Report Title:

Time Share; Repeal TAT

 

Description:

Repeals the transient accommodation tax imposed on time share units.

 

THE SENATE

S.B. NO.

456

TWENTY-FIRST LEGISLATURE, 2001

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO TRANSIENT ACCOMMODATION TAX.

 

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

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

1. By repealing the definition of "fair market rental value".

[""Fair market rental value" means an amount equal to one-half the gross daily maintenance fees that are paid by the owner, are attributable to the time share unit, and include maintenance costs, operational costs, insurance, repair costs, administrative costs, taxes, other than transient accommodations taxes, and other costs including payments required for reserves or sinking funds. The taxpayer shall use gross daily maintenance fees, unless the taxpayer proves or the director determines that the gross daily maintenance fees do not fairly represent fair market rental value taking into account comparable transient accommodation rentals or other appraisal methods."]

2. By repealing the definition of "occupant".

[""Occupant" means an owner of a resort time share vacation plan or other person occupying the resort time share vacation unit."]

3. By repealing the definition of "owner".

[""Owner" means any person who owns a resort time share vacation interest; provided that to the extent and for those purposes provided in an agreement of sale, the vendee under the agreement of sale shall be considered the owner of the resort time share vacation interest."]

4. By repealing the definition of "plan manager".

[""Plan manager" means a person who undertakes the duties, responsibilities, and obligations of managing a resort time share vacation plan or is required to act for a resort time share vacation plan under this chapter."]

5. By repealing the definition of "resort time share vacation interest".

[""Resort time share vacation interest" means any interest in a resort time share vacation unit or plan which entitles the owner thereof to the use, occupancy, or possession of a resort time share vacation unit on a periodically recurring basis."]

6. By repealing the definition of "resort time share vacation plan".

[""Resort time share vacation plan" means any plan or program subject to chapter 514E in which the use, occupancy, or possession of one or more resort time share vacation units circulates among various persons for less than a sixty-day period in any year, for any occupant. The term resort time share vacation plan includes both resort time share vacation ownership plans and resort time share vacation use plans, as follows:

(1) "Resort time share vacation ownership plan" means any arrangement whether by tenancy in common, sale, deed, or by other means, whereby the purchaser receives an ownership interest and the right to use the property for a specific or discernible period by temporal division.

(2) "Resort time share vacation use plan" means any arrangement, excluding normal hotel operations, whether by membership agreement, lease, rental agreement, license, use agreement, security, or other means, whereby the purchaser receives a right to use accommodations or facilities, or both, in a resort time share vacation unit for a specific or discernible period by temporal division, but does not receive an ownership interest."]

7. By repealing the definition of "resort time share vacation unit."

[""Resort time share vacation unit" means the actual and promised accommodations, and related facilities, which are the subject of a resort time share vacation plan."]

SECTION 2. Section 237D-2, Hawaii Revised Statutes, is amended to read as follows:

"§237D-2 Imposition and rates. (a) There is levied and shall be assessed and collected each month a tax of:

(1) Five per cent for the period beginning on January 1, 1987, to June 30, 1994;

(2) Six per cent for the period beginning July 1, 1994, to December 31, 1998; and

(3) 7.25 per cent for the period beginning on January 1, 1999, and thereafter;

on the gross rental or gross rental proceeds derived from furnishing transient accommodations.

(b) Every operator shall pay to the State the tax imposed by subsection (a) as provided in this chapter.

[(c) There is levied and shall be assessed and collected each month on the occupant of a resort time share vacation unit, a transient accommodations tax of 7.25 per cent on the fair market rental value.

(d) Every plan manager shall be liable for and pay to the State the transient accommodations tax imposed by subsection (c) as provided in this chapter. Every resort time share vacation plan shall be represented by a plan manager who shall be subject to this chapter.]"

