What Do You Think About The New Wisconsin Timeshare Tax Bill?

[Walt]

I think this new Tax Bill is something all timeshare owners from every State should know about and be concerned about. If it happens in Wisconsin it could happen in your State.

History of Senate Bill 638

2005 SENATE BILL 638

An Act to amend 66.0615 (1m) (a); and to create 66.1113 (1) (am),
66.1113 (4) and 77.994 (3) of the statutes; relating to: authorizing
a premier resort area to limit or prohibit managed time-share projects
and to impose a tax on the exchange of time-share units. (FE)

For More Information:

http://www.legis.state.wi.us/2005/data/SB638hst.html

http://www.legis.state.wi.us/2005/data/SB-638.pdf

Wisconsin is Tax Happy. Wisconsin does not need more Taxes. But, what is the reason of the Wisconsin Bill 638?

Could this be the State of Wisconsin way of stopping the Exchange Companies and Resorts from not paying the State and Local Taxes due on Rentals (Motels/Hotels State and Local Taxes) by having these
Exchange Companies and Resorts call Rentals.... Exchanges?

See my post to Madge:

Walt



http://www.tugbbs.com/forums/showthread.php?p=138384#post138384

 

[Dave M]

See this earlier thread on this topic.

 

[BocaBum99]

One of the best aspects of timeshare exchange is that sales tax has not, in general, been assessed.

In reality, it should. There is imputed rent from each depositer. It's a barter exchange. In essence, they are renting from each other for the same amount and therefore no cash changes hands. If I were to go to Circuit City and trade them my cd player for a dvd player, Circuit City would still have to collect sales tax for the dvd player. Same concept, different product.

That notwithstanding, I don't want sales taxes on exchanges.

 

[Walt]

An Example about this Tax

One of the best aspects of timeshare exchange is that sales tax has not, in general, been assessed.

In reality, it should. There is imputed rent from each depositer. It's a barter exchange. In essence, they are renting from each other for the same amount and therefore no cash changes hands. If I were to go to Circuit City and trade them my cd player for a dvd player, Circuit City would still have to collect sales tax for the dvd player. Same concept, different product.

That notwithstanding, I don't want sales taxes on exchanges.

In Wisconsin, we have a State and Local Sales Tax. This example is about buying a car.

New car Cost $30,000
State and Local Sales Tax 5%
Car Value of trade in $15,000

If I buy a new car and trade in my old car, I pay the 5% Sales Tax on $15,000. ( $30,000 new car minus $15,000 trade in)

If I buy a new car and sell my car myself, I pay the 5% on the $30,000.

The point being about a Timeshare Exchange. No matter what the Value is of each Resort, this exchange is an Even Exchange and no tax should be Due.

In your example of a CD and DVD, this is not an even exchange. If you return your DVD player because it doesn't work for another DVD that does work, this is an even exchange and no additional Sales Tax is due.

I wrote all State Senators the following email. And I also asked my State Senator what is the reason for this Bill.


I am writing to you to ask you to vote against Senate Bill 638. This bill will kill the Timeshare Industry in the State of Wisconsin.



With the ever increasing cost of Exchanges, many timeshare owners are looking for reasons to walk away from their timeshare ownership. Yearly Maintenance Fees, on average, cost the Timeshare Owner about $500.00. Exchanges cost, on average, $147.00. If you add another $200 or more on to this total, you will cause out of state timeshare owners not to exchange into Wisconsin timeshare resorts. This will cause ownership weeks at Wisconsin Resorts to have no Trade Value. Wisconsin Timeshare Owners will not be able to sell their weeks and may simply walk away from paying the yearly Maintenance Fees. The results will end up forcing the Timeshare Resorts in Wisconsin to go bankrupt. If this happen, many other Wisconsin timeshare owners will end up losing thousands of dollars in worthless timeshare weeks.



I am sending this email to all State Senators because, while living in Brookfield, for every timeshare week I own, or may own in the future, I am a part time resident of that district.



Walt

 

[Walt]

It look like the Tax Collector (State of Wisconsin) wants to set the rental value.

