New Hotel Room Tax on Kauai

[slip]

3% tax to be added.

Kauai council passes hotel room tax; mayor expected to sign

The Kauai County Council has passed a bill adding a 3% surcharge to the state’s hotel tax after the state stopped sharing revenue from the tax with the counties.

www.hawaiinewsnow.com

 

[echino]

Looks like the daily tax paid for timeshare stays increases by about 30%, correct? If you previously paid about $25 per night, you will now pay about $33 per night. That's because previously it was 10.25% of the half of the maintenance fee, and now it will be 13.25%.

 

[DeniseM]

As I read it, the 3% tax replaces the TAT tax that Kauai will no longer receive from the state?

In July, the state Legislature passed a bill that became Act 1 with Gov. David Ige’s signature, that removed the counties’ allocation of state-collected TAT revenues. The county used to receive close to $15 million a year from the state to support the impacts of tourism activities on county services. Act 1 also authorized the counties to establish and administer their own TAT at a maximum rate of 3%, in addition to the state TAT.

County has its own TAT now - The Garden Island

LIHU‘E — Mayor Derek Kawakami signed county Bill 2829 into law, now Ordinance 1099, which establishes a 3% Transient Accommodations Tax program for the County of Kaua‘i.

www.thegardenisland.com

 

[cowboy]

It looks to me like it’s on top of the tax the state collects. The article says that the state needs more revenue and is not sharing with the counties anymore.

 

[dioxide45]

As I read it, the 3% tax replaces the TAT tax that Kauai will no longer receive from the state?

County has its own TAT now - The Garden Island

LIHU‘E — Mayor Derek Kawakami signed county Bill 2829 into law, now Ordinance 1099, which establishes a 3% Transient Accommodations Tax program for the County of Kaua‘i.

www.thegardenisland.com

I beleive that article makes an incorrect statement with "In July, the state Legislature passed a bill that became Act 1 with Gov. David Ige’s signature." It was my understanding that the governor vetoed the legislation and was overridden by the legislature?

 

[TXTortoise]

As I read it, the 3% tax replaces the TAT tax that Kauai will no longer receive from the state?

County has its own TAT now - The Garden Island

LIHU‘E — Mayor Derek Kawakami signed county Bill 2829 into law, now Ordinance 1099, which establishes a 3% Transient Accommodations Tax program for the County of Kaua‘i.

www.thegardenisland.com

Denise is correct. All the islands will likely implement this, particularly since they weren’t getting their share of the TAT anyway, with Oahu getting the most.

Only impacts those that rent out a unit, e.g., VRBO/AirBNB, etc. and actually pay the tax. Seems to be rare for timeshare owners, unless doing it via VacationCandy.com, Air or brokers that collect and pay it.

 

[echino]

Denise is correct. All the islands will likely implement this, particularly since they weren’t getting their share of the TAT anyway, with Oahu getting the most.

Only impacts those that rent out a unit, e.g., VRBO/AirBNB, etc. and actually pay the tax. Seems to be rare for timeshare owners, unless doing it via VacationCandy.com, Air or brokers that collect and pay it.

It directly impact everyone staying in timeshares. Previously, it was 10.25% of 1/2 of the maintenance fees, now it will be 13.25%. So about 30% increase. Collected by resorts at check out.

 

[TXTortoise]

It directly impact everyone staying in timeshares. Previously, it was 10.25% of 1/2 of the maintenance fees, now it will be 13.25%. So about 30% increase. Collected by resorts at check out.

I’ll check again, but it was the TAT that was impacted, not the daily occupancy tax, which can vary from $1.50 for a Maui OF studio to $23 or so for the 2 BR unit...and paid at checkout by occupant. Then again, after the last two years, I expect we will see even more tax increases on visitors.

 

[dioxide45]

--

 

[dioxide45]

I’ll check again, but it was the TAT that was impacted, not the daily occupancy tax, which can vary from $1.50 for a Maui OF studio to $23 or so for the 2 BR unit...and paid at checkout by occupant. Then again, after the last two years, I expect we will see even more tax increases on visitors.

They are the same. For timeshares they just call it Timeshare Occupancy tax and it is calculated as 10.5% of 50% of the maintenance fee for the unit. It isn't a fixed amount. It varies (increases) every year as maintenance fees go up. This is only paid on timeshare based stays. Cash based stays (through the resort) at timeshares pay the regular TAT, which is the same amount.

https://files.hawaii.gov/tax/legal/brochures/TAT_brochure.pdf

 

[TXTortoise]

They aren’t the same…

Hawaii has:

GET - Excise Tax
TAT - Accomodations tax - This is the tax that Maui, and Kauai (and I expect Hawaii) will add 3% to.

I do see the opportunity for the islands to write their own rules on who and how collected, but right now it looks to just be an increase in the current TAT collection and reporting process.

These two must be collected and paid on rental income by any owner renting out a unit, even if rented out via a 3rd party.

TOT - Occupancy tax… this is the only one paid by whomever is occupying the room and is determine as you noted, with the bulk of the tax applied to the one bedroom when a two bedroom is locked off.

Lots of links, but this is a reasonable summary.