SECTION 3. Section 237D-4, Hawaii Revised Statutes, is amended to read as follows:

"§237D-4 Certificate of registration. (a) Each operator [or plan manager] as a condition precedent to engaging or continuing in the business of furnishing transient accommodations [or in business as a resort time share vacation plan] shall register with the director the name and address of each place of business within the State subject to this chapter. The operator [or plan manager] shall make a one-time payment as follows:

(1) $5 for each registration for transient accommodations consisting of one to five units; and

(2) $15 for each registration for transient accommodations consisting of six or more units[; and

(3) $15 for each resort time share vacation plan within the State;].

upon receipt of which the director shall issue a certificate of registration in such form as the director determines, attesting that the registration has been made. The registration shall not be transferable and shall be valid only for the operator [or plan manager] in whose name it is issued and for the transaction of business at the place designated therein.

The registration, or in lieu thereof a notice stating where the registration may be inspected and examined, shall at all times be conspicuously displayed at the place for which it is issued. Acquisition of additional transient accommodation units after payment of the one-time fee shall not result in additional fees.

(b) The registration provided for by this section shall be effective until canceled in writing. Any application for the reissuance of a previously canceled registration identification number shall be regarded as a new registration application and shall be subject to the payment of the one-time registration fee. The director may revoke or cancel any license issued under this chapter for cause as provided by rule under chapter 91.

[(b)] (c) If the license fee is paid, the department shall not refuse to issue a registration or revoke or cancel a registration for the exercise of a privilege protected by the First Amendment of the Constitution of the United States, or for the carrying on of interstate or foreign commerce, or for any privilege the exercise of which, under the Constitution and laws of the United States, cannot be restrained on account of nonpayment of taxes, nor shall section 237D-14 be invoked to restrain the exercise of such a privilege, or the carrying on of such commerce.

[(c)] (d) Any person who may lawfully be required by the State, and who is required by this chapter, to register as a condition precedent to engaging or continuing in the business of furnishing transient accommodations [or as a plan manager] subject to taxation under this chapter, who engages or continues in the business without registering in conformity with this chapter, shall be guilty of a misdemeanor. Any director, president, secretary, or treasurer of a corporation who permits, aids, or abets such corporation to engage or continue in business without registering in conformity with this chapter, shall likewise be guilty of a misdemeanor. The penalty for the misdemeanors shall be that prescribed by section 231-34 for individuals, corporations, or officers of corporations, as the case may be, for violation of that section."

SECTION 4. Section 237D-6, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) On or before the last day of each calendar month, every operator taxable, [or plan manager liable] under this chapter during the preceding calendar month shall file a sworn return with the director in such form as the director shall prescribe together with a remittance for the amount of the tax in the form required by section 237D-6.5. Sections 237-30 and 237-32 shall apply to returns and penalties made under this chapter to the same extent as if the sections were set forth specifically in this section."

SECTION 5. Section 237D-7, Hawaii Revised Statutes, is amended to read as follows:

"§237D-7 Annual return. On or before the twentieth day of the fourth month following the close of the taxable year, every person who has become liable for the payment of the taxes under this chapter during the preceding tax year shall file a return summarizing that person's liability under this chapter for the year, in such form as the director prescribes. The operator [or plan manager] shall transmit with the return a remittance covering the residue of the tax chargeable to the operator [or plan manager], if any, to the office of the appropriate state district tax assessor designated in section 237D-8. The return shall be signed by the taxpayer, if made by an individual, or by the president, vice-president, secretary, or treasurer of a corporation, if made on behalf of a corporation. If made on behalf of a partnership, firm, society, unincorporated association, group, hui, joint adventure, joint stock company, corporation, trust estate, decedent's estate, trust, or other entity, any individual delegated by the entity shall sign the same on behalf of the taxpayer. If for any reason it is not practicable for the individual taxpayer to sign the return, it may be done by any duly authorized agent. The department, for good cause shown, may extend the time for making the return on the application of any taxpayer and grant such reasonable additional time within which to make the return as the department may deem advisable.

Section 232-2 applies to the annual return, but not to a monthly return."

