Hawaii accommodation tax

[Larry5]

The new law passed recently authorizing Airbnb to collect and pay the Transient Accommodation tax.  Does anyone know how Airbnb will implement it?  Will they add the tax amount automatically to the total that they quote to the traveler (like VRBO does), or just subtract it from what they pay the host so the host must build the tax amount into the daily rental rate?

[Jet0]

Waiting for an answer too.

[Alison0]

As far as I know, Airbnb only pays the GE tax on THEIR amount collected. For some unknown reason, they call it an accommodation tax - it is not. They are only paying GE tax on their earnings. They do not collect or remit anything on our behalf. You should be registered to pay the GE and accomodations tax of (aprox) 13.25% and pay that amount on all of your airbnb earnings. The state and City and County are looking very closely at this. Some people have been shut down and are paying fines.  Good luck.

[Linda140]

I just listed with airbnb and the platform does not have an area to add teh 13.42% Excise and Transient tax.  I posted our tax ID number but wonder what other State of Hawaii airbnbn hosts are doing about the tax.  I do not want to added to base rent as it then makes the rental look pretty high and also airbnb would take a fee on the tax.  HomeWay and VRBO , etc have the tax listed separately and no commission taken on the taken.  I pay the tax every month directly to the state.

What are others doing?

Linda Owen

My Waii Beach Cottage-Maui

[Todd19]

I track all my rentals in a spreadsheet, tell the guest up-front how much I estimate the GE/TA taxes will be, and when they check-in, I put that number through the Resolution Center as an extra charge (airbnb.com/resolutions) for the guest's stay. This is the way AirBnB told me to do it when I called into customer service after trying to add it on to my listed rate and getting hopelessly confused (and confusing my guests).

I then pay my GE/TA bill quarterly, directly to the state.

That's the only way that is fair to everyone, otherwise the guest ends up paying AirBnB fees on the taxes.

Be careful though, because that (resolution center extra charges) shows up as revenue on your year end statement. Keep your own records so you know what money is collected as income (rental + cleaning) and what money is collected as taxes, otherwise you will end up paying taxes on the taxes you collected if you just go off of AirBnB's accounting.

Hope that helps,

Todd

[Dean11]

Larry, I'm not counting on Airbnb to find a solution soon.  Hawaii's GET/TAT is too complicated for them to get involved.  And, the liability must be huge.  Meantime, we Hosts (many of us) are duplicating the taxes we pay under GET/TAT.  The way I read it, that's unnecessary.

There is a way for you to minimize your GET/TAT to only what is required.  It is outlined in the "Visible Disclosure", Section 11. of "An Introduction to the Transient AccomodationTax", April 2016.  Issued by the Tax Department.

According to that guideline, if you (a) vissibly disclose the tax as included in the rent paid to you by Airbnb and (b) disclose the calculation to your tenant as the tax included in the rent he paid you, you may use the net amount as "Gross Income". 

Problem for most of us is that from the amount paid by Airbnb, we must work backwards to figure out the Gross Income amount.  So, to back out and determine the Gross Income from the payment, 

I use this formula: Gross Rental Income = Payment Received from Airbnb / (1+(.0925+.0450)); where the .0925 is the TAT and the .0450 is the Honolulu GET.  When I have Gross Rental Income solved, I then multiply it by 4.5% and 9.25% to determine the amount of TAT and GET due to the State Tax Collector.  It results in paying less GET and TAT than you would pay by multiplying each tax rate by the amount you got from Airbnb.  The results can then be used to report to the State Tax Collector.

As an extra precaution, my Airbnb listing (first line) shows "rate includes payment of Hawaii State Taxes" and I post my tax license number.

Now, I am not a tax expert and I know only high school algebra, so I offer this as a solution hoping that someone will review it for free and tell me this method will keep me safe from jail.

Give me feedback if you want to walk through this.

Good luck,

Dean 

[Larry5]

Brilliant, I'll have my acountant check it out, but it looks logical to me