2. The development offers commercial amenities and activities commonly
associated with hotels, inns, camps, resorts, or tourism attractions.
SECTION 3. 66.1113 (4) of the statutes is created to read:
66.1113 (4) MANAGED TIME−SHARE PROJECTS. (a) Notwithstanding s. 707.10, a
political subdivision that is a premier resort area may prohibit the creation of a
managed time−share project within the jurisdiction of the premier resort area, or
may permit the creation of such a project subject to ordinances enacted or regulations
adopted by the political subdivision. No political subdivision may permit the
creation of a managed time−share project unless the political subdivision and the
owner of the project enter into a written agreement that specifies the method by
which the daily rental value of each time−share unit is computed.(b) If a political subdivision permits a managed time−share project to be created
within the jurisdiction of the premier resort area the political subdivision may,
notwithstanding s. 707.10, impose a tax on exchanges under s. 66.0615 (1m) (a) or
77.994 (3), or both.

-----------------------------------------------------------------------

If I am reading this right, the State of Wisconsin wants total control of Wisconsin Timeshare Resorts.

If they allow a new timeshare project, the State of Wisconsin will be setting the Rental Value of our Timeshare Weeks. In other words, the Tax Collector will set the daily Tax Rate on the amount that they think the daily Rental Rate should be. Now, that really seems fair!



Walt

 

[dougp26364]

One of the best aspects of timeshare exchange is that sales tax has not, in general, been assessed.

In reality, it should. There is imputed rent from each depositer. It's a barter exchange. In essence, they are renting from each other for the same amount and therefore no cash changes hands. If I were to go to Circuit City and trade them my cd player for a dvd player, Circuit City would still have to collect sales tax for the dvd player. Same concept, different product.

That notwithstanding, I don't want sales taxes on exchanges.

Rent? What rent? I don't know about you but I PAID for my units. I PAY property taxes on them as well. There is NO RENT since I OWN it. An exchange is simply an exchange of OWNED properties and not RENTED units. These are NOT the same as hotels. They are more closely associated with condominium developements than with hotels/motels.

The exchange fee is a fee to facilitate the exchange between owners. It's a convenience fee more than anything resembling rent. It seems to me that this law would be easy enough to challenge and get knocked down in the court room.

 

[BocaBum99]

Rent? What rent? I don't know about you but I PAID for my units. I PAY property taxes on them as well. There is NO RENT since I OWN it. An exchange is simply an exchange of OWNED properties and not RENTED units. These are NOT the same as hotels. They are more closely associated with condominium developements than with hotels/motels.

The exchange fee is a fee to facilitate the exchange between owners. It's a convenience fee more than anything resembling rent. It seems to me that this law would be easy enough to challenge and get knocked down in the court room.

Actually, I stole all my timeshares. LOL.

Exchanging of owned properties is the same a bartering. Any exchange of value can be taxed. In the case of timeshare exchange it isn't.....yet.

That you pay property tax and you have a deed is irrelevent. A condo owner has a deed and pays tax and yet, if he or she rents her unit for less than 6 months in Florida, the renter needs to pay a short term transient occupancy tax. Yes, in essence a sales tax.

I am not advocating a tax on timeshare exchange. But, there is a reasonable argument that can be made for its collection.

 

[Walt]

I Need Your Input!! Please Help!

I am really surprised that this is not a hot topic. The fact that one State is going to control or even stop the building of new Timeshare Resorts in that State should be a wake up call to all Timeshare Owners. The fact that one State wants to put a daily use TAX of 13-15% on Exchanges should be another wake up call. The fact that that State wants to put an artificial daily Exchange Value on an Exchange should be another wake up call. This Bill wants to TAX the Owner as well as the Exchanger for USING the timeshare week. If it can happen in Wisconsin, it can happen in your State!

As an example about the artificial daily Exchange Value: Take the Hotel rate of $400/$500 per night at the Embassy in Maui. We all know that we can also get into the Embassy for $1200 minus 30% for charging it to an American Express Credit Card at Snap Travel or about $100 per night. What number do you think the State would use for the User Tax? You better believe the one that gives them the most income!

Are you not concerned about the direction timesharing has taken?

TAXES on the use of Exchanges!
Hawaii’s added Property TAX on Timeshare Units!
Exchange Companies acting more like Rental Companies!

I plan on doing as much as I can in Wisconsin to try and Stop this USER TAX. I really need your input. I will be talking to my State Senator and the more I tell them about what Timeshare Owners think about this Tax the better is will be for Wisconsin Timeshare Owners. But if we can defeat this Bill, it will help you too.

