Report Title:

TAT; Vacation Rentals; Bed and Breakfasts

 

Description:

Requires the Department of Taxation (DOTAX) to coordinate with the Hawaii Tourism Authority and each respective county to identify property owners subject to the transient accommodations tax who operate vacation rentals and bed and breakfast establishments. Allows audits of these owners and other enforcement actions to ensure compliance with applicable laws relating to the transient accommodations tax. Requires the counties to share transient accommodations information with DOTAX. Requires DOTAX to provide annual reports, including providing information on the estimated amount of general excise tax and transient accommodations tax revenue that is uncollected, and therefore lost, due to the lack of county enforcement. (SB750 HD1)

 


THE SENATE

S.B. NO.

750

TWENTY-FOURTH LEGISLATURE, 2007

S.D. 3

STATE OF HAWAII

H.D. 1

 

 

 

 

 

A BILL FOR AN ACT


 

 

RELATING TO TRANSIENT ACCOMMODATIONS TAX.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


SECTION 1. The legislature finds that the State needs a better reporting system with respect to transient accommodations tax revenues collected from residential properties. Better reporting will enable the State to provide a more comprehensive tax system that is more equitable and cost-effective. In addition, better enforcement is needed to ensure that owners of vacation rentals and bed and breakfast establishments comply with the transient accommodations tax law.

The purpose of this Act is to, among other things:

(1) Require the department of taxation to coordinate with the Hawaii tourism authority and each respective county to identify owners of residential properties subject to the transient accommodations tax who operate vacation rentals -- where the owner does not reside on the property -- and bed and breakfast establishments -- where the owner resides on the property;

(2) Allow the department of taxation to coordinate with the Hawaii tourism authority and each respective county to conduct audits of the owners of residential properties who operate vacation rentals and bed and breakfast establishments and take other administrative and enforcement actions necessary to ensure compliance with applicable statutes, rules, ordinances, and other provisions of the law relating to the transient accommodations tax;

(3) Require the counties and the Hawaii tourism authority to share certain transient accommodations information with the department of taxation;

(4) Require the department of taxation to report annually to the legislature on:

(A) Transient accommodations tax revenues received from owners of residential properties who operate vacation rentals and bed and breakfast establishments; and

(B) The estimated amount of general excise tax and transient accommodations tax revenue that is uncollected, and therefore lost, due to the lack of county enforcement of the tax laws;

(5) Require the department of taxation to review the forms and process relating to the collection of the transient accommodations tax from vacation rentals and bed and breakfast establishments and submit a report on the results of the review to the legislature at least twenty days before the regular session of 2008; provided that the report also contain recommendations on the appropriate funding mechanism, to include consideration of revenue collected from the transient accommodations tax, to reimburse counties for the costs associated with implementing this Act; and

(6) Appropriate funds to the department of taxation for additional investigations.

SECTION 2. Chapter 237D, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"237D-   Vacation rentals and bed and breakfast establishments; enforcement; reporting. (a) The department shall coordinate with the Hawaii tourism authority and each county to identify owners of residential properties subject to this chapter who operate:

(1) Vacation rentals, that is, when the owner does not reside on the property; and

(2) Bed and breakfast establishments, that is, when the owner resides on the property.

(b) The department may coordinate with the Hawaii tourism authority and each county to conduct general excise and income tax audits of the owners of residential property subject to this chapter who operate vacation rentals or bed and breakfast establishments and take other administrative and enforcement actions necessary to ensure compliance with applicable statutes, rules, ordinances, and other provisions of this chapter.

(c) The counties and the Hawaii tourism authority shall provide to the department the location of vacation rentals or bed and breakfast establishments subject to the taxes under this chapter; provided that the department shall not release any personal information regarding the taxes collected under this chapter.

(d) The department shall report annually to the legislature on:

(1) Tax revenues received under this chapter from owners of residential properties subject to this chapter who operate vacation rentals or bed and breakfast establishments, or both; and

(2) The estimated amount of general excise tax and transient accommodations tax revenue that is uncollected, and therefore lost, due to the lack of county enforcement of the tax laws;

(e) For the purposes of this section, the counties shall establish criteria:

(1) To identify vacation rentals and bed and breakfast establishments; and

(2) For the permitting of vacation rentals and bed and breakfast establishments."

