Hawaii Vacation Rental Owners and Homeowners’ Associations Face Increased Disclosure Requirements And Penalties Under New Law
Hawaii's Legislature is attempting to compel vacation rental owners to file and pay their general excise and transient accommodations taxes. The tax authorities believe that a substantial number of vacation rental owners do not have the appropriate tax and business licenses for their rental properties and are evading these taxes.
In an effort to close this "tax gap," the Legislature enacted HB 2078, which became law on July 10, 2012.
Act 326 added the following provisions to HRS 237D, “Transient Accommodations Tax”:
• Same-Island Contact Required. Transient accommodation operators must designate a local contact resident on the same island that the accommodation is located;
• Same-Island Contact Listed In Contract and Posted In Unit. Transient accommodation operators must include the “local contact” information in any contract or rental agreement and prominently posted it in the accommodation;
• Transient Accommodation Number Listed On Internet. The transient accommodations registration/identification number must be provided on any (a) website; (b) on-line link; and, (c) displayed in all internet advertisements and solicitations.
• Provide Local Contact To Association. Transient accommodation operators must furnish the name, address, and contact information of the “local contact” to the homeowner’s association for the property, and keep information current within sixty days;
• Association Must Report “Relevant Information” To Department of Taxation. Homeowners associations must provide the department of taxation with “all relevant information” “maintained in its records” “related to all operators who may be leasing their property as transient accommodations” by December 31 of each year, or within sixty calendar days of any change in the information. “Relevant information” means the operator’s name, address, contact information, registration number, and website address if advertising or soliciting on the internet.
For more information, including information on the dramatic penalties for non-compliance with Act 326 and some comments, please read the article.
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Richard Paul McClellan III is a lawyer in Honolulu with a practice representing taxpayers before the Hawaii Department of Taxation and the Internal Revenue Service.
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