New York City’s ability to collect taxes related to the multibillion-dollar hotel industry may be curtailed by a little-noticed ruling, one that could have broad implications for the city at a time when Wall Street’s woes have made New York more dependent than ever on alternative sources of tax revenue, city officials and tax experts said.

RELATED: Hotel Tax Loophole.

A body that decides city tax issues, the Tax Appeals Tribunal, ruled earlier this summer that American Airlines did not have to pay more than $200,000 in hotel taxes because of its permanent resident status, meaning it keeps rooms at a hotel for 180 or more consecutive days.

The case sets the stage for other companies that rent rooms for long stretches to avoid paying taxes in the city, which could have serious repercussions on the nearly $400 million in hotel tax revenues the city receives each year. Permanent residents are exempt from paying a 5% tax on the cost of the room and a $2-a-night fee. The 8.375% sales tax, which also applies to hotel rooms, is not affected by the case.

The city argued that as a permanent resident, the airline is exempt from paying taxes on only the minimum number of rooms it used during the 180-day stretch; if it occupied 50 rooms for most of the time, but during a slow month only used five rooms, the city said only those five rooms were exempt. The airline argued that it was exempted from hotel taxes on all of the rooms, whether it occupied five rooms or 50. The tribunal ruled in favor of American.

“If a person rented one room at the Waldorf-Astoria for six months, and then invited 150 guests to the hotel for a wedding party, he wouldn’t have to pay hotel taxes on any of their rooms,” an official involved with the case, who requested anonymity because it is ongoing, said. “I think it leads to an unreasonable result.”

The city’s Department of Finance appealed the ruling, and the Tax Appeals Tribunal, which is composed of three judges, will hear oral arguments this winter and issue a decision within the next year. If American wins, the decision is final; if the city wins, the airline can request a judicial review.

“It sounds pretty clear in the law that American Airlines is correct on this one,” a lawyer at the Washington-based Tax Foundation, Joseph Henchman, said.

Hotel industry officials and the Real Estate Board of New York said they were unfamiliar with the case, and it has received little press attention.

If American wins the appeal, city officials would likely make an effort to rewrite the tax law. “Unfortunately, the only flexibility the state has given us regarding the hotel tax is to be able to raise the tax by 1%,” City Council Member Lewis Fidler said. “The sooner we close this tax loophole, the better.”

Mr. Henchman said the law is part of a larger trend by cities and states to broaden their tax base by redefining the term “resident,” and is not sound tax policy. “States should tax residents and try not to tax nonresidents,” and the permanent resident clause in the hotel tax deliberately attempts to do the opposite, he said.

A spokesman for American, Ned Raynolds, said the company is confident in the outcome of the case, but if it does lose it will seek judicial review. He added that if the financial sector bear market has caused city officials to be more vigilant in closing certain tax loopholes, spiking oil prices have left the airlines equally committed to avoiding new taxes.

The airline plans to cut costs by eliminating 12% of its domestic routes, including 35% of its flights out of La Guardia Airport. Fuel costs are the main impetus for these cuts, but, of course, the airline is also concerned about any increase in its operating costs, he said.