SECTION 6. Section 237D-7.5, Hawaii Revised Statutes, is amended to read as follows:

"§237D-7.5 Federal assessments; adjustments of gross rental[,] or, gross rental proceeds[, or fair market rental value]; report to the department. (a) Any person required to report to the department by section 235-101(b), also shall report to the department any change, correction, adjustment, or recomputation of gross rental[,] or, gross rental proceeds[, or fair market rental value] subject to the tax imposed by this chapter. This report shall be made in the form of a return amending the person's gross rental[,] or, gross rental proceeds[, or fair market rental value] as previously reported on a return filed with the department for the taxable year. If no return has been filed with the department for the taxable year, a return shall be filed and shall take into account any change, correction, adjustment, or recomputation of gross rental[,] or, gross rental proceeds[, or fair market rental value].

(b) Any return or amended return required by this section shall be filed with the department within ninety days after the change, correction, adjustment, or recomputation is finally determined or an amended return is filed with the Internal Revenue Service. The return or amended return shall be accompanied by a copy of the document issued by the United States notifying the taxpayer of the change, correction, adjustment, or recomputation.

(c) The statutory period for the assessment of any deficiency or the determination of any refund attributable to the report required by this section shall not expire before the expiration of one year from the date the department is notified by the taxpayer or the Internal Revenue Service, whichever is earlier, of such a report as provided in subsection (a). Before the expiration of this one-year period, the department and the taxpayer may agree, in writing, to the extension of this period. The period so agreed upon may be further extended by subsequent agreements in writing made before the expiration of the period previously agreed upon."

SECTION 7. Section 237D-8, Hawaii Revised Statutes, is amended to read as follows:

"§237D-8 Filing of returns. All monthly, quarterly, semiannual, and annual returns shall be transmitted to the office of the taxation district in which the transient accommodation upon which the tax is imposed is situated [taxes arose] or to the office of the first taxation district in Honolulu."

SECTION 8. Section 237D-8.6, Hawaii Revised Statutes, is amended to read as follows:

"§237D-8.6 Reconciliation; form requirement. [(a)] On or before the twentieth day of the fourth month following the close of the taxable year, every person who has become liable for the payment of taxes under this chapter during the preceding taxable year and who has furnished transient accommodations which were exempt, for any portion of the taxable year, from the tax imposed under this chapter, shall file a reconciliation for transient accommodations as prescribed by the director indicating the amount of gross income that was subject to such tax and the amount that was subject to the general excise tax imposed under chapter 237.

[(b) On or before the twentieth day of the fourth month following the close of the taxable year, every plan manager who has become liable for the payment of taxes under this chapter during the preceding taxable year shall file a reconciliation indicating the period of time that the owner of a resort time share vacation unit was subject to the general excise tax or the tax under section 237D-2(a).]"

SECTION 9. Section 237D-9, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) If any operator [or plan manager] fails to make a return as required by this chapter, the director shall make an estimate of the tax liability of the operator [or plan manager] from any information the director obtains, and according to the estimate so made, assess the taxes, interest, and penalty due the State from the operator [or plan manager], give notice of the assessment to the operator [or plan manager,] and make demand upon the operator [or plan manager] for payment. The assessment shall be presumed to be correct until and unless, upon an appeal duly taken as provided in section 237D-11, the contrary shall be clearly proved by the person assessed, and the burden of proof upon such appeal shall be upon the person assessed to disprove the correctness of assessment."

SECTION 10. Section 237D-10, Hawaii Revised Statutes, is amended to read as follows:

"§237D-10 Overpayment; refunds. Upon application by an operator [or plan manager], if the director determines that any tax, interest, or penalty has been paid more than once, or has been erroneously or illegally collected or computed, the tax, interest, or penalty shall be credited by the director on any taxes then due from the operator [or plan manager] under this chapter. The director shall refund the balance to the operator [or plan manager] or the operator's [or plan manager's] successors, administrators, executors, or assigns in accordance with section 231-23. No credit or refund shall be allowed for any tax imposed by this chapter, unless a claim for such credit or refund is filed as follows:

(1) If an annual return is timely filed, or is filed within three years after the date prescribed for filing the annual return, then the credit or refund shall be claimed within three years after the date the annual return was filed or the date prescribed for filing the annual return, whichever is later.

