Personal Property Tax Update & Short-Term Rental Ruling
June 7, 2018

Dear WH&LA Lodging Member:
 
There are two important updates that we want to share with you, with one relating to a legal opinion on the business Personal Property Tax exemption passed in the state Budget last fall, and the other relating to a State Supreme Court ruling released yesterday regarding short-term rentals vs  restricted covenants.
 
Personal Property Tax Exemption for Machinery, Tools and Patterns
As we shared last fall, in the State Biennial Budget Act a new personal property tax exemption was added for non-manufacturing machinery, tools and patterns to go into effect January 1, 2018. In some communities there has been some confusion between business owners and municipal assessors as to what qualifies for the exemption and there is no plan from the state Department of Revenue (DOR) to issue formal guidance.  
 
In the interim, many businesses have been trying to convince local assessors that their machinery is eligible for this exemption, which leaves them now waiting until December when the new tax bills are issued to attempt to change the assessed value. This would of course require them to pay the tax, file a claim for refund with the municipality and if denied, consider legal recourse.
 
The WH&LA continues to be a member of the Personal Property Tax Coalition, a growing coalition of business associations pursuing reductions and eventual elimination of local personal property taxes. We recently participated in the retention of a legal opinion from the highly respected firm of Reinhart Boerner Van Deuren s.c. Attorneys at Law in Madison. As such we have been given the privilege of sharing a Client Memorandum on the New Personal Property Tax Exemption for Machinery, Tools, and Patterns with our members to provide some clarification. So you know the Memorandum was sent directly to all municipal assessors as well.
 
There are some excellent points included regarding how to judge what is eligible for an exemption, so we encourage any lodging member to review the "Discussion Points" and revisit how it may help your property to pay less in personal property tax.
 
Supreme Court Ruling on Short-Term Rentals
On June 5 the state Supreme Court issued a decision on a case between neighbors in a subdivision with a restricted covenant prohibiting commercial activity on any lots in the subdivision and the owner of a large home in the subdivision that is frequently rented out to the public on VRBO. Somewhat surprisingly the Court ruled 6-1 in favor of the owner, with only Justice Ann Walsh Bradley claiming that it is clear that this was commercial activity and the owner was in violation. 
 
What makes this ruling important is the fact that the majority of the justices felt that the language of the covenant was not as clear as it should have been if the intent is to not allow owners to regularly rent homes in the neighborhood out to the public. 
 
This concept with covenants could also be carried over to condo association covenants and the need for clarity in what is allowed or not allowed regarding renting units out. Also interesting was the comment of one justice stating this case is likely the first of many to come that will relate to short-term rentals. It was also noted that the Wisconsin Realtors Association filed an amicus curiae brief supporting the owner (defendant).
 
 
As a reminder, if you have received a membership renewal invoice from the WH&LA, please be sure to remit your payment as requested to ensure there is no interruption in your communications and services from the WH&LA. Thank you as always for your interest and support!

 
Best,
Trisha
 
Trisha A. Pugal, CAE
President, CEO
Wisconsin Hotel & Lodging Association
262-782-285 1
Contact: Trisha Pugal
Wisconsin Hotel & Lodging Association
pugal@wisconsinlodging.org
262/782-2851