GET, TAT & TOT Requirements for Homeowner Associations - Destination Maui

Do you get confused distinguishing between GET, TAT and TOT for Homeowner Associations? Hawaii General Excise Tax (“GET”), Hawaii Transient Accommodations Tax (“TAT”) and the Hawaii Time-Share Occupancy Tax (“TOT”)- these three taxes are based on gross income or receipts. In other words, they...

www.destinationmaui.net

 

[dioxide45]

They aren’t the same…

Hawaii has:

GET - Excise Tax
TAT - Accomodations tax - This is the tax that Maui, and Kauai (and I expect Hawaii) will add 3% to.

I do see the opportunity for the islands to write their own rules on who and how collected, but right now it looks to just be an increase in the current TAT collection and reporting process.

These two must be collected and paid on rental income by any owner renting out a unit, even if rented out via a 3rd party.

TOT - Occupancy tax… this is the only one paid by whomever is occupying the room and is determine as you noted, with the bulk of the tax applied to the one bedroom when a two bedroom is locked off.

Lots of links, but this is a reasonable summary.

GET, TAT & TOT Requirements for Homeowner Associations - Destination Maui

Do you get confused distinguishing between GET, TAT and TOT for Homeowner Associations? Hawaii General Excise Tax (“GET”), Hawaii Transient Accommodations Tax (“TAT”) and the Hawaii Time-Share Occupancy Tax (“TOT”)- these three taxes are based on gross income or receipts. In other words, they...

www.destinationmaui.net

But doesn't TOT come to be when TAT doesn't apply because it isn't a cash stay? TOT uses the same forms for remittance as TAT. That is why I think they are one and the same for the most part. The PDF I linked to referred to it as TAT, but Timeshare Occupancy is called out. I think by raising TAT they are also raising TOT?

 

[echino]

The keep saying the tax increased by 3%, but it's incorrect. An increase from 10.25% to 13.25% is not 3%. It's closer to 30%.

 

[TXTortoise]

But doesn't TOT come to be when TAT doesn't apply because it isn't a cash stay? TOT uses the same forms for remittance as TAT. That is why I think they are one and the same for the most part. The PDF I linked to referred to it as TAT, but Timeshare Occupancy is called out. I think by raising TAT they are also raising TOT?

I don’t think so, but waiting to see how implemented.

 

[controller1]

But doesn't TOT come to be when TAT doesn't apply because it isn't a cash stay? TOT uses the same forms for remittance as TAT. That is why I think they are one and the same for the most part. The PDF I linked to referred to it as TAT, but Timeshare Occupancy is called out. I think by raising TAT they are also raising TOT?

Yes, if you read the guide from the state of Hawaii they are essentially the same.

 

[controller1]

Yes, if you read the guide from the state of Hawaii they are essentially the same.

https://files.hawaii.gov/tax/legal/taxfacts/tf96-2.pdf

 

[TXTortoise]

https://files.hawaii.gov/tax/legal/taxfacts/tf96-2.pdf

That’s a good summary I hadn’t seen.

Irrespective, if you rent out a timeshare unit out, as the owner, you are obligated to pay the TAT on the gross rental fee to the state and the occupant is obligated to pay the TOT to the resort as the occupant. Two distinct taxes.

 

[controller1]

That’s a good summary I hadn’t seen.

Irrespective, if you rent out a timeshare unit out, as the owner, you are obligated to pay the TAT on the gross rental fee to the state and the occupant is obligated to pay the TOT to the resort as the occupant. Two distinct taxes.

Yes, two distinct taxes but your interpretation does not appear to be correct per the state of Hawaii. Your use of TOT is what Hawaii refers to as TSO (Timeshare Occupancy Tax).

Per FAQ 8 from Hawaii Tax Facts 98-4:
I occupied my unit for 7 days and rented it out for 7 days. Am I subject to the TSO tax for all 14 days?
No. Because you occupied the unit for only 7 days, the daily fair market rental value is multiplied by 7 days to get the total fair market rental value that is subject to the TSO tax paid by the plan manager.

Because you received income from the rental of the unit, you must be licensed under the TAT Law and under the General Excise Tax (GET) Law. You, not the plan manager, must report and pay the TAT at 10.25% on the gross rental proceeds (not the fair market rental value) from the rental of the time share unit. Because you are subject to the TAT for the 7 days that the time share unit was rented, the plan manager is not liable for the TSO tax for those 7 days. You must also report and pay the GET at 4% (plus the county surcharge if applicable) on the gross income from the rental of the time share.

By law it appears there would not be an instance in which both the TAT and TSO would be paid for the same time period.

https://files.hawaii.gov/tax/legal/taxfacts/tf98-4.pdf

 

[TXTortoise]

That is strange since we know that both occupants will pay the resort the occupancy tax at checkout, at least at Marriott Maui, and the owner would pay the TAT on the rental.

Took a lot to wrap my head around, and integrate into their tax collection processing for TAT and GET. Paying the occupancy tax at checkout was always separate and handled by resort…and always collected.

 

[dioxide45]

That is strange since we know that both occupants will pay the resort the occupancy tax at checkout, at least at Marriott Maui, and the owner would pay the TAT on the rental.

Took a lot to wrap my head around, and integrate into their tax collection processing for TAT and GET. Paying the occupancy tax at checkout was always separate and handled by resort…and always collected.

It would seem that Timeshare Occupancy (TSO) is really there to cover those non cash/non rental stays. Like home resort and timeshare exchange. In reality, it is far more complex and if someone is renting out their home resort week, there should be no need for the owner to collect TAT on the rental amount and then the management company (resort) to collect it again on checkout at TSO.