October 2009 Developments - 26

State Andrew M. Fisher and Kurt Gruber Florida Legislature Takes Action on Transient Accommodation Tax Issue hat whooshing noise you heard on July 1st of this year was the sound of a whole lot of people from Miami to Parsippany—as well as from every timeshare/shared ownership project in Florida—letting out their collectively held breath. On that date, Florida House Bill 61 (“HB 61”) (approved by Governor Crist, Chapter 2009-133) became effective, and Florida’s tax laws were amended to clarify that the use by an owner or an owner’s guest of a timeshare accommodation located at the owner’s timeshare resort (or located at another resort and obtained through an exchange program) is not subject to Florida’s sales and tourist development taxes. Obtaining passage of HB 61 was the culmination of years of effort by ARDA-Florida to navigate difficult tax waters, while fending off local governments strapped for revenue, wrestling special interest groups with competing agendas, and cajoling legislators and various revenue authorities. ARDAFlorida nearly pulled off the victory during last year’s 2008 legislative session, only to have its bill fall prey to a last minute logjam, caused in part by the failure of the on-line travel providers, who were initially forced onto the bill to deal with their own tax issues. The result was well worth the wait. By specifically recognizing that timeshare owners should not be taxed for using the product that they bought and for which they already pay high taxes in the form of ad valorem assessments, the Florida legislature has again stepped up to the challenge, despite difficult economic times, and recognized the importance of the timeshare industry to Florida. The hope is that Florida will continue to act as the bellwether state for the industry, and that T other states will look to Florida law as a model for the proper taxation of timeshare interests. In addition to clarifying the laws governing state and local taxes that relate to timeshare activity, HB 61 also allows sellers of timeshare interests to offer debt cancellation products and amends certain portions of the Florida Vacation Plan and Timesharing Act (“Chapter 721”) with respect to the definition of “facility;” the disclosure required to be included in the public offering statement concerning timeshare assessments; and the requirements regarding disclosures to be given by timeshare resale service providers listing or advertising a timeshare interest for resale. HB 61: Tax Clarification Provisions By way of background, in Florida, local county governments have the authority to levy and impose the following three major taxes on transient rental activity: (1) a tourist development tax, which is primarily used by a county to promote and advertise tourism although may be used for other purposes specified in the statute (see §125.0104, Florida Statutes); (2) a tourist impact tax, in which half of the amount collected is transferred to the land authority to purchase property in the area of critical state concern, and the other half is used by the county to offset the loss of ad valorem taxes due to the purchase of such property (see §125.0108, Florida Statutes); and (3) a convention development tax, which is primarily used to promote and advertise tourism in relation to public-owned convention centers in the county (see §212.0305, Florida Statutes). In addition to these local taxes, the Florida Department of Revenue has the authority to levy and collect a tax on all transient rentals (see §212.03, Florida Statutes). As previously noted, the industry benefit from HB 61’s provisions lie in the recognition that certain transactions are now clearly not subject to these transient rental taxes. Specifically, HB 61 states that the taxes would not be due for the following: (1) the occupancy of an accommodation of a timeshare plan or multi-site timeshare plan by an owner or a non-paying owner’s guest; (2) an exchange transaction in an exchange program; or (3) a membership or transaction fee paid by a timeshare owner that merely provides for the opportunity to go through an exchange program. Even though it is a well-accepted legal principle that the government cannot read the right to tax an activity into the law, when the law does not spell it out, ARDA-Florida recognized the need to firmly and completely foreclose the possibility that an adverse interpretation of, or simple amendment to, the existing law could result in taxation of timeshare owner use or exchange, with catastrophic implications for the industry. In return for obtaining clarity on the treatment of timeshare owner use and exchange of timeshare accommodations, it was necessary for ARDA-Florida to agree to clarification of what timeshare activity would be subject to these transient rental taxes. The three areas that are identified in HB 61 for inclusion of transient rental taxes are sales of timeshare licenses (the right to use a timeshare accommodation, not coupled with an interest in the underlying property), transient rentals of timeshare accommodations, and the sale of regulated short-term products. With respect to timeshare licenses, HB 61 states that consideration paid for the purchase of a license in a timeshare Developments • October 2009

October 2009 Developments

Table of Contents for the Digital Edition of October 2009 Developments

October 2009 Developments - 1
October 2009 Developments - C1
October 2009 Developments - I1
October 2009 Developments - I2
October 2009 Developments - I3
October 2009 Developments - I4
October 2009 Developments - 4
October 2009 Developments - 5
October 2009 Developments - 6
October 2009 Developments - 7
October 2009 Developments - 8
October 2009 Developments - 9
October 2009 Developments - 10
October 2009 Developments - 11
October 2009 Developments - 12
October 2009 Developments - 13
October 2009 Developments - 14
October 2009 Developments - 15
October 2009 Developments - 16
October 2009 Developments - 17
October 2009 Developments - 18
October 2009 Developments - 19
October 2009 Developments - 20
October 2009 Developments - 21
October 2009 Developments - 22
October 2009 Developments - 23
October 2009 Developments - 24
October 2009 Developments - 25
October 2009 Developments - 26
October 2009 Developments - 27
October 2009 Developments - 28
October 2009 Developments - 29
October 2009 Developments - 30
October 2009 Developments - 31
October 2009 Developments - 32
October 2009 Developments - 33
October 2009 Developments - 34
October 2009 Developments - 35
October 2009 Developments - 36
October 2009 Developments - 37
October 2009 Developments - 38
October 2009 Developments - 39
October 2009 Developments - 40
October 2009 Developments - 41
October 2009 Developments - 42
October 2009 Developments - 43
October 2009 Developments - 44
October 2009 Developments - 45
October 2009 Developments - 46
October 2009 Developments - 47
October 2009 Developments - 48
October 2009 Developments - 49
October 2009 Developments - 50
October 2009 Developments - 51
October 2009 Developments - 52
October 2009 Developments - 53
October 2009 Developments - 54
October 2009 Developments - 55
October 2009 Developments - 56
October 2009 Developments - 57
October 2009 Developments - 58
October 2009 Developments - 59
October 2009 Developments - 60
October 2009 Developments - 61
October 2009 Developments - 62
https://www.nxtbookmedia.com