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Legislature Update — Legislature 2018 Now in Session
The legislature started up again in mid-January and originally about 30 bills were introduced which could affect you. As predicted, most of them fell away, so it probably good we didn’t bore with the full list a few weeks ago. And one bill we wouldn’t have mentioned three weeks ago is now top of the list. The bills which remain are quite concerning, as usual.
This bill is the latest iteration of the AirBnB as tax collector bill that we have seen for the past three years. However, it has mutated into something quite frightening. How AirBnB can continue to support the bill is a complete mystery. (If you advertise with AirBnB, you might ask them!)
In a nutshell, SB 2963 includes:
- An amnesty program for those who haven’t been totally on-board with their zoning permits, GET and TAT collection and remittance. We have been asking for this provision for year, so good to see it is finally on the table.
- The advertising broker ( i.e. AirBnB) may collect and remit tax on behalf of all advertisers. However, if they mess up, AirBnB and the owner are jointly and severally liable for all taxes. So, if AirBnB collects TAT and doesn’t remit it, you are potentially on the hook. The bill also requires AirBnb to provide details of how many nights were rented, the rates per night, the address and name and number of the local contact – and this information can be made available to the Counties. The County of Honolulu has been asking for this for years to help detect compliance with their complex permitting requirements.
- All operators must provide proof of compliance with all zoning, land use and tax laws. Our concern here is in providing positive proof of compliance – how do you prove you are legal in every regard. The Counties have no system to accommodate this.
- Failure to comply with any tax or zoning law is considered a Class C Felony (more than one year in prison). The bill also provides for not only seizure of the property but also all income earned from operating a vacation rental.The bill also allows counties to phase out all transient accommodation in any zone for any reason.
RBOAA is actively opposing this bill, but, we need to warn you that the legislators want this bill to pass and have cleared away a lot of procedural steps to ensure that it does go through.This bill has already cleared the Senate and the next step is to be heard by a House Committee (we don’t know which one or when).
The Hawaii Teachers union has once again brought forward the Constitutional Amendment to require the TAT to be increased in order to fund education in the State of Hawaii.We saw this one go right to the bitter end last year before ultimately failing so that the TAT could be increased to pay for the Honolulu rail system.It is hard to get a read on the support, or lack thereof, for this bill at the Legislature, but taxing visitors is politically popular in an election year as most of them don’t vote.
This bill requires all local contacts to be real estate agents or brokers.This is the fight we fought a number of years ago. Frankly, we are surprised that the topic has returned as we have heard no concerns about the local contact requirement since it became law.
There are a couple other bills still being considered.
One would change the way properties owned by non-residents are taxed upon sale. The original draft displayed a surprising lack of understanding as to how the tax system works and so is currently deep in re-writes. This one may not come back until next year
Another bill clarifies that all amounts charged to transient vacation rental guests are subject to TAT. It seems some hotels are charging a resort fee but not collecting tax on the resort fee.
We will continue to work with the legislators on your behalf and hopefully any legislation which does pass is fair and balanced. We have a pretty strong track record over the past 6 years.
Please remember that everyone at RBOAA is a volunteer and is donating their time on top of working regular paying jobs and whatever else they have going on. These people dedicate countless hours of their personal time to help protect our – and your – investments in Hawaii.
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Mahalo and Aloha,
Neal and Annette