Business

Kentucky hotel-tax suit dismissed

LOUISVILLE — A federal judge has dismissed a lawsuit in which Louisville and Lexington officials tried to collect taxes from hundreds of online hotel brokers such as Hotels.com. U.S. District Judge Thomas B. Russell on Tuesday said the city and state hotel tax laws are outdated and don't cover online hotel brokers. The cities and state have amended their hotel taxes several times in recent years, but didn't address online hotel brokers, Russell said. If the cities want to collect the taxes, they are free to amend their ordinances, Russell said.

The city of Louisville two years ago sued hundreds of Web sites that rent discount hotel rooms, accusing the online travel companies of not paying taxes on the rooms rented. Defendants included Orbitz, Hotwire, Expedia and Travelocity, among others.

Lexington joined the lawsuit, asking Russell to award an unspecified amount from the online travel companies to the two municipalities and to the 24 cities and 25 Kentucky counties that have hotel taxes.

Bill Patteson, a spokesman for the Jefferson County Attorney's Office, called the ruling disappointing and said the city plans to appeal. Susan Straub, a spokeswoman for Lexington Mayor Jim Newberry, declined to comment.

E-mail messages sent to several travel company Web sites were not immediately returned. In other, similar lawsuits, the companies denied any wrongdoing.

The ruling was a reversal for Russell, who had refused a request to dismiss the lawsuit last year. In his ruling Tuesday, Russell said he had inadvertently read a meaning into the ordinances that's not spelled out in writing.

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