Rental Tax for All

Make all rentals pay room tax, say Wildwoods hotel owners

By TRUDI GILFILLIAN Staff Writer, (609) 463-6716
Published: Wednesday, May 23, 2007WILDWOOD — The island's leading tourism groups are urging the state to require owners of condominium units to charge their renters the same taxes imposed on motel guests.

“They should collect the tax like everybody else is forced to do,” said Bruce Smith, president of the Greater Wildwood Hotel & Motel Association.

Smith said condominium owners have an unfair advantage over motel owners who are required to charge a 14 percent room tax in the Wildwoods and at least 12 percent elsewhere in the state.
In addition to the 7 percent sales tax, motel and hotel guests in the Wildwoods pay the following taxes:

n 2 percent tourism tax for operation and maintenance of the Wildwoods Convention Center

n 1.85 percent tourism assessment for advertising and marketing by the tourism authority
n 3.15 percent room occupancy tax for the state

During a news conference Tuesday, Smith, owner of the Tangiers Motel in Wildwood Crest, read a resolution passed by the association's board of directors asking the state to enforce existing state law, which they believe applies to hotels, motels and other room rentals including condominiums.

The state's administrative code requires that taxes on hotel-room occupancy must be imposed and it defines hotel as meaning “a building or portion thereof which is regularly used and kept open as such for the purpose of furnishing sleeping accommodations for pay to tourists, transients or travelers. It includes, but is not limited to the following: an apartment hotel, motel, inn, tourist home, tourist house or court, tourist cabin and club; a boarding house or rooming house containing eight or more units; and any other building or group of buildings in which sleeping accommodations are normally available to the public on a transient basis.”

The law does not address forms of ownership or amenities provided.

However, Mark Perkiss, a spokesman with the state Department of Treasury, said Tuesday the rental of a condominium is not subject to the state's room tax.

“The law is specific to motel rooms,” Perkiss said, adding condominium rentals involve the rental of real property as opposed to designated hotel or motel rooms.

The Wildwoods tourism authority disagrees.

“We do believe the law is written very clearly,” said John Siciliano, executive director of the Greater Wildwoods Tourism Improvement and Development Authority. “It's time for the state to apply it as it's written.”

Siciliano said the state is missing out on an estimated $345 million in tax revenue that could be generated by condominium rentals through the state's 7 percent sales tax and the 5 percent room-occupancy tax.

Siciliano said the additional revenues could support the state's meager tourism advertising budget and plug holes in the state's troubled budget process.

More importantly, he said, the amount paid in taxes is forcing visitors to spend their nights in condominiums rather than in the island's hotels and motels.

Mary Erceg, a member of the tourism authority board and owner of the AA Heart of Wildwood Motel, recalled the case of a guest who checked into a motel room and quickly checked out after learning there would be no occupancy or sales taxes charged in a nearby condominium.

Erceg said she doesn't understand why the state has failed to act.

“We have not gotten any response other than a deaf ear,” she said.

Steve Tecco, owner of the Armada Motel, said not requiring condominium owners to pay the same taxes amounts to a 14 percent subsidy by the state.
“We cannot compete as those serving as pseudo-motels,” h
e said.

A brief Internet search led to several condominiums in the Wildwoods that list the lodging tax as zero or none. The owner of one of those properties said the zero sales tax is not the primary concern of her guests.

“They are interested in the number of rooms and how many can sleep in a unit (not the tax),” she said.

Tecco said the many taxes paid support advertising for the island, which in turn brings new visitors here. When those visitors opt to rent condominiums instead of motel rooms, the condominium owners benefit without paying their fair share, he said.

Smith said he a number of motels on the island have chosen to move to the condominium form of ownership simply to avoid paying the various taxes, and he fears more will do the same, thereby reducing advertising dollars for the island.

Siciliano sent a letter last week to the Division of Taxation asking the state to once again take a look at the issue.

“It is the financially prudent thing to do,” he wrote.

To e-mail Trudi Gilfillian at The Press: TGilfillian@pressofac.com