Do think of this as User Tax in Wisconsin. Think of this as a User Tax for YOUR timeshares.

Walt

 

[rapmarks]

Walt, I too am surprised that this is not a hot topic. Where are all the usual posters? I do know that the movers and shakers in Wisconsin Dells have a lot of political clout and perhaps they are fighting this tax. Wisconsin Dells area has to have the highest amount of timeshares in the state.

 

[bluehende]

Let us help

Could anyone post a web site or page that we can use to express our anger at this policy. An email address for the sponsor would be a good one too. A quick note from a lot of people to the State of Wisconsin stating that their tourist dollars will go elsewhere if they enact this legislation could go a long way to stopping this.

Wayne

 

[Walt]

That Sounds Like a Good Idea!

Could anyone post a web site or page that we can use to express our anger at this policy. An email address for the sponsor would be a good one too. A quick note from a lot of people to the State of Wisconsin stating that their tourist dollars will go elsewhere if they enact this legislation could go a long way to stopping this.

Wayne

That sounds like a good Idea. Dave, Can we do this on TUG?

Walt

 

[Dave M]

I don't think postings on websites are likely to help much. However, what will go a long way to stopping this is a campaign by Wisconsin residents with their legislators. See the RCI letter to Wisconsin RCI members in the first post in this thread.

Thus, if you know someone who lives in Wisconsin, give them a link to the RCI letter and ask them to write their legislators. Or contact ARDA, which will be fighting this on behalf of the timeshare industry, and ask how you can help.

 

[Miss Marty]

Yahoo Group

How about setting up a Yahoo Group
New Wisconsin Timeshare Tax Bill

That way you can post and read messages
and send the link to your Senators and RCI

 

[T_R_Oglodyte]

But, there is a reasonable argument that can be made for its collection.

Actually, the issue is that no reasonable argument can be made for any type of occupancy tax. The owner of a building with transient occupants pays all of the same taxes for government services as does the owner of an apartment building.

 

[Dave M]

I posted before seeing your latest post, Walt.

If I understand your question correctly, I think you are already doing what you ask about - expressing "anger at this [proposed] policy."

As for an e-mail link to the bill's sponsor(s) to encourage others to write, that's certainly permitted here.

 

[wbtimesharer]

Just what the Wisconsin legislators need, more vacation money

Sounds like the legislators aren't getting enough skim from the Indian casinos in Wisconsin and can't afford their vacation homes in Europe and the mistresses to fill them. So they are now targeting the timesharing industry. We need to get a sticky thread going that lists the bill's sponser and names/email addresses/addresses for all the legislators who are going to vote on it and start sending complaints.

As a Wisconsin timeshare owner, this bill really stinks of greed.

Bill

 

[rickandcindy23]

I am very upset that this could become a trend.

If you rent your house to someone for a year's lease, you don't have to pay occupancy sales taxes. You pay your property taxes. The government gets their share. I do not see the difference. I own weeks, most are deeded, and I rent them to friends and family or exchange them. Why should anyone pay taxes to use MY WEEK????

I remember an article in Timesharing Today a few years ago. That timeshare lobby group that I pay $5.00 a year to help fund their causes (what is the name of that group????) was fighting to keep this from happening. They need to be informed, if they are not already. We should all write to that group and tell them we have huge concerns.

 

[Dave M]

You are correct, Cindy. However, there are differences. Suppose you were seeking to rent accommodations.

If you choose to rent a home or an apartment for a year, you'll pay no sales tax or accommodations tax. However, in almost every U.S. taxing jurisdiction, you, the tourist will pay one or more sales/accommodations taxes if you rent a hotel room while visiting. The theory is to sock it to the short-term visitor, not the in-state resident. However, states can't legally discriminate based on the state of your residence, so they do it based on the type of expenditure.

The challenge that state and local legislators and other government officials have is finding the balance between long term and short term accommodation rentals in deciding when to charge taxes and when not to. The argument that assessing a tax will kill a particular segment of the tourist industry will typically fall on deaf ears, because so many - almost all - tourist expenditures are already taxed!

