Hawaii Taxes on Rentals [Email from Marriott]

[Dewnay]

Just received the following from Marriott. Does anyone know anything about the process to collect and pay the GET and TAT taxes. Are these taxes collected from the renter or paid by the owner out of the rental proceeds?

Dear Owner,

The following notice is being provided to you at the request of the Hawaii Department of Taxation.

NOTICE REGARDING HAWAII TAXES

The State of Hawaii imposes a General Excise Tax ("GET") and Transient Accommodations Tax ("TAT") on the proceeds of the rental of timeshare interests. If you elect to rent your timeshare interest whether on your own, through Marriott or through another operator, please note that unless arrangements are made for collection and payment of these taxes, you may be liable for the payment of both the GET and TAT due on the rental proceeds. Failure to timely remit these taxes to the Department of Taxation of the State of Hawaii may result in the assessment of the taxes, interest and penalties against you. Any such liability may be in addition to any federal or Hawaii income tax requirements.

Because each individual tax situation varies, you should consult with your accountant or other tax advisor regarding your filing requirements and with respect to the federal, state and local tax consequences of the rental of your timeshare interests.

The foregoing does not constitute and should not be construed as a legal or tax opinion or as legal or tax advice. The information in this letter is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code.

Thanks,

D.

 

[DeniseM]

This makes no sense at all, because all guests pay the TAT tax at check-out, whether you are a renter or a guest. Marriott collects it from everyone.

I think this is just a CYA move by Marriott, because they have no way of knowing if you have rented your timeshare or not, nor is it any of their business.

This was sent out to private condo owners some time ago, but I don't know how they can apply it to TS owners…YMMV….

 

[BocaBoy]

Perhaps the State of Hawaii believes there are timeshare resorts that do not collect these taxes at check-out?

 

[brianfox]

Got a weird E-mail from Marriott about TAT and GET

I own at Ko Olina, and this year we rented out our week for the first time ever.
I just got an E-mail from Marriott that was a "friendly reminder" that proceeds from timeshare rental may be subject to TAT and GET. They aren't saying taxes are due or not; they are just the messenger.

I don't want to avoid a tax if I owe it, but I don't know how to proceed.

Who do I contact about it?

Does my maintenance fee offset the rent?

Can Marriott prevent me from reserving weeks until the tax is paid?

Every time I rent from an owner, I pay these taxes to Marriott as a renter at the time of checkout. I'm sure my renter paid them as well, so I don't see why I as the owner would need to pay them a second time.

 

[Sandy VDH]

The TAT yes, all of the resorts I have stayed at collect it at source. I have not idea about the GET.

I am getting kind of annoyed with HI just thinking they can tax the crap out of TS owners as they have no say in the matter. We don't live there we can't object to the tax.

We pay property tax, and then again Tax on usage of the property that we have already paid tax on.

Seems a bit of gouging to me.

 

[DeniseM]

This part of the statement is ridiculous - how can you possibly process the tax on a rental handled by Marriott???

If you elect to rent your timeshare interest whether on your own, through Marriott or through another operator

Marriott just sent this out, so they can tell the state that the did as they were requested….

 

[McDuck123]

Just to clarify - the Hawaii resorts collect TOT tax (Transient Occupancy Tax) of about$10 $15 per day. TAT (Transient Accommodation tax) and GET (General Excise Tax) are addition 7% and 4% (roughly) and are required to be collected by the owner or their representative (mainly a real estate broker).

Having lived in HI - I know that in order for timeshare owners to comply with this tax regulation they would need to file for a GET and TAT license - or other such nonsense and then complete all the necessary paperwork and so forth - sounds like a major pain in the butt...

 

[PamMo]

And here's a worksheet, just to help you get started - http://files.hawaii.gov/tax/forms/2013/ta42.pdf

 

[yobo500]

I also received this email and would like clarification on it. I thought the TAT was included in our maintenance fees each year since it does not matter whether the owner stays in the unit or a renter. Very confusing for owners that do not rent their units very often.

 

[PearlCity]

Just to clarify - the Hawaii resorts collect TOT tax (Transient Occupancy Tax) of about$10 $15 per day. TAT (Transient Accommodation tax) and GET (General Excise Tax) are addition 7% and 4% (roughly) and are required to be collected by the owner or their representative (mainly a real estate broker).

Having lived in HI - I know that in order for timeshare owners to comply with this tax regulation they would need to file for a GET and TAT license - or other such nonsense and then complete all the necessary paperwork and so forth - sounds like a major pain in the butt...

Honestly, enforcement would be pain, but I think legally Marriott had to let owners know this. For the GET its equivalent to what I have to pay when I rent my house out, as GET is put on every financial transaction in hawaii. the TAT, Im not clear on. That one looks like a state double dip.

 

[PearlCity]

I must add the GET is already a regressive double dip tax. Contractors have to pay it to subcontractors. .. etc.

 

[DeniseM]

In my experience, nearly every timeshare front desk in Hawaii collects the TAT at check-out, from guests and owners alike. It's standard practice.

 

[PearlCity]

In my experience, nearly every timeshare front desk in Hawaii collects the TAT at check-out, from guests and owners alike. It's standard practice.

I think perhaps , marriott is saying if you rent for higher than maintenance fees youre supposed to collect the difference. But im speculating..

 

[DeniseM]

I think perhaps , marriott is saying if you rent for higher than maintenance fees youre supposed to collect the difference. But im speculating..

The TAT is not based on the maintenance fee.

The TAT is standardized based on the unit size/value. For instance, everyone who stays in the same unit will pay the same TAT, if Marriott has a sale, and lowers the rent on that unit, the TAT doesn't change, because the rent was lower.

