Increased taxes on vacation credit and cash reservations effective June 16th

[kozykritter]

After the website update, it appeared that some properties that charge the transient occupant tax (TOT) on all stays were charging the wrong type of tax instead (the much higher sales/lodging tax). Not the case. Today on a call with Owner Resolution, I learned that effective yesterday (June 16th), to comply with state law changes, all the properties in Washington and Colorado and many of the ones in California will be assessed a new tax called Credit Conversion Tax (CCT) in place of the existing TOT. The TOT was a set daily charge based upon the size of the unit you were staying in. The CCT is calculated by taking the number of vacation credits used for the reservation, converting it to a dollar value using the Bonus time rate per credit (8.1 cents currently, I believe) and then assessing the sales and/or lodging tax on the amount, depending upon the jurisdiction. This applies to both vacation credit and cash (MM, IS, BT, FAX) reservations. You can find the new tax alert on any resort's page on the website under Tax Information. I've also attached it here.

What does this mean for your bottom line? Instead of paying a set amount per day based solely upon unit size at these properties, now how much tax you pay will be based solely upon the number of credits you use. If you book weekends versus weekdays, you pay a higher rate....same with Red season reservations versus White or Blue. Red season weekend days will pay the highest while Blue season weekdays will pay the lowest. It is a complete change in taxing philosophy from what we've known in the past! To give a dollar impact example from this change, a Red season Estes Park weekend day in a 2-Bedroom goes from the set $17.14 tax per day to $28.18, an increase of 61%. Buckle up and get your wallets out!

 

[VacationForever]

So what is the percentage charged? I cannot tell from the chart. So, if my reservation takes 40K credits, what is the value per credit and what is the percentage used to calculate?

 

[kozykritter]

So what is the percentage charged? I cannot tell from the chart. So, if my reservation takes 40K credits, what is the value per credit and what is the percentage used to calculate?

Bonus time cost is the rate per credit, currently 8.1 cents. Tax rates varies by location. In Estes Park, it is 14.2%. Mostly they are using the same lodging tax rate charged for cash/hotel bookings. When looking at the chart, look for the CCT abbreviation to find properties doing this and the tax rate.

 

[rickandcindy23]

Colorado has been diligent in collecting taxes from rentals in Colorado. They have staffed people to comb ads in Redweek, Craigslist, and other rental venues to make sure those who are renting are complying and charging sales tax. It's been a nightmare for Colorado resorts to communicate to owners that if they are renting at their home resorts, taxes must be collected.

Look for sales tax to get charged on exchanges at some point. ARDA supposedly is on top of this, but I doubt they are.

I made a reservation with WM points for our kids for 4th of July next year. I need to tell them they will be paying a tax, if it is to be collected at the resort level. If it's collected at the time of booking, I didn't pay it but may get a bill.

I noticed Dolphin's Cove hasn't made the list. That's interesting.

 

[kozykritter]

Colorado has been diligent in collecting taxes from rentals in Colorado. They have staffed people to comb ads in Redweek, Craigslist, and other rental venues to make sure those who are renting are complying and charging sales tax. It's been a nightmare for Colorado resorts to communicate to owners that if they are renting at their home resorts, taxes must be collected.

Look for sales tax to get charged on exchanges at some point. ARDA supposedly is on top of this, but I doubt they are.

I made a reservation with WM points for our kids for 4th of July next year. I need to tell them they will be paying a tax, if it is to be collected at the resort level. If it's collected at the time of booking, I didn't pay it but may get a bill.

I noticed Dolphin's Cove hasn't made the list. That's interesting.

Yes, it appears to be a State initiative in Colorado and Washington but local ones in California, hence the spotty nature of it there perhaps.

Like you suggest, probably likely that Colorado and Washington went after Wyndham for not collecting tax properly and we are seeing the results.

It makes me think about the other timeshare companies like Marriott and Vistana. Besides Hawaii and offshore locations, I've never paid a tax while at their resorts using ownership or an exchange. I wonder if that is going to change!

 

[bnoble]

I looked into Dolphin's Cove back when the Villas @ Disneyland Hotel's TOT was announced. DC is in the City of Anaheim (as I read the political boundaries) but does not charge a TOT. Alternatively, it might be part of the maintenance fees there. Finally, it is possible that the resort was grandfathered. I am not sure what the real explanation is.

 

[CO skier]

I was pleasantly surprised when I booked a credit reservation at WM Big Bear, CA for next winter and there were no taxes. This appears to still be true.

 

[CO skier]

I made a reservation with WM points for our kids for 4th of July next year. I need to tell them they will be paying a tax, if it is to be collected at the resort level. If it's collected at the time of booking, I didn't pay it but may get a bill.

In WorldMark (and every hotel I have ever stayed at), these taxes are collected at the time of booking . If a tax rate changes between my booking and arrival, I have never been charged for the difference in WorldMark or at a hotel.

I have a half dozen upcoming reservations at Colorado WorldMarks, paid the taxes at the time of booking and am certain that is all I will pay, unless I modify a reservation, in which case any new tax rate would apply.

 

[kozykritter]

I was pleasantly surprised when I booked a credit reservation at WM Big Bear, CA for next winter and there were no taxes. This appears to still be true.

View attachment 78078

Yes, they don't appear on the tax information list.

 

[markb53]

I did some comparisons using WorldMark Birch Bay which had TOT before and now.
Up until June 16th the TOT was per night by unit size. For a 2BR the cost per night was $9.78 per night. Therefore a 2BR for a week would cost $68.46 for the week. The thing about doing it this way is that it doesn’t matter when you go Red season, Blue season, or white season it would always be $68.46 for a week in a 2BR

Now the same 2BR during red season for a week is 10,000 credits. The credits are converted to dollars by multiplying by .081 per credit so the cash equivalent is $810.00 Then you multiply that by the tax rate of 10.6% to get $85.86. An increase of $17.40 for the week.
The difference is that with the new method if you book during White season the tax for the week would be $42.93 or if you book during blue season the tax would be $25.78.