In January 2011, the South Carolina Supreme Court upheld the South Carolina Department of Revenue's position that online travel companies were responsible for the sales tax on accommodations at the retail price charged to consumers. The case, Travelscape LLC v. South Carolina Department of Revenue, 705 SE 2d 28, determined that the OTC practice of paying sales and accommodations taxes on the wholesale price the OTCs paid South Carolina hotel properties was illegal giving them a significant profit advantage over South Carolina lodging providers.
Online travel agencies were only paying taxes on wholesale hotel rates, not what the customer pays. The online company kept the difference as a "service fee." Rather than offset the state and local government's revenue shortfall, this extra money was going into the online travel agency's pocket taking essential dollars needed for infrastructure, local parks, and education away from the state.
Recently the Myrtle Beach Area Hospitality Association has heard from our local community on a similar issue that is negatively affecting our industry and that is the proliferation of vacation rentals by owner. This issue, growing dramatically with the surge of online sites such as VRBO and HomeAway, is creating a similar environment of lost tax and business license revenues presenting an unfair competitive advantage to companies and individuals who are following the letter of the law.
State law requires every person who receives compensation for lodging accommodations to collect and remit all applicable taxes. The law states individuals renting their homes/condos in a commercial setting are supposed to have a business license and remit the state and local accommodation taxes. We recognize that a majority of businesses and local owners are paying their fair share but many others are not. Current enforcement of the law by the state and local municipalities can vary drastically and needed taxes to fund important public services, such as education and law enforcement, are falling through the cracks. Not only are needed tax dollars being lost but it is creating an unfair disadvantage to properties following the law as the same accommodations can be rented for less as taxes are not being remitted.
As one of our 2012 legislative priorities, the Myrtle Beach Area Hospitality Association on behalf of the hospitality industry is calling on all local and state agencies to enforce current laws by collecting all appropriate licenses and taxes from individuals or businesses who rent property commercially for more than 30 nights in a given calendar year.
Tourism works for each of us every day and provides needed revenues to state and local coffers. As the watchdog for the hospitality industry we feel everyone from online travel agencies to individuals should follow the law and pay their fair share.
After months of pressure from AH&LA, the Department of Justice (DOJ) Tuesday issued a burdensome interpretation of when and how lifts need to be installed at swimming pools under the Americans with Disabilities Act.
DOJ has determined that lifts need to be available at each pool at all times when a pool is open to the public.
In addition, only “fixed” lifts are acceptable unless a hotel can demonstrate that installing such a lift is not readily achievable.
AH&LA is greatly disappointed at this interpretation, which will cost the lodging industry additional millions in compliance obligations and comes less than two months before the March 15 compliance date.
AH&LA are now considering next steps on how to respond to this unfortunate action.
MYRTLE BEACH, S.C. – The Myrtle Beach Area Hospitality Association will hold its 2011 Annual Meeting Brought to you by HTC on Thursday, Nov. 17 from 8:30 a.m.-10:00 a.m. at the Sheraton Myrtle Beach Convention Center Hotel. The event is open to the public. Cost: $10 per person MBAHA member (breakfast included) and $20 non-members. Businesses can become a reserved table sponsor by purchasing 10 registrations.
This year the keynote speaker is Bill Hardman, president and CEO for the Southeast Tourism Society. As president and chief executive officer of Southeast Tourism Society, Mr. Hardman directs the organization\'s promotion of travel to the 12 Southeastern states of Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia and West Virginia. STS promotes the Southeast through cooperative marketing efforts, provides continuing education programs for its members and represents the legislative interests of the tourism industry.
The annual Hospitality Industry Awards will be presented to recognize outstanding achievements by hospitality leaders and businesses. The awards honor business efforts that reflect the mission of the MBAHA, which is to represent, educate, and promote the best in the Hospitality and Tourism Industry. The winners for Hotelier of the Year, Restaurateur of the Year, Front Line Employee of the Year, Heart of the House Employee of the Year and Hospitality Services Member of the Year will be presented. Winners will be submitted to the Stars of the Industry Awards presented by the South Carolina Hospitality Association.
The Myrtle Beach Area Hospitality Association also will present updates and recap its accomplishments for the 2010-2011 year.
The annual meeting is presented through the generous support of HTC, the Sheraton Myrtle Beach Convention Center Hotel and Johnson Controls. For more information or to register, visit www.MBHospitality.org or call (843) 626-9668.
The Myrtle Beach Area Hospitality Association is the voice of the Hospitality Industry and a tourism advocate, whose role is to promote the industry’s needs, ensure a healthy tourism economy, and educate our membership and the public about industry issues.
