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Friday’s Letter from America

Welcome to this week’s Letter from America, in this article by Irene Parker with a contribution from Mike Finn of Finn Law Group, we look at the Timeshare Tax Trap.

The Orlando Sentinel has also published an article about Diamond and Orange Lake Resorts sueing Mike Finn, they accuse him of using  “false and misleading” claims in his ads. The article also mentions that Mike is cited by many publications as a successful cancellation attorney who along with other groups monitor timeshare companies, they go on to name the National Timeshare Owners Association and also Inside Timeshare. Mike is a regular contributor and offers valuable insights into the law for Inside Timeshare For the full article click on the link below.

http://www.orlandosentinel.com/business/brinkmann-on-business/os-bz-orange-lake-timeshare-finn-20180404-story.html

But first a new warning from Europe, one of our long standing regulars has been contacted by a new “law Firm”, yes you guessed it, another new name in the Litigious Abogados family from Tenerife.

legalidades-abogados-logo

The new name is Legalidades Abogados, using the same address we have seen before:

4, Calle de S. Francisco, Santa Cruz, 38002, Tenerife

Freephone: 0800 862 0995

Tenerife Tel: 0034 822 250 502

email: [email protected]

email: [email protected]

Once again the address is genuine and shows 2 lawyers plaques on the wall, neither are this one. The email addresses are also not linked to the website, but are ones you can register for free at consultant.com.

According to their website http://legalidades-abogados.com/ they were founded by  Alberto Kalimro Galvera, on Monday 19th July 1990. Again this date in 1990 was actually a Thursday, so once again not very much attention to detail there. They also still insist they have over 15 years presence on the internet, not bad since the website was only registered on 15 March 2018 with the registrant hidden by a privacy company.

After the initial call they send an email which is signed by Angelica Imolintos Lesterno from Departmento Legal. Also attached is a letter of 3 pages with many official looking logos, it is signed by another new name Pablo Ibernas Cavosa.

Here are the new lawyers names and photos, once again probably downloaded from the internet, without the knowledge of the actual persons.

alberto-kalimro-galvera  luciano-emanca-domeras  pedro-arenolde-verandel  gabriel-lindeno-miraldo-203x300  pablo-Ibernas-cavosa-legalidades-abogados-300x201

From left to right: Alberto Kalimro GalverLuciano Emanca DomerasPedro Arenolde VerandelPablo Ibernas Cavosa.

 

In this long winded letter, they go on to say that it is a “no win no fee” arrangement, but as we know from past experience the next stage will be a fee is required for the Procurador. After this there will be a fee to pay “tax” to release the money from the court.

Once again we remind you to be very wary on companies that make these wonderful claims, especially with a “no win no fee” arrangement. Do your homework, you know it makes sense.

Now for this week’s Letter from America.

The Timeshare Tax Trap – A 1099 Loan Forgiveness Tax Liability

$170,000 Diamond Timeshare Points Purchased for no Reason

Timeshare Attorney Mike Finn, a former C.P.A., weighs in

Tax Time

By Irene Parker

April 6, 2018

Two Inside Timeshare readers contacted us alarmed, because they received an IRS 1099 form, informing them of a timeshare tax liability. For one family, this meant possibly an additional $170,000 in income. This would have been bad enough, but the already Platinum Diamond Resort member said they purchased the points to participate in a program that did not exist.

Timeshare members have learned there is little to no timeshare enforcement of timeshare regulations in some states, so by relying on the oral representation clause, timeshare sales agents are allowed to say anything to sell vacation points. The Nevada Real Estate Division has routinely replied to timeshare buyers, “You have no proof,” according to member reports. Today’s family is one of eleven families complaining about the same sales Las Vegas sales agent.

A reminder no one should pay upfront money without checking with us or one of the advocacy self-help Facebooks and websites listed below. Lack of a secondary market for timeshare points gives rise to a flourishing community of scam artists.

