Law Tech Spotlight Examines Tax Exposure Claims Against LuxUrban Hotels Inc., Citing OTA Payment and Tax Collection Laws
Los Angeles, CA, Oct. 15, 2025 (GLOBE NEWSWIRE) --
A panel of legal, financial, and technology experts by Law Tech Spotlight has issued an extensive analysis titled “The Statutory Fallacy of Applying New York State and City Taxation to LuxUrban Hotels Inc.” The panel concludes that claims suggesting LuxUrban owes large-scale tax liabilities in New York and seems like it may be inaccurate, legally precluded under both State and City law, and fundamentally inconsistent with established OTA payment systems.
Findings and Legal Basis
The report reveals that between 2020 and 2025, LuxUrban Hotels generated approximately $248 million in gross room revenue across 11 U.S. states and cities. After deductions and local compliance, audited net room revenue totaled $149 million, with only $56 million (22.6%) originating from New York operations.
Under New York State Tax Law §§ 1101(c)(1) and 1105(e), entities defined as “room remarketers” or “resellers”—including Online Travel Agencies (OTAs) such as Booking.com and Expedia—are the merchants of record responsible for both collecting customer payments and remitting occupancy and sales taxes at the point of sale. These statutory obligations are mirrored in NYC Administrative Code § 11-2502, which explicitly assigns tax liability to the room remarketer rather than the hotel operator.
As confirmed in Expedia, Inc. v. City of New York Dept. of Finance (2013) and Travelocity.com LP v. City of New York (2011), hotels do not remit occupancy taxes for prepaid OTA transactions—the OTA does. The LawTech Review analysis found that from 2022 to 2025, 92–97% of LuxUrban’s customers booked through OTAs, meaning LuxUrban did not handle customer credit card payments, did not charge guests directly, and did not collect or remit those taxes. Instead, OTAs charged guests, deducted applicable state and city taxes, and issued virtual card credits to LuxUrban for the net room revenue after all taxes and fees had already been paid.
Implications Beyond Taxation
The experts emphasized that this OTA payment and tax structure is not merely an accounting detail—it defines the merchant-customer relationship, tax responsibility, and consumer service chain. In nearly all transactions, the OTA:
• Collected payment directly from the guest.
• Processed the credit card charge through its own merchant network.
• Deducted applicable taxes and commissions.
• Transmitted net funds to LuxUrban via virtual credit issuance.
• Provided the customer’s booking support and service interface.
Thus, LuxUrban neither controlled nor processed customer payments for 92–97% of its bookings, making any suggestion that it failed to remit sales or occupancy taxes legally impossible.
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Potential Damages and Legal Exposure of False Claims
The report also highlights that false or reckless claims alleging unpaid taxes or financial misconduct may expose responsible parties to defamation, commercial disparagement, and tortious interference liability under New York law. As recognized in CareOne Mgmt. LLC v. Tenenbaum, 173 A.D.3d 1006 (N.Y. App. Div. 2019), publishing inaccurate financial allegations that cause reputational or economic harm is actionable.
If these unfounded claims contributed to market depreciation, loss of partnerships, or increased compliance costs, LuxUrban’s recoverable damages could reach into the tens of millions of dollars, subject to verification of causation and timing.
“This is not a technical debate — it’s a matter of law, payment architecture, and factual record,” said a spokesperson for the LawTech Review Independent Expert Panel. “LuxUrban neither processed guest payments nor collected occupancy taxes for OTA-booked stays. To allege otherwise is to ignore both statutory authority and the financial technology underlying modern hospitality commerce.”
About LawTech Review
LawTech Review is an independent legal and financial analysis publication specializing in emerging intersections of technology, regulatory compliance, and commerce.
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