City of Phoenix v. Orbitz Worldwide

Summary

The court held that online travel companies are subject to municipal privilege taxation under MCTC § 444 because they act as brokers engaged in the business of operating hotels, and their markups and service fees are taxable gross income. The court held that the companies are not subject to the separate tax imposed by § 447 because that provision applies to hotels, not brokers. It also held that § 542(b) bars retroactive taxation based on a new policy, procedure, or interpretation until affected taxpayers receive clear notice, requiring further factual determinations regarding the Cities’ prior guidance and notice. No separate opinions are included in the record supplied.