This former Diamond member says DRI sales agent Rick Casper, working out of Polo Towers in Las Vegas, told him to buy more Diamond vacation points to eliminate maintenance fees. He and his wife wanted to talk to someone at DRI because they were struggling to pay maintenance fees on the 50,000 DRI points they already owned. This member is a 100% disabled Vietnam veteran, having been exposed to Agent Orange. The former member did not contact us to complain about Diamond Resorts. He wanted to know if there was anything that could be done about the 1099. I did ask why he purchased additional timeshare points from Rick Casper, given Inside Timeshare has received 11 identical complaints about the same Las Vegas sales agent over an 18 month period.    

In 2016 we went to Las Vegas and stayed at Diamond’s Cancun resort and met with Rick Casper. Mr. Casper said if we upgraded, we would be able to cover maintenance fees. However, maintenance fees increased after the upgrade to $16,000 a year. After five hours, my blood sugar was at 400. I was recovering from congestive heart failure. Rick Casper said it would cost us $198,000, $2500 a month in payments for the next 10 years but after ten years we would have no maintenance fees and no loan payment. Rick Casper said, “Then the little people will be paying for your vacation.” He said it would take a year to a year and a half to set up but he would personally handle it. He said since we were only paying $3, he had a guy that could sell points for much more than that and the proceeds would pay for the maintenance fees. I ended up paying a company in Branson MO $1500 to get out of this; but now the IRS has issued us a 1099 which has to be claimed as income. It’s for around $170,000. I’m now 71 years old. I would have been better off foreclosing.

Inside Timeshare has heard from 114 Diamond Resorts members since January 1. By publishing these accounts we hope to inform new timeshare buyers, and existing members upgrading, that the timeshare contract is perpetual, maintenance fees increase, and in most cases there is little or no secondary market.

Buyer Beware Active Duty military and law enforcements are especially affected by a bad timeshare purchase. We are assisting seven in fear of losing their Security Clearance. The ages and branch of military service of the 11 Rick Casper customers, who report being financially devastated as a result of their Polo Tower purchase, include:

  1. Age 69, Army, retired, 21 years
  2. Age 70, 100% disabled, Army, Agent Orange
  3. Age 68, Coast Guard veteran
  4. A stage 4 cancer patient, age 40s
  5. Age 60
  6. Age 69, Gulf War veteran, on 25 meds
  7. Age 61
  8. Age 66
  9. Age 56
  10. Mary Pfeifer, age 72, new complaint not unresolved
  11. Denise Hodgkins, age 56, new complaint, unresolved

I asked my CPA about the 1099. She said they would have referred the tax filer to a tax attorney, so the problem is not that simple. As usual, we went to timeshare attorney Mike Finn of the Finn Law Group. Mike provided an article about this important topic on his Learning Center.

https://www.finnlawgroup.com/learning-center/tax-time-contract-cancellation-timeshare-developer

An excerpt from Mike’s article:

Loan forgiveness

The 1099 form is referencing a large amount which may very well be taxable income! Unlike a mortgage balance forgiven, which would have been spread out over the life of the loan, this possibly taxable sum has been reported to the IRS in one lump sum! Say the amount reported is about $25,000. Say further that your tax bracket is 20%. Your new added tax bill is $5,000, and it’s due April 15th!

So, does this tax form receipt mean that the recipient is stuck with the tax bill for the so-called income? Well, possibly.

Consult with a tax professional before you assume that your receipt of a 1099 form from a timeshare developer automatically means you’re staring down significant tax liability. Understand we are not providing tax advice, merely a possible position that we believe is quite tenable and worth exploring with your own tax advisor. Although it’s accurate for me to state that I was a Certified Public Accountant, it is much more important to note that my C.P.A. licensure has long ago lapsed (because I didn’t choose to keep up with the annual professional education courses necessary to retain my certification). Please take your tax preparation advice solely from your own qualified tax return preparer.

Every tax filer is unique, with differing facts and circumstances. I am not offering, nor should you interpret my comments, as tax advice.

Historically, over the past half dozen years or so, hundreds and hundreds of Finn Law Group clients have received IRS 1099 forms, both 1099A’s and 1099C’s.  The receipt of these forms creates confusion.