(2) If an annual return is not filed, or is filed more than three years after the date prescribed for filing the annual return, a claim for credit or refund shall be filed within:

(A) Three years after the payment of the tax; or

(B) Three years after the date prescribed for the filing of the annual return,

whichever is later.

Paragraphs (1) and (2) are mutually exclusive. The preceding limitation shall not apply to a credit or refund pursuant to an appeal, provided for in section 237D-11.

As to all tax payments for which a refund or credit is not authorized by this section (including, without prejudice to the generality of the foregoing, cases of unconstitutionality), the remedies provided by appeal or by section 40-35 are exclusive."

SECTION 11. Section 237D-12, Hawaii Revised Statutes, is amended to read as follows:

"§237D-12 Records to be kept; examination. Every operator [and plan manager] shall keep in the English language within the State, and preserve for a period of three years, suitable records of gross rental[,] or, gross rental proceeds[, or fair market rental value] relating to transient accommodations [the business] taxed under this chapter, and such other books, records of account, and invoices as may be required by the department, and all such books, records, and invoices shall be open for examination at any time by the department or the Multistate Tax Commission pursuant to chapter 255, or the authorized representative thereof."

SECTION 12. Section 237D-14, Hawaii Revised Statutes, is amended to read as follows:

"§237D-14 Collection by suit; injunction. The department may collect taxes due and unpaid under this chapter, together with all accrued penalties, by action in assumpsit or other appropriate proceedings in the circuit court of the judicial circuit in which the taxes arose. After delinquency shall have continued for sixty days, or if any person lawfully required so to do under this chapter shall fail to apply for and secure a certificate as provided by this chapter for a period of sixty days after the first date when the person was required under this chapter to secure the certificate, the department may proceed in the circuit court of the judicial circuit in which the transient accommodations [or in which occupants of resort time share vacation units] are taxed, to obtain an injunction restraining the further furnishing of transient accommodations [or the operation of the resort time share vacation plan] until full payment shall have been made of all taxes and penalties and interest due under this chapter, or until such certificate is secured, or both, as the circumstances of the case may require."

SECTION 13. Section 237D-15, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) In order to determine if the tax under this chapter is to be levied, assessed, and collected [upon transient accommodations] the following presumptions shall control.

(1) If a person lets a transient accommodation for less than one hundred eighty consecutive days, it shall be presumed that the accommodation furnished is for a transient purpose.

(2) If a person lets a transient accommodation for one hundred eighty days or more, there is no presumption one way or another as to the purpose for which the accommodation is furnished.

The operator shall have the burden of proving to the department whether an accommodation is not being furnished for a transient purpose. If the department is satisfied that an accommodation is not furnished for a transient purpose, then the department shall not levy any tax under this chapter. The department shall adopt rules to implement this section."

SECTION 14. Section 514E-3, Hawaii Revised Statutes, is amended to read as follows:

"§514E-3 Taxation. (a) The plan manager, if any, shall collect and pay real property [and transient accommodations] taxes due on the time share units [or occupants] under the plan manager's authority as the agent of the owners of the individual units or temporal divisions thereof. The liability of the individual owners of the units, or temporal division thereof, for real property taxes, shall be primary to all parties except the plan manager. The right to contest or appeal any real property [or transient accommodations tax] assessment shall apply to the plan manager and any person having an interest in a time share unit.

(b) The acquisition agent and sales agent shall maintain records pertaining to the general excise tax of any independent contractors employed by them, their addresses and commissions paid during each calendar year. The plan manager shall maintain records of the general excise [and transient accommodations] taxes due and owing with respect to any occupants or time share units under the plan manager's management. The records for any year shall be retained for at least two years and be available for inspection by the director or the director of taxation."

SECTION 15. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 16. This Act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2000.

INTRODUCED BY:

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