NLRB Postpones Employee Rights Poster Deadline Delayed, Congressional Bill Introduced
Following lawsuits filed by the American Hotel & Lodging Associaton and the National Restaurant Association through the Coalition for Democratic Workplace and several other organizations, the National Labor Relations Board (NLRB) has postponed the Notification of Employee Rights requirement until January 31, 2012, from the initial date of November 14, 2011.
As of January 31, 2012, the NLRB will require employers to post a notice of employees’ rights to unionize, according to the final rule on Notification of Employee Rights under the National Labor Relations Act (NLRA) issued by the NLRB.
A breakdown of the NLRB Poster Rule, including direction on what hoteliers need to do in advance of the deadline, can be found on AH&LA’s Website.
Next Steps:
AH&LA has been working with Members of Congress to explain the dangerous implications of the recent NLRB decisions.In response, House Committee on Education and the Workforce Chairman John Kline (R-MN) introduced the Workforce Democracy and Fairness Act which would ensure that employers have a voice and are employees are able to participate in a fair union election process. Specifically, the bill:
Ensures employers are able to participate in a fair union election process. The legislation provides employers at least 14 days to prepare their case to present before a NLRB election officer and an opportunity to raise additional concerns throughout the election hearing.
Guarantees workers have the ability to make a fully informed decision in a union election. No union election will be held in less than 35 days, giving workers a chance to hear both sides of the debate. Important issues that can determine how a worker votes will be decided before ballots are cast.
Reinstates the traditional standard for determining which employees will vote in the union election, restoring a standard that was developed through years of careful consideration and Congressional guidance.
Protects workers’ privacy by empowering workers to choose the type of personal contact information that is provided to the union.
In January 2011, the South Carolina Supreme Court upheld the South Carolina Department of Revenue\'s position that online travel companies were responsible for the sales tax on accommodations at the retail price charged to consumers. The case, Travelscape LLC v. South Carolina Department of Revenue, 705 SE 2d 28, determined that the OTC practice of paying sales and accommodations taxes on the wholesale price the OTCs paid South Carolina hotel properties was illegal.
SC DOR has mailed all the OTCs a letter advising them they must obtain a South Carolina retail sales tax license and should file monthly sales tax returns based on the “gross proceeds” derived from their sales (rentals) of accommodations as outlined in SC Code Section 12-36-920. The sales tax on accommodations is due as the accommodations are furnished, beginning with accommodations furnished on and after November 1, 2011. In addition, DOR advised them that in order to purchase the accommodations at wholesale (tax free) from hotels in South Carolina, online travel companies should provide each hotel a properly and fully completed resale certificate (Form ST-8A) using their South Carolina retail sales tax license number.
DOR realizes that certain system changes must be instituted by the OTCs in order to properly report the taxes to the State. As such, DOR formally notified all known registered online travel companies that beginning with the November 2011 return due December 20, 2011; all amounts reported to the DOR on each monthly tax return should be at the gross amount, with no deduction for the wholesale rental amount the online travel company paid to the hotel.
The South Carolina Hospitality Associaton has been working with DOR for several weeks to insure that not only all of the sales and accommodations taxes are appropriately paid at retail by the OTCs, but also that South Carolina "brick and mortar" hotels do not have a tax liability in case an OTC does not collect and pay the taxes on their retail transactions. DOR has supplied the SCHA a letter stating that the OTCs should purchase accommodations from South Carolina hotels at wholesale using a properly and fully completed resale certificate. In the event that resale certificates are not supplied to the local hotels by an OTC, DOR will still recognize the sale as wholesale and not hold the South Carolina hotels liable for the tax. We believe that the Supreme Court’s ruling validates that the OTC’s are the responsible party.
Accordingly, DOR expects local hotels’ sales tax returns to reflect the appropriate deductions of accommodations furnished associated with transactions of the OTC’s. DOR also expects reporting by local hotels any additional taxes related to additional guest charges.
NOTE FROM ASSOCIATION - When completing your Form ST-388, State Sales, Use and Accommodations Tax Return, we would suggest on the Worksheet on page 2, under "Section 4 - Sales and Use Tax Allowable Deductions," that South Carolina hotel properties write in "Online Travel Company transaction" for the monthly OTCs sales at wholesale.
Click here for a copy of the letter to SCHA explaining the new rules related to OTCs. You will want to retain a copy of this letter for future sales tax audits so you have a record of the DOR\'s hold harmless statement as to your tax liability.
If you are not a member of the South Carolina Hospitality Association and the American Hotel & Lodging Association you should thank the hundreds of hotels in our state that are members enabling the associations to protect your business. The simple language to protect brick and mortar hotels from potential tax liabilities if the OTCs do not pay their required sales taxes would not have happened without our members pushing for the correct language to protect your business. Consider joining the associations to help us continue protecting your business. It will be one of the best investments you make to help not only your business, but your career. Click here for more information.