I point you to IRS form #982. This is the form that the IRS advises should be filed along with the income tax return itself as a form of supporting schedule, which provides notification to the IRS that the amount presented to them via a 1099 is being acknowledged, but further, that the amount listed should be excluded from the taxpayer’s gross income. The myriad of possible reasons provided on the 982 Form are in and of themselves confusing and difficult to understand. I’m therefore providing my readers what I suggest may be appropriate reasoning in concluding that, in many cases, there should be no “income tax penalty” imposed after successfully negotiating a release of contract with your timeshare resort.

Allow me to provide my argument as to why some forms of debt forgiveness may well be construed as taxable income, and then differentiate the negotiated act of cancelling a timeshare contract and why this transaction therefore logically should be treated differently.

Since “income” generally means a measure of accretion of wealth or value added to your worth, then the cancellation of a debt, when that debt was incurred when you received something of value, should be counted as income because the elimination of the debt liability plus the retention of the item acquired when the debt was incurred increases your net worth. Under this definition of added wealth, the taxing of same would be quite logical.

Applying this argument to the cancellation of a timeshare contractual obligation and its related underlying indebtedness, it’s immediately evident that the cancelled owner has retained absolutely nothing of value. They’ve surrendered their interest in exchange for a debt and/or contract cancellation, but after the transaction they have absolutely no accretion of net worth.

Indeed, they’ve lost anything previously paid on an ‘asset’ they no longer own, so any argument that they’ve achieved and retained income or anything of value because of the contract cancellation is simply not accurate.

In terms of taxpayer reporting requirements, the issue becomes murkier when you apply it to timeshare transactions. Whether or not the industry will ever acknowledge that the resale value of a timeshare interest is minimal at best, what we can establish is that it would be extremely unusual for anyone other than the resort developer to acquire the timeshare interest at foreclosure, and therefore the liquidated basis of the interest will nearly always be zero, or at best a nominal value at foreclosure. Also making the timeshare transaction more complex in terms of following the instructions of either IRS form 982 and/or publication 4681 relating to this issue is determining whether the underlying debt should be viewed as “recourse” or “non-recourse,” given the propensity of the developers to utilize non-recourse based non-judicial foreclosures to recover the interest the greatest majority of the time.

I’ve attempted to avoid becoming overly technical in terms of specifically advising of taxpayer reporting other than to suggest very generally that the filing of the IRS form 982 will most probably be required. Lastly, I do strongly recommend utilizing a professional tax return preparer, as these forms are not at all intuitive.

I earnestly wish that I could offer something less complex to help provide absolute answers to this prominent issue, but I do feel that this is important because the financial ramifications are potentially high.

Respectfully provided,

Michael D. Finn, Esq.

Michael-D-Finn2

Thank you, Mike, for the timeshare accounting lesson. One question I had is,

What is the difference between a 1099 A and a 1099 C?

http://www.koontzassociates.com/pages/know-the-difference-between-a-1099-a-and-1099-c/

Contact Inside Timeshare or one of these self-help groups if you have a timeshare nightmare. We know there are many that use and enjoy their timeshare, some having not faced a need to sell it, or were lucky to purchase from a sales agent that sold the product as the product is intended.

https://www.facebook.com/timeshareadvocategroup/

https://www.facebook.com/groups/DiamondResortsOwnersAdvocacy/

https://tug2.com/Home.aspx

https://www.facebook.com/groups/180578055325962/

https://www.facebook.com/groups/465692163568779/

https://www.facebook.com/groups/1639958046252175/

Deceptive

Elder Abuse:

https://www.fbi.gov/news/stories/elder-fraud-charges-announced

All of the schemes have one goal: to trick and deceive senior citizens into turning over their hard-earned savings. Last year, the FBI opened more than 200 financial crime cases that involved elderly victims, Bowdich said. The investigations covered a range of crimes, from investment frauds to reverse mortgage scams.

Thank you Irene for this weeks article and also a very big thank you to Mike Finn for his contribution.

Inside Timeshare welcomes your comments on this or any article published, also if you need any information about your ownership or any company that has contacted you or you are thinking of doing business with, contact Inside Timeshare and we will point you in the right direction.