Here is what Hawaii says about the tax:

The transient accommodations tax is a 6% tax levied on a business' gross rental income which consists of the total income received for the rental, but does not include separate charges for guest amenities such as meals and telephone calls, and also does not include any general excise or transient accommodations taxes which are visibly passed on to the guest or tenant. Operators of transient accommodations must pay the 6% TAT, and also the general excise tax at the rate of 4%.

http://files.hawaii.gov/tax/legal/taxfacts/tf96-02.htm

Timeshare management companies are already collecting and paying this tax from ALL guests, and it's bogus to ask owners to pay it again!

 

[yobo500]

From the information that I have found. It looks to me like the Timeshare Plan Manager(Marriott I think ) files the taxes with the State. I see no reason for an owner to have to pay twice. What does everyone else think?



These instructions will assist you in filling out your
Transient Accommodations Tax — Time Share Occupancy
(TSO) Registration Form (Form TA-40) correctly. The transient accommodations tax on time share occupancy is levied on
the occupant of a resort time share vacation unit at the rate of
7.25% on the unit’s fair market rental value.The timeshare plan
manager shall be liable for and pay to the State the transient c. accommodations tax on time share occupancy.

 

[DeniseM]

That is exactly what I'm saying - Marriott is ALREADY paying this tax for all stays - it's baloney!

 

[Saintsfanfl]

I think it's because technically revenue is being generated outside of the resort which would change the tax calculation. How would the resort know the amount to charge if they do not know how much the unit was rented for?

 

[DeniseM]

They have a standard rate based on the size of the unit, etc. it doesn't change.


Sent from my iPhone using Tapatalk

 

[SueDonJ]

Based on the first line of the email I agree that this is something Marriott is doing through an agreement with the state: "The following notice is being provided to you at the request of the Hawaii Department of Taxation."

I know that the Hawaiian timeshares have tax issues that are different from most others; various related discussions have taken place in the Hawaii forum as well as the Starwood/Marriott/etc forums. I don't remember this particular item - a letter from Marriott - being discussed, though. It seems to me that it can only be fully explained by the resorts' GM's or boards. The GM's can be reached by calling the resorts directly; those numbers and/or the boards' email addresses may be available on my-vacationclub.com. (Click on the resort page from this list of Marriott HI resorts, then click on the "Weeks Owners" tab, then scroll down to the info under "Contact Your Board of Directors.")

 

[DeniseM]

If you contact Marriott, I'm 99% sure they will say:

Because each individual tax situation varies, you should consult with your accountant or other tax advisor regarding your filing requirements and with respect to the federal, state and local tax consequences of the rental of your timeshare interests.

 

[SueDonJ]

If you contact Marriott, I'm 99% sure they will say:

I'd contact them to ask only, "Why is the resort sending out this letter this year, when we owners and Marriott have been engaged in renting out intervals since the resort was established? What is different this year?" That's not a question of personal tax issues; it's a question of Marriott procedure which the boards presumably would have discussed.

They might still come back with some version of what you quoted, sure, but IMO this is one of the few things that it's better to ask them directly than to ask TUG.

 

[PamMo]

The TAT is not based on the maintenance fee.

The TAT is standardized based on the unit size/value. For instance, everyone who stays in the same unit will pay the same TAT, if Marriott has a sale, and lowers the rent on that unit, the TAT doesn't change, because the rent was lower.

Here is what Hawaii says about the tax:



http://files.hawaii.gov/tax/legal/taxfacts/tf96-02.htm

...

This file is dated 1996, and there have been a lot of changes since then. Hawaii needs more tax revenue to support state and local spending, and going after timeshare rentals-by-owners makes sense. I think Marriott is writing to owners to comply with the new reporting requirements. http://files.hawaii.gov/tax/news/announce/ann14-03.pdf Are we getting lumped in with apartments, condos, and planned communities?

 

[DeniseM]

Hi Pam - Thanks for the more current info. - However, I don't see how the new bill changes anything for timeshare owners, because these taxes are ALREADY being paid on timeshare units.

By definition, ALL timeshares are "transient accommodations," whether a TS owner is occupying their own unit, or it was rented by the management company, or rented by the owner. So the taxes have to be paid on ALL timeshare/hotel units at timeshare resorts - this isn't anything new.

There may now be a more burdensome reporting requirements for the management companies, but since they are already collecting and paying the taxes, I don't see how this changes anything for owners.

From what I have read in the past, this legislation is really aimed at small, private vacation rental owners who may or may not be paying the taxes, because they are flying under the radar. Like people who rent their own condo or vacation home, that isn't affiliate with a resort system.

 

[PamMo]

I don't know. It's looking more and more like Hawaiian politicians want to collect revenue on personal timeshare rentals. (That wouldn't surprise any owner who has watched Hawaiian RE tax rates soar on timeshares.) I think that's why Marriott sent out the notice. If you rent a timeshare in Hawaii, are you now supposed to have a GET and TAT identification number, send in a list of all places that you advertise your rental, and fill out a tax form with payment every year you rent your unit? And you're dead on about the TAT - I don't get the TAT reporting because even as owners, we pay that every time we use our own units in Hawaii???!!!

 

[DeniseM]

That is completely illogical (not you - Hawaii) because these fees are already being paid by the management companies on all TS units. It would be ridiculous to charge for them twice. Of course we ARE talking about Hawaii...

And you're dead on about the TAT - I don't get the TAT reporting because even as owners, we pay that every time we use our own units in Hawaii???!!!

Exactly - are we suppose to report the TAT every time we use our own units?

The TAT is already being paid by all guests/owners/renters at check-out, and logic tells me that owners are paying the GET with their maintenance fees (because you KNOW management isn't paying it) so how can they possibly charge us again?