Dewey’s budget and finance committee expects $200,000 from the recently imposed accommodations tax. Adopted by the town on May 20, the tax requires property owners to give the town 3 percent of their rental earnings.
Not all think the tax is being collected fairly, however. Ben Cloud, a consultant based in New Castle County, said the tax is being unfairly applied to rentals with lease agreements predating the May 20 enactment. Cloud contacted Christopher Koyste, an attorney based in Bellefonte. to interpret the language of House Bill 51, which allows Dewey to collect the tax.
“I believe that it is likely that the Delaware Attorney General’s Office or a Delaware Court interpreting the meaning of this section would conclude that this language references the date that the rental or lease agreement was signed, rather than the date the actual accommodation was provided,” Koyste wrote in response.
Town attorney Glenn Mandalas said any agreement signed after Jan. 1, 2009 would be subject to this year’s tax, so long as the date of accommodation fell between May 20 and Sept. 30.
“To be clear, the town took great measures to ensure owners of rental properties were well aware that the accommodations tax would likely be implemented,” said Mandalas. “The town wanted to be certain owners had every opportunity to plan for the implementation of the tax.”
Commissioner Marc Appelbaum said the budget and finance committee created a spreadsheet to track and ensure collection of the accommodations tax. Appelbaum said the town has collected $20,000 of the tax so far.
A letter sent to owners of rental properties Sept. 7 notes that an unpaid tax is a civil offense.
Late payments will be fined 10 percent of the taxable amount per month. Failure to pay after 90 days will constitute a first lien against all properties owned by the renter within Dewey town limits.
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