Big tax bills surprise ski-share-house renters
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The Vermont Department of Taxes has in recent months sent thousands of dollars in tax bills to ski-share-house renters. Cassandra Hotaling / Rutland Herald |
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By Cristina Kumka Staff Writer - Published: May 8, 2009
The Vermont Department of Taxes has sent thousands of dollars in tax bills to ski-share-house renters, a move that could cause a "devastating" blow to the Killington economy, according to former Killington Chamber of Commerce President Chris Karr.
The department's compliance division began issuing notices to homeowners and lessees of private ski shares in Killington in late April, asking that they register with the state as a business so they will be billed the state's 9 percent meals and rooms tax.
A typical ski share house arrangement consists of someone leasing a property from the property owner, then collecting rent from people who want to pay for a specific amount of time. In most cases, rooms are rented for weeks at a time, and in others weekends only.
According to the state, the meals and rooms tax doesn't apply to long-term renting or leasing relationships, but short-term renting does.
Some ski-share lessees were asked to submit financial information and the date they began renting, while others received bills ranging from $6,000 to $32,000, according to lessees.
The tax department says the practice is nothing new.
Lessees said they were shocked by the retroactive tax bills and will consider not renting out a home on the mountain again.
According to state tax law, a "hotel is any establishment which holds itself out to the public by offering sleeping accommodations for a consideration" offered by a property owner, lessee, sub lessee or any other agent.
Inns, motels, ski lodges, cabins and rooming homes all fall under the law.
For the past decade, the state has scoured Web sites, print advertisements and federal tax filings for any "short-term rentals of vacation homes" that are not registered with the state and therefore not billed the mandated 9 percent meals and rooms tax, according to Brenda Vovakes, director of compliance for the tax department.
The bills are not exclusive to Killington and the department is not targeting any one area, according to Vovakes.
"It's like paying the sales tax," she said. "It's a trust tax, if you are doing it right you're filing your tax and remitting it to the state and sometimes, also an income tax return."
Vovakes did not have available how many share homes received these bills in the past six months.
Former head of the Killington Chamber of Commerce Chris Karr said he hadn't heard of renters of private ski share homes in the Killington being billed for meals and rooms before last month, but he had heard that it may have been done in other ski areas.
"They were just sent a bill … these people had no idea they were breaking a tax code when they got the bill," he said. "It would be devastating to our local economy if they decided to not return."
Thomas Wall of New York City has been renting out the Killington Ski Haus on Wobbly Lane to about a dozen of his friends for the past four years for the length of the ski season.
He said he was shocked to receive a bill from the state last month for more than $6,000 in back meals and room taxes for the past two years.
"We are a bunch of friends deciding to share a house together," Wall said.
"I never wanted to turn this into a business and now I have to do tax filing," he said. "It's more than I wanted to do … we may come back but I won't be running it."
Vovakes said the state tax department doesn't want to deter business but it has a job to do and it is willing to work with renters to get the bill settled.
Since 2005, the state has collected nearly $461 million in meals and rooms taxes, according to information from the department. As of June 30, 2008, there was $6.8 million delinquent.
For more information on the state meals and rooms tax, call 828-2522 between the hours of 8 a.m. and 4 p.m.
cristina.kumka@rutlandherald.com
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