Dewey rental tax interpretations differ

March 15, 2013

Last week, I had an email exchange with Dewey Beach Town Council member Courtney Riordan regarding the accommodations tax in Dewey. It is very clear that he and some members of the town council as well as the Citizens to Preserve Dewey (the political group backing the current administration) have a rather myopic view of this tax.

The accommodations tax, as proposed and as explained to the residents in 2008, was to be similar to the room tax paid if you rent a hotel room in Delaware or most any other state.  The tax would be collected by the business along with the rent and passed on to the Town of Dewey Beach annually.
The question of exactly who was being taxed (the renter or property owner) was asked and answered numerous times at meetings and workshops.  Had this not been clear, then it is very unlikely that the referendum authorizing this tax would ever have passed in the first place.

If you look on the town website, you will find a notice to property owners that states, “If you do rent out property, be aware that there is an accommodation tax you should collect.”  Note the word “collect.”  If you search the internet looking for property to rent, you will frequently find mention that there is a three percent accommodations tax in addition to the rental fee.

In other words, it should be clear to everyone by now that this is a rental tax payable by the renter and collected by the property owner. But Mr. Riordan adamantly insists that this is not the case.  It’s not clear if this is due to a problem with the wording in the ordinance passed in 2009, or a self-serving interpretation, but something needs to be done to correct this situation because Mr. Riordan and his supporters are essentially claiming that the residents were promised one thing, but given something different.

Since Mayor Hanson and Town Manager Applebaum were both on the town council when the law was passed, it would seem prudent for these two people to address this issue and state, for the record, which is the correct interpretation.  And, if the law was not written so that it reflects the intent of the referendum, then it should be changed to conform.

Until it is clear who is paying what, Mr. Riordan should not continue use his interpretation of this tax as an argument in favor of his proposed business gross receipts tax or as a way of excluding rental businesses from that tax.

Graham Smith
Dewey Beach

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