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Pawleys Island: Town suspects private rentals aren’t collecting taxes

By Charles Swenson
Coastal Observer

It sounds like good news for real estate rental companies. From 2008 to 2014, there’s been a 15 percent drop in accommodations tax paid by people who rent their own property on Pawleys Island, according to figures compiled by the town. At the same time overall accommodations tax revenue is up 15 percent.

Mayor Bill Otis doesn’t think that trend reflects a shift toward commercial rental companies. “That’s the same time we’ve seen an increase in rentals over the Internet,” he said.

The state legislature passed a bill this year that creates a $500 fine for people who fail to collect and pay accommodations taxes on rental properties. Pawleys Island Town Council adopted an ordinance this week that lets it take advantage of the law.

“Those who don’t collect the taxes have a 10 percent price advantage,” Otis said. That includes local (3 percent) and state (2 percent) accommodations taxes and sales tax.

The law, which had support from state Sen. Ray Cleary and state Rep. Stephen Goldfinch, allows local government to work more closely with the state Department of Revenue in tracking down rentals that don’t collect the tax.

The town doesn’t have a property tax and over half of its $1.2 million budget comes from accommodations tax revenue.

With the rise of online rental services, Otis said he expects the share of revenue coming from individuals would have increased along with overall revenue. “There should be more people reporting,” he said, not fewer.

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