🎯 STRisker: Bulletin - Hawaii
Hawaiʻi Seeks STR Tax Compliance Amid Housing Crisis
Hawaiʻi Lawmakers Advance STR Tax Collection Bill
Photo by Hawaii.gov
Hawaiʻi lawmakers are advancing a bill that would require short-term rental platforms to collect taxes on behalf of the state and counties, targeting both legal and illegal operators.
House Bill 1590 would designate hosting platforms as state tax collection agents, requiring them to remit general excise and transient accommodations taxes. Platforms that fail to comply would be liable for the taxes owed.
Kevin Dayton
Similar bills were vetoed in 2016 and 2019 by then-Gov. David Ige, who argued they would “legitimize” illegal vacation rentals. But Gov. Josh Green’s administration has introduced its own versions this year.
Deputy Tax Director Kristen Sakamoto said HB 1590 is narrowly focused on ensuring both legal and illegal operators pay taxes. “From our perspective, paying taxes doesn’t make the activity legal,” she said. “Counties still have their enforcement mechanisms. This just deals with the tax aspect of the business.”
Audits last fiscal year identified 94 taxpayers owing $4.9 million in hotel room taxes. Another 69 taxpayers owed a similar amount this year, most of them individuals and small businesses.
Expedia’s Hawaiʻi Regional Manager Mackenzie Chase testified that making platforms “tax responsible” would promote compliance and reduce leakage. “It will likely increase tax collections for the state and simplify administration for short-term vacation rental operators,” Chase wrote.
The bill would allow counties to use their share of collected taxes to police illegal rentals. However, Senate committees amended the measure to remove a requirement that platforms report operator names and addresses, a change requested by Airbnb. Sakamoto emphasized that tax information is confidential and cannot be shared for non-tax purposes.
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Honolulu City Councilman Tyler Dos Santos-Tam expressed frustration. “We need all the tools that we can get to meaningfully enforce,” he said. “We’re in a housing crisis. We’re not in a tourism crisis.”
House Tourism Chair Adrian Tam, the bill’s lead sponsor, said collecting taxes from illegal rentals is reasonable. “They’re still engaged in some form of transaction,” he said. “If we aren’t able to collect taxes during the time they operate illegally, what kind of a message are we sending to those who are operating legally and are paying taxes?”
HB 1590 now advances to the Senate Judiciary and Ways and Means committees.
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