Court rules on Suffolk County hotel tax for short-term rentals

The New York Appellate Division of the Supreme Court has ruled in the case of Gorelick v. Suffolk County Comptroller's Office, affirming that the Suffolk County Comptroller can assess hotel and motel taxes on properties rented for periods of less than 30 consecutive days. This decision affects property owners in Suffolk County, particularly those who rent homes for short-term stays.

The case centers around Joanne Gorelick, a property owner in Ocean Beach, New York, who challenged the Comptroller's authority to impose these taxes on her rental property. The ruling is significant because it clarifies the definition of what constitutes a hotel or motel under local tax law, potentially influencing how short-term rentals are taxed across the state.

Background

Joanne Gorelick owns a house in the Village of Ocean Beach, located on Fire Island. She rents this property to guests, typically for minimum stays of seven days. In 2016, the Suffolk County Comptroller's Office notified Gorelick that she was required to pay hotel and motel taxes on her rentals for periods shorter than 30 consecutive days. This notification prompted Gorelick to file a legal challenge against the Comptroller.

In January 2017, Gorelick initiated a proceeding under New York's Civil Practice Law and Rules (CPLR) article 78, seeking to prohibit the Comptroller from assessing these taxes on her property. She argued that her property did not qualify as a hotel since she did not rent it on an overnight basis. The Supreme Court converted her CPLR proceeding into an action for a declaratory judgment, allowing the case to proceed in a different legal context.

The Ruling

The Appellate Division ruled in favor of the Suffolk County Comptroller, affirming the lower court's decision which had granted summary judgment to the Comptroller. The court found that the Comptroller had the authority to impose hotel and motel taxes on Gorelick's property. The ruling stated, "The Legislature authorized Suffolk County to impose a tax upon persons occupying hotel or motel rooms in the County... This statute granted 'broad authority to enact an occupancy tax.'"

The judges involved in the ruling included Hector D. Lasalle, Francesca E. Connolly, Lourdes M. Ventura, and Elena Goldberg Velazquez. They concluded that the definition of "hotel or motel" in the relevant tax law was broad enough to encompass Gorelick's rental practices. The court noted that the definitions in the Suffolk County Hotel and Motel Occupancy Tax Law align with the state law, thus supporting the Comptroller's position.

Impact

This ruling has significant implications for property owners in Suffolk County who engage in short-term rentals. It establishes that local authorities can impose hotel and motel taxes on properties rented for less than 30 consecutive days, which could affect many homeowners who rent their properties through platforms like Airbnb or VRBO.

The decision may also set a precedent for similar cases in New York State, as it clarifies the legal interpretation of what constitutes a hotel or motel for tax purposes. Property owners may need to adjust their rental agreements and pricing to account for these taxes, potentially impacting the short-term rental market in the area.

What's Next

Gorelick has the option to appeal the decision to a higher court if she chooses. Details were not available in the court filing regarding any pending related cases. The outcome of this case could influence future legislation or regulations regarding short-term rentals and their taxation in New York.