That doesn't make such a tax palatable to any of us here. I believe RCI's argument on this matter and Walt's discussion of the costly exchange issue are very real and compelling. Whether a state legislature sees it that way may well hinge on the quantity and quality of the correspondence, phone calls and industry lobbying that they encounter.

 

[ladycody]

That you pay property tax and you have a deed is irrelevent. A condo owner has a deed and pays tax and yet, if he or she rents her unit for less than 6 months in Florida, the renter needs to pay a short term transient occupancy tax. Yes, in essence a sales tax.

But this is for renting. If two people swap houses in order to vacation in a different area(yes there are such programs)...there is no tax. If you're a family member or friend and own a vacation condo and I use it without paying 'rent'...there is no tax. So a tax (TOT) on exchanges or general use of a TS membership makes no sense to me.

 

[Dave M]

You hit it on the head with respect to the difference, at least as a legislator views it.

When a family member or friend uses it, you don't charge any rent and, thus, as you state, there is no tax. However, the legislator would view the exchange situation as paying rent for the occupancy. You were paid with something of value, the use of another timeshare instead of cash. It's that something of value - cash or otherwise - that some believe should be taxed.

It's easy to look at it from our side. It's important to see the other side to best determine how to fight such a proposed tax.

 

[ladycody]

But if I use my co-worker's home on Cape Cod and she uses my timeshare in FLA...we're exchanging value there too....but... no tax. I simply dont see it as being right to charge an owner for using or exchanging owned property unless it can be enforced across the board. (and that's assuming it should be enforcable across the board) It's one thing when you're talking about renting...because you are getting a monetary gain. I can see the application of it if the exchange (barter) is between businesses (my company paves your driveway...yours puts up my fence). In those instances you're exchanging business services. At what point does the decide that taxing is overstepping bounds and stepping on personal ground. I mow my 60 year old neighbor's yard...does he need to pay taxes on the $900 worth of services I choose to give him each year. He gives me honey from his hives and apples from his orchard...do I need to pay tax on that? I just think it's pushing the envelope.

 

[Walt]

It appears the tax would go to advertising and marketing of businesses

You hit it on the head with respect to the difference, at least as a legislator views it.

When a family member or friend uses it, you don't charge any rent and, thus, as you state, there is no tax. However, the legislator would view the exchange situation as paying rent for the occupancy. You were paid with something of value, the use of another timeshare instead of cash. It's that something of value - cash or otherwise - that some believe should be taxed.

It's easy to look at it from our side. It's important to see the other side to best determine how to fight such a proposed tax.

It appears that the reason for the Bill was to collect the room or condo tax to pay for the advertising and marketing of businesses in a resort area. By Law they wanted 70% of the Taxes to go to pay for marketing the area.

"The changes will prohibit the tax being used for police salaries, garbage pickup or other services. Instead, Holperin said 70 percent of the funds collected by a room tax would need to be used for tourism advertising, Web sites, construction of convention centers and other tourism efforts."

You can see why these groups were for the Bill. It is a good deal for them to have public money (taxes) pay for the expenses of advertising private businesses.

Association of Wisconsin Tourism Attractions 3/2/2006
Position.........For

Wisconsin Dells Visitors and Convention Bureau 3/1/2006
Position ............For

Wisconsin Restaurant Association 3/9/2006
Poistion ............For


http://www.wiscnews.com/wde/news/index.php?ntid=75853&ntpid=0

Walt

 

[DenMar]

All taxes have a negative effect on somebody. From a federal income tax to a local TOT, no tax is fair for every person in society. We might bemoan TOT's while accepting taxes on tabacco and a smoker hates that sin tax and laughs at a TOT. It is all relative. The important thing to remember is that any tax hurts somebody, therefore no taxes should be suggested lightly. politicians have learned to tax small groups drasticly as not to upset the majority. As long as people continue to only care about what happens to them while ignoring how government is treating their neighbor, this will not change. JMHO

 

[Dave M]

This Wisconsin legislation is dead - at least for this session. The bill passed in the Senate on March 7 and died in the Assembly on the 9th.

 

[RonaldCol]

Where Was ARDA During This Whole Mess?

I would like to know where ARDA was when this thing blew up, and I want to know what they did, if anything, about this legislation?

The $5 from each timeshare owned by owners amount to a lot of dollars going to a useless organization.