Report Title:

Transient accommodations tax



Amends the definitions of "gross rental" or "gross rental proceeds" and "operator" (HB1589 HD1.)



H.B. NO.



H.D. 1






relating to transient accommodations tax.



SECTION 1. Section 237D-1, Hawaii Revised Statutes, is amended as follows:

1. By amending the definitions of "gross rental" or "gross rental proceeds" to read as follows:

""Gross rental" or "gross rental proceeds" means the gross receipts, cash or accrued, of the taxpayer received as compensation for the furnishing of transient accommodations and the value proceeding or accruing from the [furnishing of] sale or resale of such accommodations without any deductions on account of the cost of property or services sold, the cost of materials used, labor cost, taxes, royalties, interest, discounts, or any other expenses whatsoever. Every taxpayer shall be presumed to be dealing on a cash basis unless the taxpayer proves to the satisfaction of the department of taxation that the taxpayer is dealing on an accrual basis and the taxpayer's books are so kept, or unless the taxpayer employs or is required to employ the accrual basis for the purposes of the tax imposed by chapter 237 for any taxable year in which event the taxpayer shall report the taxpayer's gross income for the purposes of this chapter on the accrual basis for the same period.

The words "gross rental" or "gross rental proceeds" shall not be construed to include the amounts of taxes imposed by chapter 237 or this chapter on operators of transient accommodations and passed on, collected, and received from the consumer as part of the receipts received as compensation for the furnishing of transient accommodations. Where transient accommodations are furnished through arrangements made by a travel agency or tour packager at noncommissionable negotiated contract rates, and the gross income is divided between the operator of transient accommodations on the one hand and the travel agency or tour packager on the other hand, [gross rental or gross rental proceeds to the operator means only the respective portion allocated or distributed to the operator,] the tax imposed by this chapter shall apply to each person with respect to that person's respective portion of the proceeds, and no more. For purposes of this definition, where the operator maintains a schedule of rates for identifiable groups of individuals, such as kamaainas, upon which the accommodations are leased, let, or rented, gross rental or gross rental proceeds means the receipts collected and received based upon the scheduled rates and recorded as receipts in its books and records."

2. By amending the definition of "operator" to read as follows:

""Operator" means [any]:

(1) Any person operating a transient accommodation, whether as owner or proprietor or as lessee, sublessee, mortgagee in possession, licensee, or otherwise, or engaging or continuing in any service business [which] that involves the actual furnishing of transient accommodations[.]; and

(2) A travel agency or tour packager furnishing transient accommodations through noncommissionable negotiated contract rates who is dividing gross income between the person operating a transient accommodation on the one hand, and the travel agency or tour packager on the other hand."

SECTION 2. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 3. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2001.