In January, we faced almost a dozen bills which could have impacted our transient vacation rentals. In the end, only one survived. SB519 became Act 204 and is discussed below.
SB519 SD2 HD3 CD1 (“SB519”)is now Act 204
On July 2, Governor Ige signed SB519 into law and is now known as Act 204. Generally, this bill covers Local Contacts, Advertising and Tax Compliance for Transient Rentals. The latest version of the bill was posted on the legislative website Saturday, May 2, and can be accessed through this link: SB519 CD1.htm
This is a very good outcome for RBOAA members and all those who own or own and operate rental accommodations in Hawaii. There is no doubt that we would be in a very different place, and a very disadvantageous place, had it not been for all the efforts of the RBOAA membership. We banded together and made strong, passionate and logical arguments to the Legislators.
Please note that this bill replaces Act 326 which ceases to have force on December 31, 2015. SB519/Act 204 negates the need to extend Act 326 as certain key provisions of Act 326 are carried forward indefinitely within the Transient Accommodations Tax Act.
Act 204 at-a-glance:
If you don’t live on the same island as your vacation rental, you need to name a Local Contact. The Local Contact is a person or a company resident on the island (when companies are local contacts they must have someone who resides on the island). The Local Contact is not necessarily a real estate agent and is not necessarily an employee of the owner.
You must post your Hawaii Tax ID (your TAT ID number) number conspicuously in all advertisements and in your rental (note: we have always had to post our GET number in our rental);
You must identify your local contact by name, phone number and email address to your guests before they check in and within the rental property;
There is no longer any requirement for the HOA to collect and remit tax ID and local contact information annually;
Your online advertising system, i.e., VRBO, FlipKey, AirBnB, must ensure you have posted your Hawaii Tax ID (your TAT ID number) in your advertisement;
The same rules now apply to time shares and homes as to other transient accommodations; and,
The fines for non-compliance are very steep and include a monetary fine and a prohibition against operation.
What do you need to do?
Make sure that your Hawaii tax identification number (your TAT number) is posted on all of your websites and advertisements. (Hint: check that it is still there. Sometimes your advertiser updates their site and information is lost)
Make sure your Hawaii tax identification (both TAT & GET) certificates are posted conspicuously in your rental. If you have lost your certificates, contact the Department of Taxation for a replacement copy.
Make sure your local contact’s name, email and phone number are posted conspicuously in your rental and that this information is sent to your guests before they arrive.
Failure to comply with any of these could result in heavy fines and a cease and desist order. We have every reason to believe that the DoT is getting ready to very actively enforce these rules this year.
MORE DETAILS of ACT 204:
This Act shall take effect on January 1, 2016.
The preamble sees the legislature declare, per Section 521-43(f) of the Hawaii Revised Statutes, (the Landlord Tenant Code) that as a consumer-protection measure, an owner who lives out of state or on a different island than the rental unit shall designate an agent who resides on the same island to act on the owner’s behalf. The preamble explains that designating a “local contact” is essential in the case of an emergency or natural disaster, and for dealing with any questions, concerns, or property issues that might arise regarding the transient accommodation.
The bill amends section 237D-1 of the Hawaii Revised Statutes (the Transient Accommodation Tax Act) to add a new definition — “Local Contact” — which it defines as: ““Local contact” means an individual residing on the same island as the transient accommodation or resort time share vacation unit or an entity with a place of business and at least one employee, officer, partner, member, or other person working on behalf of the company who is residing on the same island as the transient accommodation or resort time share vacation unit.”
The bill amends section 237D-1 of the Hawaii Revised Statutes to add a new definition — “Transient Accommodations Broker” — which it defines as: “Transient accommodations broker” means any person or entity, including but not limited to persons who operate online websites, online travel agencies, or online booking agencies, that offers, lists, advertises, or accepts reservations or collects whole or partial payment for transient accommodations or resort time share vacation interests, units, or plans.”
The bill amends the definition of “transient accommodations” in section 237D-1 of the Hawaii Revised Statutes to include single family dwelling and dwelling unit (Chapter 514B), so as to affirm that when such defined spaces are used for less than 180 consecutive days by a transient, the spaces are “transient accommodations” and fall subject to compliance with applicable statutes.
The bill amends section 237D-4 of the Hawaii Revised Statutes relating to the display of the Hawaii Tax ID, i.e., the “Certificate of Registration,” (your TAT number) adding that, “The name, phone number, and electronic mail address of the local contact shall at all times be conspicuously displayed in the same place as the registration or the same place as the notice stating where the registration may be inspected and examined. Failure to meet the requirements of this subsection shall be unlawful.” [Note:RBOAA recommends that the information be displayed in the rental property.]
The bill amends section 237D-4 of the Hawaii Revised Statutes to advise that, “The department [Department of Taxation] may issue citations to any person who fails to conspicuously display the registration or notice, or the local contact’s name, phone number, or electronic mail address as required. A citation issued pursuant to this subsection for each transient accommodation or resort time share vacation interest, plan, or unit in violation of this subsection shall include a monetary fine of not less than: (1) $500 per day, for a first violation for which a citation is issued; (2) $1,000 per day, for a second violation for which a citation is issued; and, (3) $5,000 per day, for a third and any subsequent violation for which a citation is issued. Any monetary fine assessed under this section shall be due and payable thirty days after issuance of the citation, subject to appeal rights provided under this subsection. Citations may be appealed to the director of taxation or the director’s designee.”
The bill amends section 237D-4 of the Hawaii Revised Statutes relating to the advertisements for transient accommodations, to advise that “Any advertisement, including an online advertisement, for any transient accommodation or resort time share vacation interest, plan, or unit shall conspicuously provide: (1) The registration identification number (your TAT number) or an electronic link to the registration identification number of the operator or plan manager issued pursuant to this section; and, (2) The local contact’s name, phone number, and electronic mail address, provided that this paragraph shall be considered satisfied if this information is provided to the transient or occupant prior to the furnishing of the transient accommodation or resort time share vacation unit. Failure to meet the requirements shall be unlawful.” [Note:RBOAA recommends that owner operators include the Tax ID in every advertisement.]
The bill amends section 237D-4 to advise that, “The department [Department of Taxation] may issue citations to any person, including operators, plan managers, and transient accommodations brokers, who violates [the ‘advertisement’] subsection. The penalties are the same as for operators, as noted above.
If you have any questions, we recommend you contact the Hawaii Department of Taxation.
All information contained in this website is for informational purposes only. It is not intended to be or replace legal advice.
Please consult with your own attorney and tax professional to obtain advice on these issues.