Letter: A red herring
Steamboat Springs City Council considering a timeshare tax is a red herring. The sales tax law states that transactions for barter are taxable at the fair market value. A person cannot evade sales taxes by paying for items with gold coins or bitcoins, for instance. I personally know that timeshare rentals in other states pay their states’ sales and lodging taxes.
Thus, I asked the town of Vail’s revenue manager the following question: “I was wondering if the town of Vail collects sales and transient taxes for short-term rentals paid by timeshare points?”
I received the following response: “Yes, these transactions are subject to the town of Vail sales tax. Even if the points were not assigned a monetary value, the fair market value of the points would be taxable when used to buy a taxable service or property in Vail.”
Thus, the issue of collecting sales and lodging taxes for timeshare rentals is not a legal issue requiring voter approvals, but a city of Steamboat government issue of failing to collect owed taxes. It is as if the city finance department has unilaterally decided not to collect taxes from a sector of the economy. It would appear the city is violating the terms of being a Home Rule city to properly collect sales taxes and forward the portion owed to the state and Routt County to those governments.
The comparison with Hawaii taxing timeshare owners is for a different transaction. Hawaii used the timeshare industry’s promotional materials to argue that 50% of a timeshare owner’s annual fees are prepaying for lodging services, such as shuttle vans, concierge, breakfast bar, etc. when occupying their unit during their deeded weeks. Thus, when a timeshare owner stays in their unit during their deeded weeks, Hawaii says there is a short-term rental transaction for 50% of the annual dues, which the owner must pay as sales and lodging taxes.
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