Friday is upon us the weekend beckons, we hope you have a great and relaxing one. See you next week.

weekend 1

The Tuesday Slot with Irene Parker

The Consumer Financial Protection Bureau after Richard Cordray

Timeshare Developers and ARDA vs the Timeshare Consumer

donkey

ALEC – What’s a Corporate Bill Mill?

Part I – The Manhattan Club

Part II – Marriott and Florida legislation Tuesday, November 28

By Irene Parker

November 21

Is the Consumer Financial Protection Bureau an agency that overreached or a necessary protection for consumers?

The Consumer Financial Protection Bureau’s Director Richard Cordray recently announced his resignation. Timeshare members not familiar with the CFPB may remember 3.4 million Wells Fargo customers receiving restitution from unauthorized credit card accounts being opened that allowed Wells Fargo representatives to meet incentive targets. CFPB conducted that investigation.

https://www.politico.com/story/2017/11/15/richard-cordray-resigns-consumer-financial-protection-bureau-24493/

Timeshare today seems as polarized as Democrats vs the GOP. Given the corporate driven political climate in Washington DC, it is unlikely Cordray’s replacement will bolster the agency’s power or recourse for timeshare consumers.

Timeshare members have not benefitted from the CFPB like the Wells Fargo victims. The opening of an unauthorized credit card is annoying, but probably not financially devastating. The majority of our 209 Inside Timeshare readers, reaching out to us for advice, are often financially devastated by their decision to purchase a timeshare or continuing to own one. The perpetual contract, accompanied by rising maintenance fees and little or no secondary market can spell disaster, especially if sold by deceit.

Still, timeshare members appreciate the CFPB’s interest in hearing timeshare complaints. The CFPB did initiate a Westgate timeshare investigation that lasted two years, only to be dropped after the 2016 presidential election. Call me suspicious, but seeing Westgate owner David Siegel pictured left of Mr. Trump on the stump during the campaign, while the Trump organization simultaneously launched a timeshare in Scotland, seems beyond coincidental.

Trump1

Former Florida Attorney General Bill McCollum’s name was mentioned in the Politico article linked above as a possible Cordray replacement. Given Florida’s current legislative and timeshare enforcement climate, timeshare members have little to cheer should a former or current Florida elected official be named director. In our opinion, Ms. Bondi has done little to address deceit on the front end of the timeshare sale. As Inside Timeshare previously reported, the Florida Timeshare Division only acted on 110 out of 2,360 timeshare complaints received from April 2014 to April 2016.

In contrast, New York Attorney General Eric Schneiderman achieved a $6.5 million settlement for The Manhattan Club members, Arizona Attorney General Mark Brnovich $800,000 for Diamond Resort members, Attorney General Herbert H. Slatery III $3 million for Festiva members, and other smaller settlements by Colorado, Wisconsin and Missouri Attorneys General.

Despite AG settlements that seem mere financial speed bumps in the life of a timeshare corporation, timeshare members are hopeful our grassroots efforts to educate lawmakers will someday bear fruit.

The Manhattan Club investigation was one member vs developer battle over lack of availability and other concerns that led to the $6.5 million settlement. TMC owners were banned from the timeshare industry as part of the agreement. While the settlement was hailed as a significant accomplishment, Douglas Wasser, an attorney involved with the investigation is not so sure:

The $6.5 million was set aside for the benefit of “hundreds of purchasers” as a restitution fund.  But The Manhattan Club has upwards of 14,700 unit owners.  So, the pool of Manhattan Club owners entitled to a purchase refund may be a very small one.

The forced divestiture by the current sponsor of control over the Manhattan Club could be a lift for the entire community. Given the lack of confidence in the current reservation system and the many complaints that the reservation system was heavily tilted to benefit the sponsor, this seems like a significant positive to the Manhattan Club community.  It may restore confidence, perhaps drive up market value of the units and allow those who want to leave to do so, and bring in new and willing participants.   

Will it be uplifting for all timeshare members?

Inside Timeshare and other advocates expect little improvement given the polarity that exists between member advocacy groups and ARDA, the American Resort Development Association. I have personally forwarded close to 100 complaints to ARDA, prepared by members alleging timeshare sales agents violated ARDA’s Code of Ethics, which have been ignored.

