STAND. COM. REP. NO. 3568

 

Honolulu, Hawaii

                

 

RE:    H.B. No. 2432

       S.D. 1

 

 

 

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2018

State of Hawaii

 

Sir:

 

     Your Committee on Ways and Means, to which was referred H.B. No. 2432 entitled:

 

"A BILL FOR AN ACT RELATING TO THE TRANSIENT ACCOMMODATIONS TAX,"

 

begs leave to report as follows:

 

     The purpose and intent of this measure is to clarify the treatment of resort fees under the transient accommodations tax.

 

     More specifically, this measure specifies that resort fees, which are any mandatory charges or surcharges imposed for the use of a transient accommodation's property, services, or amenities, are included in the gross rental proceeds amount upon which the transient accommodations tax is calculated.

 

     For purposes of a public hearing, your Committee circulated a proposed S.D. 1 (Proposed Draft) of the measure and notified the public that your Committee would be accepting testimony on the Proposed Draft, which amends the measure by adding provisions to:

 

     (1)  Amend the definition of "resort fee" to include fees, regardless of whether or not they are mandatory;

 

     (2)  Rename "transient accommodations brokers" as "transient accommodations intermediaries" and include within the definition travel agencies, tour packagers, and wholesale travel companies, thereby making these entities subject to the transient accommodations tax;

 

     (3)  Impose the transient accommodations tax on transient accommodations intermediaries who arrange transient accommodations at noncommissioned negotiated contract rates;

 

     (4)  Clarify that the transient accommodations tax liability shall be apportioned between an operator and transient accommodations intermediary with respect to that person's respective portion of the gross proceeds;

 

     (5)  Clarify that fees unrelated to transient accommodations are exempt from the definition of "gross rental" or "gross rental proceeds";

 

     (6)  Exempt from the definition of "gross rental" or "gross rental proceeds" the amount of transient accommodations taxes that are visibly passed on to the customer by a transient accommodations intermediary;

 

     (7)  Require transient accommodations intermediaries to register with the Director of Taxation and to pay a one-time $15 fee;

 

     (8)  Require operators, transient accommodations intermediaries, and plan managers to register the name and physical address of each place of business in the State that is subject to the transient accommodations tax; and

 

     (9)  Require that transient accommodations intermediaries obtain prior consent from each of their operators and plan managers prior to registering their names and physical addresses with the Director of Taxation.

 

     Your Committee received testimony in opposition to the Proposed Draft from the Hawaii Tourism Authority; Aqua-Aston Hospitality; Kohala Coast Resort Association; Andaz Maui at Wailea Resort; Expedia, Inc.; Land Use Research Foundation of Hawaii; Maui Hotel and Lodging Association; and Hawaii Lodging and Tourism Association.

 

     Your Committee received comments on the Proposed Draft from the Department of Taxation and Tax Foundation of Hawaii.

 

     Your Committee finds that, as transactions regarding the furnishing of transient accommodations are increasingly conducted over the Internet, a disparity in the tax treatment of certain entities involved in the furnishing of transient accommodations has arisen and resulted in the State not collecting the full amount of transient accommodations taxes from certain parties.

 

     Your Committee has amended this measure by adopting the Proposed Draft and further amending the Proposed Draft by:

 

     (1)  Amending the definition of "resort fee" to apply only to mandatory fees; and

 

     (2)  Making technical nonsubstantive amendments for the purposes of clarity, consistency, and style.

 

     As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2432, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2432, S.D. 1, and be placed on the calendar for Third Reading.

 

 

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

 

 

 

 

________________________________

DONOVAN M. DELA CRUZ, Chair