SECTION 3. Section 201B-3, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Except as otherwise limited by this chapter, the authority may:

(1) Sue and be sued;

(2) Have a seal and alter the same at pleasure;

(3) Make and execute contracts and all other instruments necessary or convenient for the exercise of its powers and functions under this chapter; provided that the authority may enter into contracts and agreements for a period of up to five years, subject to the availability of funds; and provided further that the authority may enter into agreements for the use of the convention center facility for a period of up to ten years;

(4) Make and alter bylaws for its organization and internal management;

(5) Unless otherwise provided in this chapter, adopt rules in accordance with chapter 91 with respect to its projects, operations, properties, and facilities;

(6) Through its executive director represent the authority in communications with the governor and with the legislature;

(7) Through its executive director, provide for the appointment of officers, agents, and employees, subject to the approval of the board, prescribing their duties and qualifications, and fixing their salaries, without regard to chapters 76 and 78 if there is no anticipated revenue shortfall in the tourism special fund and funds have been appropriated by the legislature and allotted as provided by law;

(8) Through its executive director purchase supplies, equipment, or furniture;

(9) Through its executive director allocate the space or spaces [which] that are to be occupied by the authority and appropriate staff;

(10) Engage the services of qualified persons to implement the State's tourism marketing plan or portions thereof as determined by the authority;

(11) Engage the services of consultants on a contractual basis for rendering professional and technical assistance and advice;

(12) Procure insurance against any loss in connection with its property and other assets and operations in [such] amounts and from [such] insurers as it deems desirable;

(13) Contract for or accept revenues, compensation, proceeds, and gifts or grants in any form from any public agency or any other source, including any revenues or proceeds arising from the operation or use of the convention center;

(14) Develop, coordinate, and implement state policies and directions for tourism and related activities taking into account the economic, social, and physical impacts of tourism on the State and its natural resources infrastructure; provided that the authority shall support the efforts of other state and county departments or agencies to manage, improve, and protect Hawaii's natural environment and areas frequented by visitors;

(15) Have a permanent, strong focus on marketing and promotion;

(16) Conduct market development-related research as necessary;

(17) Coordinate all agencies and advise the private sector in the development of tourism-related activities and resources;

(18) Work to eliminate or reduce barriers to travel in order to provide a positive and competitive business environment, including coordinating with the department of transportation on issues affecting airlines and air route development;

(19) Market and promote sports-related activities and events;

(20) Coordinate the development of new products with the counties and other public sectors and private sectors, including the development of sports, culture, health and wellness, education, technology, agriculture, and nature tourism;

(21) Establish a public information and educational program to inform the public of tourism and tourism-related problems;

(22) Encourage the development of tourism educational, training, and career counseling programs;

(23) Establish a program to monitor, investigate, and respond to complaints about problems resulting directly or indirectly from the tourism industry and [taking] take appropriate action as necessary[;], including but not limited to coordination with the department of taxation under section 237D- ;

(24) Set and collect rents, fees, charges, or other payments for the lease, use, occupancy, or disposition of the convention center facility without regard to chapter 91;

(25) Notwithstanding the provisions of chapter 171, acquire, lease as lessee or lessor, own, rent, hold, and dispose of the convention center facility in the exercise of its powers and the performance of its duties under this chapter; and

(26) Acquire by purchase, lease, or otherwise, and develop, construct, operate, own, manage, repair, reconstruct, enlarge, or otherwise effectuate, either directly or through developers, a convention center facility."

SECTION 4. The department of taxation shall review the forms and process for the collection of the transient accommodations tax and include separate categories of collection for residential properties used as vacation rentals and bed and breakfast establishments.

The department of taxation shall report the results of its review and report any findings and recommendations, including any proposed state and county enforcement and compliance initiatives, to the legislature at least twenty days prior to the convening of the regular session of 2008. In its report, the department of taxation shall also submit recommendations on the appropriate funding mechanism, to include consideration of revenue collected from the transient accommodations tax, to reimburse counties for the costs associated with implementing this Act.

SECTION 5. There is appropriated out of the general revenues of the State of Hawaii the sum of $          , or so much thereof as may be necessary for fiscal year 2007-2008, for additional investigation of undocumented vacation rentals and bed and breakfast establishments, in coordination with the counties and the Hawaii tourism authority.

The sum appropriated shall be expended by the department of taxation for the purposes of this Act.

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect on January 1, 2025.