The two resorts which seem to have the highest volume of complaints each give ARDA ROC, the supposed owner’s arm of ARDA, $1million dollars a year through “voluntary” opt out donations. It took until November to have my $7 removed. When I contacted my resort to have the donation removed, it was instead moved to another account and reported as a delinquency on that account. When members ask what ARDA ROC is, members are told it is a nonprofit that helps members. However, ARDA seemed to be on the side of TMC developers.

mclub

The picture above shows two ARDA attorneys observing a TMC meeting and taking notes. The notes may have later turned into an amicus brief written by a high ranking executive member and attorney for ARDA attempting to defend TMC.  In the brief, Robb Webb described the company’s practices as “routine industry transactions” and, according to one source, drafted some TMC original documents.

Our readers would agree false promises and shady sales tactics are often routine industry practices or transactions, but members are alarmed ARDA defended such practices. In the settlement, the Manhattan Club defendants acknowledged that they misled buyers about availability and the ability to sell back the timeshare.

“The owners of the Manhattan Club lured thousands of timeshare buyers with false promises and shady sales tactics that violated New York law,” Schneiderman said.

https://ag.ny.gov/press-release/ag-schneiderman-announces-65-million-settlement-midtown-manhattan-timeshare-scammed

What’s a corporate bill mill and does such an entity play a role in timeshare?

On Friday in Part II we will examine how politics played a role in the Marriott racketeering case, as lawyers involved with the case suspect. It’s been reported backdoor politics contributed to a bill signed by Florida Governor Rick Scott that, in effect, rendered the Marriott case non-meritorious.

Unsure of the allegations, I researched lobby efforts and their influence on legislation and the possibility of timeshare participating in an ALEC type endeavor. Georgia Senator Nan Orrock described ALEC as “a corporate bill mill.” ALEC stands for American Legislative Exchange Council.

According to Senator Orrock, ALEC is an organization that gets money from lobbyists and gives the money to legislatures and it is considered charity. Three lawmakers, mentioned in this video, received $22,000 in “scholarships” from ALEC, considered an educational charity. The YouTube is disturbing.

https://www.youtube.com/watch?v=sNA0-GBuunc

The timeshare PAC ARDA also has a charitable educational organization called AIF ARDA International Fund. I don’t know enough about AIF to parallel it to ARDA, but the legislative action in the Marriott case seems similar.

http://www.arda.org/foundation/

Open Secrets list ARDA’s contributions to political candidates:  

https://www.opensecrets.org/pacs/lookup2.php?strID=C00358663

So where do we go from here and why can’t we all just get along? Has greed so permeated timeshare and American politics that a working relationship between timeshare members and developers or between the rich and the not rich, is as unlikely as Bernie Sanders and President Trump coming to terms over health care?

a

Fortunately, the court of public opinion is still open as long as the first amendment stands while timeshare members keep coming forward filing regulatory complaints and reaching out to the media if they feel they have been harmed. Someday, somewhere, someone will listen. Until then, we build our case brick by brick.

If you or someone you know needs help with a timeshare, contact Inside Timeshare or a self-help advocacy Facebook.

https://www.facebook.com/timeshareadvocategroup/

https://www.facebook.com/groups/DiamondResortsOwnersAdvocacy/

https://www.facebook.com/groups/180578055325962/

https://www.facebook.com/groups/465692163568779/

https://www.facebook.com/groups/1639958046252175/

Thank you Irene, as usual you explain things in a way that is easily understood, we look forward to Part II next week.

The Tuesday Slot

Today Irene Parker calls on our readers in the US to join Inside Timeshare for a get together in Orlando, but first a little of the news in Europe.

 

anfi ariel view

We have been looking at the ANFI DEL MAR Public Group Facebook page, in a post and discussion started on 29 August, all does not seem well amongst the members. The post related the dire state of the accommodation, how it is falling way behind what it was when these members joined.

The complaints are also about the furniture with one member stating that the bed settee “was not fit for purpose”. This same post also complained about the bed covers curtains and furniture still the same as when the upgraded in 2007, that it is shabby and past its sell by date.

