Expedia.com, Priceline.com, Hotels.com, Travelocity and Orbitz have been accused of making underpayments of the tax, according to the suit that was filed in Los Angeles Superior Court on 30th December.
The Attorney's Office estimates that the lost hotel tax revenue costs the City around $10 million annually for each on-line company.
"We will no longer allow on-line booking companies to continue a fraudulent scheme to collect but avoid paying these needed taxes and defraud all Angelenos," said Los Angeles City Attorney Rocky Delgadillo.
The suit also accuses the companies of charging higher fees and taxes on rooms than the current Los Angeles City room tax of 14%.
In a statement, Art Sackler, the Executive Director of the Interactive Travel Services Association (ITSA), the US trade group for on-line travel companies and computer reservations systems, described the suit as "without merit".
"The claim that ITSA members do not remit collected taxes is false," he said. "The city's hotel tax does not apply to on-line travel companies which are not hotel operators and do not collect rent. These companies provide valuable services to assist consumers with booking hotel rooms."
"The city is trying to impose a new tax on internet services that is adverse to consumers," Sackler added.