Agreed.

However, they can add a note along the lines of "Priceline computes tax based on the price you bid and the tax rates applicable to the hotel. The entire sum so computed may not always be remitted to the hotel for taxes. The excess, if any, is retained by Priceline."

Would anyone, who would otherwise use PL, not use it if they read something like that? I doubt it.

Would they be off the hook legally? I'm pretty sure they would.