Maui Tax Appeal Resolved?

[sdtugger]

The starwood board reports that the Westin Maui timeshare tax appeal has been resolved in the timeshare's favor. My recollection is that the Maui Marriott timeshare also appealed the tax increase. Is that right? Was the appeal also resolved? In Marriott's favor? I'm not sure where to look for any information. Thanks.

 

[Michigan Czar]

I own at Maui and they were fighting the new tax but I haven't heard anything about it in over a year. I hope this is true as that would be great news!

 

[GregT]

I've sent an inquiry to both the chairman of the HOA BOD and also to the property general manager (who is out until Monday).

I'll post back once I hear something.

Best,

Greg

 

[GregT]

All,

Wow -- Hawaii is becoming a real problem for timeshare owners -- first Maui County was trying to increase the property taxes (not sure how this was resolved for MOC), now the State Legislature is trying to increase the Transient Occupancy Tax on the timeshares. Apparently the tourism subcommittee has approved this, presumably to go into a bill next. ARDA is fighting it (I'm glad I donated $20 to ARDA).

There are two variables -- first is an increase from 7.25% to 9.25% in the Transient Occupancy Tax rate itself -- a "temporary" increase for the next several years.

Bigger issue is that the basis for determining the Fair Market Value of rent (which the tax rate is applied to) % is increasing from 50% of our MFs to 150% of our MFs.

So....the tax on each of my wonderful little 3BR units with $2,460 in MFs will go from 7.25% of $1,230 or $89 for each week, to 9.25% of $3,690, or $341 for each week -- an increase of $250 for each week.

Wow, Hawaii -- ever heard of taxation without representation? It's an real problem -- we are definitely captive taxpayers.

Sorry to be bearer of (potentially, not yet a law) bad news -- but this may be the straw for alot of people's backs -- and would further depress the resale prices of Hawaii timeshares.

Best,

Greg


http://www.capitol.hawaii.gov/session2011/bills/HB1163_.pdf

 

[Tia]

Think the USVI is taking notes from Maui in messing with timeshare owners taxes.

 

[GaryDouglas]

The starwood board reports that the Westin Maui timeshare tax appeal has been resolved in the timeshare's favor. My recollection is that the Maui Marriott timeshare also appealed the tax increase. Is that right? Was the appeal also resolved? In Marriott's favor? I'm not sure where to look for any information. Thanks.

It's my understanding that we are persuing this together, so whatever determination they make for Westin will apply to Marriott. The president of our association is way overdue and keeping us apprised of the status of this and other tax related issues... IMO.

 

[GaryDouglas]

An excerp from our association president at MOC (aka MMO), recently sent via email...

# 1 - A brief history of the State of Hawaii versus Maui Ocean Club and the audit for 2004, 05 and 06 as it relates to the general excise tax and the tidy tax.

As was mentioned in my previous letter dated December 4, 2009 the State of Hawaii decided in their infinite wisdom that the timeshare industry was fair game for tax revenue. That being said they proceeded to audit the various timeshares books looking for tax revenue. Marriott was deemed to be the big dog on the block, therefore the State, changed or re-interpreted the wording as to how Marriott was filing their annual tax returns starting with the years 2004, 05 and 06. Based on their assumptions in 2009 they levied an assessment of nine hundred thousand dollars ($900,000”) including penalties and interest against our Vacation Owners Association, “VOA” and the Apartment Owners Association, “AOAO”. The State had not yet assessed the VOA/AOAO for 2007, 08 and 09.

The State did assess Marriott’s Kauai Beach Club (KBC) and Marriott’s Waiohai Beach Club at the same time.

At the October 2009 Board of Directors meeting the decision was made to prepay the assessment in order to stop additional penalties and interest. In conjunction with KBC and Waiohai, the decision was to retain an attorney versed in the State of Hawaii Tax code to file an appeal against these assessments.

Also, a motion was made and passed by the Board to postpone the 2010 refurbishment of MOC 1 for one year in that if we lost the appeal, we would not have depleted the VOA’s reserves that are necessary in case of a catastrophic failure at the resort.

# 2 - April of 2011 the VOA’s of the three resorts settled with the State of Hawaii.

The settlement returned all monies prepaid to the State for 2004, 05 and 06 plus pre-paid monies for 2007, 08, and 09. Total refund for all years was ONE MILLION ONE HUNDRED THREE THOUSAND FOUR HUNDRED FIVE AND NO/100 DOLLARS ($1,103,405.00) in full and complete settlement for general excise and use taxes by the State of Hawaii.

As part of the settlement the State agreed to an amnesty on the years 2010, 2011 and to have Marriott Vacation Club present a plan on how the funds collected will be allocated for the future, starting with 2012. At this time Marriott Vacation Club management and their attorneys are currently working with the State of Hawaii’s tax attorneys to finalize the details.

I do wish to thank our Attorney David W.K. Wong at Carlsmith Ball LLP in Honolulu. His due diligence enabled the Board of Directors to successfully bring a positive closure to this assessment by the State. Also, I believe the Board of Directors was very instrumental in the appeal process and deserve to be acknowledged for their counsel. They are, John Albert, Arnold Drill, Nathan Guikema and Rand Sperry. Finally, I would like to thank the MVCI management, in particular Dirk Schavemaker and Rob Welch. All in all it was a team effort.

# 3 - Maui County Property Tax Assessments

Briefly Maui County assessed us on two levels. Level one was the assessment on the property. 2008/2009 was assessed at $2.4M increasing to $7.3M for 2010/2011. The 2009 and 2010 assessments were appealed. Subsequently, the association received refunds of $192K in 2010 and $1.5M in 2011. Tax year 2011 is currently under appeal. Level two was the proposed 40% increase in timeshare real property tax. This was a proposed increase by the County from $14 to $19.60 per $1,000 valuation.

Maui Ocean Club in conjunction with ARDA and other timeshare strongly opposed this increase and after many hearings with the County it was agreed that the new rate would be at $15.45 per $1,000.

The taxation by the State and the County will not disappear and unfortunately for the owners, the County looks upon us as a cash cow. In all probability we will not win the war of taxation but hopefully we can win a few battles and negate the increases to a manageable level.

I think it important to note that ARDA had a positive influence..