotion tax, they can tax hotels or meals purchased when people dine out at places like restaurants, said city administrator Phillip Patterson. The reason for joining the lawsuit is because although Siloam Springs does not have a "hamburger tax," or a tax on eating out, it does have a hotel tax. In addition, it will not cost the city anything and could result in an award down the road, depending on the court's decisions.
Among the companies involved are Hotels.com, Expedia and Hotwire, who are said to owe the state of Arkansas millions of dollars in such taxes that they have collected during the last 23 years, according to a report by the Arkansas Democrat-Gazette on Feb. 3. To explain how, Hotels.com, for example, may pay $100 for a hotel room and sell it to a consumer for $200; the consumer then pays state taxes on that $200. Half of those taxes, in addition to the original $100 for the room will go to the hotel company, who then remits the taxes on the $100 it received for the room. Unlike the hotel company in this example, however, some online travel companies have not been paying all of these taxes, even though they were collected from the person who purchased the room.
The lawsuit was filed in 2009 by Jefferson County and the Pine Bluff Advertising and Promotion Commission, but was given class-action status in 2013, according to the report. Due to this, the plaintiffs in the case represent every advertising and promotion commission, county and city in the state of Arkansas. In May, Jefferson County Circuit Judge Robert H. Wyatt Jr. ruled that 12 companies, including Hotels.com, would be held liable for the back taxes. He also ruled that potential plaintiffs who want to become a party to the lawsuit have up to four months to intervene and file a claim for damages.
Other items on Tuesday night's meeting agenda included:
• Unanimous approval of a construction contract to build a taxilane at the Smith Field Airport.
• Unanimous approval of a budget amendment which will allow the district court to purchase a new computer software.
• Unanimous approval of a budget amendment needed to reflect a $10,000 grant from the Northwest Arkansas Economic Development District to the police department that was awarded them to use for community outreach programs.
• Unanimous approval of a resolution to allow Cobb Vantress Inc. to run a fiber optic cable from their existing headquarters located on U.S. Highway 412 to what will be their new headquarters at 305 E. Main St.
• Review of a proposed ordinance to rezone a 5.17 acre property located at 620 Hwy. 16 E. A motion was unanimously passed to place the ordinance on its first reading, suspending the rules and reading by title only.
General News on 06/10/2018