timeshare legislation

The following excerpt is from the article “Today in Timeshare” written by Sharon Drechsler-Scott for the January 2012 issue of The Resort Trades. It is reprinted here with permission from The Resort Trades. Described as a “Window into the industry” we encourage you to read this timely article in full in the print edition of the magazine or online via this link.

…Closing remarks: Jason Tremblay, Founder, Sell My Timeshare NOW

While investigating the proposed introduction of timeshare resale legislation in Florida, Resort Trades caught up with the founder of the resale firm, Sell My Timeshare NOW, Jason Tremblay. As he puts its, “Resales and transfer companies are topics about which  I certainly have a lot of passion. No entrepreneur wants to hear the government is going to impose an increased burden on their business and obviously, compliance with additional regulations will cost Sell My Timeshare Now time and money. However, we are supportive of regulations that are reasonable and which can be enforced fairly.”

Tremblay compares the current abuse of consumers by resale operators who behave unethically and unlawfully to the situation in which timeshare found itself in the early ‘80s prior to the introduction of timeshare regulations: Then as now, there were a few bad players using clearly unethical marketing practices that threatened the very foundations of the industry.

“We hope to see that Florida Attorney General Bondi will carefully review ARDA’s Timeshare Resale Model Act while crafting her proposed bill with an eye to ensuring that regulations will be enforceable. For example, we understand that one portion of her draft legislation calls for all third-party advertisers to be able to disclose past success rates, regardless of whether they solicit customers (which we do not). For those of us who frequently connect buyers directly with owners, we have no way of tracking the success of those contacts once they are conversing independently. So we do hope this proposed legislation will understand the need for practicality in their requirements for advertisers.”

“But overall,” says Tremblay, “we are very glad to see some legislation being considered that will reduce consumer fraud. It’s been a space that has been unregulated for too long. And it will be far easier to stop someone who is clearly breaking the law than it would be to prove the intent to commit fraud as things stand today.”

News sources across South Carolina and within the timeshare industry itself have been abuzz over a proposal to the South Carolina Tax Realignment Commission. The proposal, drafted by a subcommittee of the state’s Tourism Alliance and the state’s Chamber of Commerce Tourism Committee, calls for adding South Carolina’s existing accommodations tax to timeshare maintenance fees statewide. It’s a move that some critics say looks suspiciously like an attempt to squeeze more money out of those who already do so much to support the state’s tourism economy.

Ironically, the South Carolina Tax Realignment Commission is a state legislature-appointed committee tasked with, “…maintaining and enhancing the state as an optimum competitor in the effort to attract business and individuals to locate, live, work, and invest in the state.” Yet a proposal to tax South Carolina timeshare owners through both the taxes they already pay by way of their annual maintenance fees and again as a tourist tax added to these same fees serves not as an attraction, but as a serious deterrent.

Accommodations taxes (also called tourist or bed taxes) are an add-on tax to hotel and motel rooms, and in many states to any short-term apartment or vacation home rental. Presently, South Carolina timeshare owners do not pay this tax, but they do pay other taxes that benefit state revenues. Through their annual maintenance fees, timeshare owners pay the property or real estate taxes at their home resort– properties often assessed as high-dollar developments built on prime real estate.

Additionally, the annual fee paid by timeshare owners provides the funds for the timeshare’s HOA to pay the payroll taxes on the resort staff as well as sales taxes on any items purchased by the resort, such as cleaning supplies or building materials. Annual fees, which are paid whether or not an owner uses the timeshare, also pay utility taxes on the resort’s use of phone, water, cable, satellite, electricity, and gas.

And it doesn’t stop here…

If a residential property owner in South Carolina rents his property to someone else for a short-term stay, the property owner is responsible to pay the accommodations tax on his rental income. Likewise, when South Carolina timeshare owners use their timeshare as a rental, they currently pay both their maintenance fee to the resort (which goes in part to pay property taxes) and the accommodations tax on the money received by renting. In other words, they follow the same rules all other South Carolina homeowners follow.

Jason Gamel, vice president of state government affairs for the American Resort Development Association, reinforces the position that timeshare owners are already South Carolina taxpayers in the form of property taxes, and describes the premise on which this new proposal is based as faulty. “A timeshare owner,” Gamel explains, “is a real property owner in the state of South Carolina. It’s no different than someone owning a second home.”

As individual consumers, timeshare owners in South Carolina (and other states) make a rock-solid contribution to local economies through the taxes they pay on the goods and services used during their holidays and by the economic influx of the actual dollars they spend while on vacation. Earlier this month ARDA released a study developed in conjunction with Ernst & Young, which shows that for 2009, the economic impact of the timeshare industry on the U.S. economy was $68 billion, with $8.4 billion of that coming in the form of taxes.

Perhaps the handful of South Carolina hoteliers who are behind this double-taxation proposal haven’t fully considered that today’s economy has already turned ‘walking away from’ into an option many homeowners and timeshare owners consider viable if faced with a mortgage they are struggling to pay. As the federal government works to find ways to help homeowners save their ownership, how inappropriate is it for a state government to attempt to implement standards that make it more difficult than ever for real property owners in the form of timeshare owners to hang on to their ownership?

Since 1969, ARDA has been working to support the needs of timeshare owners, strengthen the industry, and help effect legislation that protects and preserves the rights and privilege of timeshare. They have promised to “put up fierce opposition” to this tax and all us who make up the timeshare industry should stand with them in support of South Carolina timeshare owners and the future of the timeshare industry there.