Council voted 6-1 with Bill Ferguson opposed to give R.H. Realty and Rentals Inc. until Aug. 1 to pay $102,939 or forfeit its ability to do business on the island.
The rental company, owned by brothers William and Robert Hoisington, failed to pay the town $205,804 in accommodations taxes and beach preservation fees owed from 2000 to 2003. Additional penalties accrued to $427,845 during the same period, according to town officials.
The company has since remained current on its tax obligations, according to records.
The town reached an agreement with the company in 2005 in bankruptcy court to repay the taxes and fees under a set monthly payment schedule. In 2008, payments from the company decreased, leaving it with $102,939 in outstanding taxes and fees to pay by January, putting it in default of its agreement, according to the town.
The Hoisingtons said they misunderstood the agreement, would not have the means to pay if shut down and proposed an amended payment schedule through 2012.
Town officials argue the company has not been honoring its commitments to the town for years and have no faith it will adhere to future payments.
"These are taxpayer dollars taken in and used by the company for its own operations (instead of being remitted to the town) and needs to be paid back to the citizens of this community," said Councilwoman Kim Likins.