Other comments also included having to call out maintenance on several occasions for various things including a broken down jacuzzi, including falls due to slipping on leaking water. Another commentator told of water damaged kitchen cupboards, including a balcony door falling out.

So what is happening to this once wonderful resort?

We leave you to decide the answer to that little conundrum.

Now on with Irene’s little piece.

Meet Inside Timeshare in Orlando for a Meeting/Party

Heres news

Meet Charles Thomas and Lisa Ann Schreier October 11, 2017 in Orlando  

September 5, 2017

By Irene Parker

There has never been a time when the need for Advocacy in the timeshare industry has been so apparent. The evolution from fixed deeded timeshare to sometimes confusing and convoluted points programs, consumers buy in a same day sale, often after an hour’s long sales session, leaves many buyers bewildered and sometimes shocked when the product purchased doesn’t meet the product promised.

Charles Thomas will travel from Canary Islands, Spain, to join us in America as Lisa Ann Schreier and I show Charles what Orlando has to offer, and hopefully gather as many timeshare members as we can to attend an informational meeting/party October 11th.  Grassroots as always, bring your own food and beverages. Charles will be in Orlando for the week, so if you are available from October 7 to October 12, let us know. This will give us an idea on how to plan.

Charles describes himself as a former timeshare sales agent who wasn’t very good at it, refusing to give into high pressure or deception. Charles is British of Maltese descent. After a beer or two you might get Charles to talk about his family tree that dates back to William the Conqueror 1068.

 Lisa Ann Schreier is “The Timeshare Crusader.” She has been teaching and helping timeshare members since 2004.

The Timeshare Crusader is dedicated to helping consumers navigate through the myriad of confusing timeshare information as well as working with forward thinking organizations to be a catalyst for positive change. Lisa Ann is the creative force behind International Timeshare Appreciation Day, held annually on November 1, so perfect timing for a preliminary kick-off.

Lisa is author of two bestselling books, “Surviving a Timeshare Presentation…Confessions from the Sales Table” and “Timeshare Vacations for Dummies.” She also co-authored the college-level textbook, “An Introduction to Vacation Ownership Management.”

Lisa Ann’s Blog can be accessed at

http://thetimesharecrusader.blogspot.com

A little bit about Lisa Ann Schreier

Lisa Ann served as the Director of Member Services for the National Timeshare Owners Association from 2013 to January 2017. Prior to NTOA she served as Director of Communications for Celebration World Resort and most importantly, understands the industry from the inside out having worked in timeshare sales and sales management for several Orlando resorts.

Lisa Ann’s passion for the timeshare industry and the rights of the consumer fits like a hand to glove with the mission of Inside Timeshare:

Our mission is to provide you news surrounding the timeshare industry, providing you with the information and tools to make informed decisions about the companies you may wish to deal with.

Then there is me. I call myself The Peasant of Venice antithesis to The Queen of timeshare Versailles because I live in Venice and have devoted full time volunteer hours to help timeshare members, alleging they were deceived by bait and switch, prepare their request for refund, relinquishment or loan cancellation. I rely on Lisa Ann and her expertise along with several other timeshare insider advocates working behind the scenes as the member and I work toward timeshare freedom, if that is their goal.

Hat’s off also to Irene Allen and the admins of advocacy Facebook groups working towards timeshare reform. Social Media has indeed enhanced the ability for members to contact other members to share experiences and concerns.

We seek to provide Diamond Resort members a way to proactively address membership concerns; to advocate for timeshare reform; to obtain greater disclosure from the company; to advocate for a viable secondary market; and to educate prospective buyers.

https://www.facebook.com/groups/DiamondResortsOwnersAdvocacy/

https://www.facebook.com/timeshareadvocategroup/

https://www.facebook.com/groups/180578055325962/

Join us in Orlando if you can. I have met with several of our Facebook members at resorts throughout the country. There’s nothing like meeting someone you already consider a friend face to face. Remember to contact Charles at Inside Timeshare, Lisa Ann or me if you are able to hook up with us.

party time

Thank you Irene, I am certainly looking forward to meeting you all and visiting Orlando, see you all soon.