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County starts collecting ‘hotel tax’ from short-term rental landlords

11/19/2015 11:00 AM |

Suffolk County has begun to crack down on short-term rental owners who list their properties online and are now requiring them to collect and remit a hotel-motel tax from their guests. In some cases, the county has administered back taxes to those who hadn’t previously collected the tax.

Suffolk County Comptroller John Kennedy said his team has been in touch with rental entities “literally every day” and that, since July, his office has collected nearly $140,000 from about a dozen property owners who recently enrolled to collect and remit the hotel-motel tax. Some of that money came as back taxes from those who did not pay previously, and some came as new revenue from rentals after enrollment.

Mr. Kennedy said the county has “a wide range of tools,” including a database it shares with the state, to identify property owners who have not been collecting and remitting the 3-percent tax. Once his team makes contact with those individuals, they identify how much tax, along with “penalties and interest,” they owe.

“The lion’s share of them are saying that they never knew that they had to go ahead and remit this,” Mr. Kennedy said. “I take this with a grain of salt. Ironically, in some cases, we’re talking to owners who themselves are attorneys or accountants or stuff like that.”

Several property owners interviewed last month by the Riverhead News-Review and The Suffolk Times similarly said they weren’t aware they were accountable for the tax. Legislator Jay Schneiderman (I-Montauk) previously said the tax “never applied to home rentals” and George Nolan, counsel to the legislature, said the law’s phrasing is “pretty broad.”

The county’s law itself states the tax “shall include a tourist cabin, camp, resort, tavern, inn, boardinghouse, lodging house or any other establishment comparable or equivalent to any of those previously mentioned.” Penalties for failing to do so can include up to a $1,000 fine and year in prison.

“It is a tax that they were always subject to,” Mr. Kennedy said. “We have had a hotel-motel tax on the books since, I believe, the ‘90s … Tax is one of those things where it’s not necessarily subject to the statute of limitations.”

Although it hasn’t happened so far, Mr. Kennedy said he can issue subpoenas to anyone who is not forthcoming. He calculates the amount of tax and fines that any given property owner owes based on their business records.

“If they had a seasonal rental of three bungalows that ran from June through October, and they rented each one of those bungalows for 100 days in that time period and the rate was $100 for each bungalow for each one of those days, then the math is simple — [the tax] is $3 per bungalow per day times 100 days,” Mr. Kennedy said.

Despite confusion over the legal framework, Legislator Al Krupski (D-Cutchogue), who represents the North Fork, said he has not received any complaints about the tax. On Tuesday, the county Legislature discussed extending the entire hotel-motel tax through 2017, and Mr. Krupski said Monday he would support it.

“You’ve got to have a level playing field,” he said. “As a businessman, you have to collect the tax; you have to do all the administration and paperwork. If somebody else in the same business as you doesn’t have to do the same thing, that’s a disadvantage.”

Mr. Krupski has been visiting East End towns to inform local leaders of the discussion on the hotel-motel tax so they can offer input.

“This gives you the opportunity to have input,” he said. “Things were changed in 2009 and they can be changed again.”

Collection of the hotel-motel tax was previously the responsibility of the county treasurer’s office, but Mr. Kennedy announced in July that the comptroller’s office would immediately begin assuming the responsibility after an audit revealed the treasurer’s office wasn’t adequately staffed to handle monitoring of the tax. Following the approval of a 2014 public referendum to consolidate the two elected positions, the comptroller’s office will, in January, absorb all of the treasurer’s office’s responsibilities.

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