Thursday, October 27, 2016

New York’s Highest Court Rejects Challenge To Schuyler County’s Local Hotel Tax

ALBANY—The New York State Court of Appeals has denied a motion for leave to appeal an order upholding Schuyler County’s local hotel tax on vacation rentals and other tourist facilities.

The court issued the order on Thursday (October 27). It rejected the appeal filed by Thomas Schneider, owner of “Seneca Lake Vacation Rentals” and let stand a June holding from the Supreme Court, Appellate Division, that the Schuyler County Treasurer properly applied the four percent local tax to these properties.

In 2014, the Schuyler County Treasurer found that Schneider owed $6,100.00 in back taxes under the "Schuyler County Hotel or Motel Room Occupancy Tax Law.” Under that local law, Schuyler County imposes a four percent (4%) local tax upon the rent for every occupancy of a room or rooms in a hotel, motel, bed and breakfast or tourist facility having one or more rooms in the county. The purpose of the tax is to promote local tourism and to enhance the local economy.

Schneider, a resident of New Jersey, had argued that his properties were exempt from the tax as “bungalows” under regulations of the State Commissioner of Taxation and Finance. He sued in state court to overturn the treasurer’s findings, but his lawsuit was dismissed. He then filed an appeal to the Third Judicial Department, Supreme Court, Appellate Division.

In the previous appeal, Schneider’s attorneys, Schlather, Stumbar, Parks & Salk argued that the properties could not be taxed because they are furnished and do not provide housekeeping, food or other common hotel services.

Representing the County Treasurer, Schuyler County Attorney Steven Getman argued on appeal that the state exemption was specifically limited to state administered taxes, not locally administered hotel or room taxes. The local tax, Getman said, more broadly defined hotels and motels to include “bed and breakfasts” and “tourist’ facilities,” such as bungalows.

In its decision, the Appellate Division ruled that the State Commissioner's interpretation does not apply to the locally administered tax. The court noted that other local taxes, including the City of New York’s, did not exempt bungalows and that the definition of "hotel" in the enabling statute was expansive enough to include bungalows such as the properties owned by Schneider. Therefore, the Appellate Division stated, the prior decision upholding the treasurer should be affirmed.

In addition, the Appellate Division rejected Schneider’s argument that the retroactive imposition of the tax against his property was unjust. Schneider had been operating his vacation rental business for approximately five years, but had never filed a tax return with the county treasurer’s office, due to his theory that the “bungalow exception” excused his doing so.

In July 2016, after the Appellate Division ruled against him, Schneider’s attorneys moved the Court of Appeals for leave to appeal to that court. The county attorney opposed.

On Thursday, the Court of Appeals issued an order denying Schneider’s request to appeal. It also imposed $100.00 costs.

The Court of Appeals decision means that the prior decisions upholding the county’s tax become final and binding.