Sandals denies customer tax rip-off after guest sues for millions

Sandals Resorts is being sued for at least $5 million by a former guest who claims the company pocketed taxes that should have been paid to Caribbean governments.

The lawsuit, filed in Florida, claims Sandals continued the alleged tax fraud for decades, but the company insists the allegations are ‘downright false’.

Former guest, US resident Vitali Feldman, brought the class action against Sandals Resorts after staying at its properties in 2017, 2018 and earlier this year with is wife and two children.

He claims he was charged an all-inclusive tax rate of 12% of the total cost of his stay, but that this was retained by Sandals rather than being paid to the Caribbean governments.

Dailymail.com claims it has seen the court papers filed by the plaintiff’s Miami-based lawyers which state: "At all times material, it is represented to the public and Plaintiffs and others similarly situated that the ‘all inclusive’ packages include ‘all taxes’.

"The way the charges were presented to the guests was described in a deceptive way by labelling the charge(s) as a local government tax, when in fact Sandals was charging more money for the room."

Additionally, the filing accuses Beaches Turks & Caicos of collecting the accommodation tax on guests under 12 years of age, which is said to be illegal under Turks & Caicos law.

In a statement to DailyMail.com, a spokesperson for Sandals Resorts said: "Our customers are our top priority and under no circumstances would we exploit their faith in us.

"Our valued guests have never been unlawfully charged for taxes and allegations to the contrary are downright false. Not only do we conduct our business with pricing transparency, we meet all of our tax obligations in each of the islands where we call home.

"We take great pride in being the gold standard in the islands where we operate and have spent close to four decades providing guests with the most comprehensive vacation experience bar none.

‘We will of course vigorously defend against these baseless allegations."

In court papers, lawyers claim all guests of Beaches Turks & Caicos, which falls under Sandals Resorts’ ownership, paid a 12% accommodation tax.

However, the lawsuit claims Sandals had an agreement with the Turks and Caicos government allowing Sandals to retain ‘a significant’ chunk of the tax for its own use and benefit.

It adds: "These tax charges are used to generate extra profit at the expense of Plaintiff and others similarly situated, who were deceived into believing the fees are legitimate charges directly related to Sandals’ owed and paid taxes to the government.

"In fact, the fees are nothing but profit-enhancers disguised as taxes that have a legitimate purpose, constituting a violation of the Florida Deceptive and Unfair Trade Practices Act."

Sandals Resorts is accused of running the same alleged scheme at its resorts in Grande Antigua, Barbados and Royal Barbados where guests are charged a 12.5% sales tax.

The suit adds: "By bundling the fees, taxes, and other charges into the all-inclusive package, Sandals is able to conceal the fact that consumers were being vastly overcharged for the all-inclusive resort package due to the agreement to retain a large portion of the taxes.

"In short, Sandals has, through fraud, deception, omission and/or concealment, engaged in a pattern of unlawful profiteering, deceit, and self-dealing with regard to charging a local~government tax and retaining a large percentage of such."

The lawyers claim in court papers that Sandals Resorts settled with the government of Antigua and Barbuda over~$37.5 million of unpaid sales tax up to late December 2016.

"Because the government stipulated to not collect the $37.5 million and Sandals retained such monies, Plaintiffs and other similarly situated are entitled to these monies as it relates to the taxes they were fraudulently and deceptively charged."

The class action lawsuit is seeking at least $5 million, exclusive of interest and costs.

Earlier this year, Sandals launched legal action against the Turks & Caicos, accusing the government of imposing back taxes on its Beaches property. It later announced it would close Beaches on the Turks & Caicos indefinitely from January 2021, but it is now planning to keep the resort open.