The City of Madison may soon file a lawsuit against Internet hotel retailers if such companies refuse to pay taxes owed on hotel rooms.

Ald. Zach Brandon, District 7, will propose a resolution to the City Council next week, asking for authorization of the City Attorney to use whatever means necessary to collect such taxes.

"Sometimes when you go out suing companies, people think it's anti-business," Brandon said. "But I'm defending local businesses from these big Internet companies."

The request for action follows similar suits filed by San Diego, Philadelphia and Los Angeles against Internet travel companies within the last year.

Internet hotel companies like Expedia, Travelocity and Orbit reserve a portion of hotel rooms in Madison for a lesser price.

The current Madison law requires a business or a patron who reserves a hotel room to pay an 8 percent tax in addition to the room rate.

But according to Brandon, the problem is that the Internet retailers are only paying a tax on the discounted price of the hotel rooms instead of the tax on the full price, which, by law, they are obligated to pay.

"That hotel room tax is used to generate tourism within Madison and offset property taxes," Brandon said. "They should pay because it's a law."

City Attorney Michael May said in his released opinion that these Internet room providers should pay the full tax.

"It is our opinion that the City has a relatively strong argument that such fees should be included in calculating the room tax," May said in the opinion. "Therefore, additional tax revenues are due [to] the city."

According to Brandon, the Internet retailers claim themselves as "intermediaries" who only help sell the room and are not the direct supplier.

All the fees charged to users, the companies argue, are just service fees.

But Brandon said the argument would not hold because Madison's law specifically states that the tax is imposed on the direct supplier and other individuals' furnishing accommodations.

Furthermore, the tax is enforced on the retail value of the room, which negates the company's practice of paying a tax on the discounted room price.

Brandon emphasized the importance of protecting local businesses affected by Madison tourism.

"If you can go online and you can get a room for less and not have to pay the taxes, the local business loses out," he said. "That 8 percent helps us market Madison as a destination. … That's how we help the restaurants on State Street, to get people by coming here."

The City Council will consider the proposal next week.