New Hawai’i County Transient Accommodations Tax Starting January 1, 2022

Background

Act 1, 1st Special Session 2021 (House Bill 862, H.D. 2, S.D. 2, C.D. 1), which became law on July 8, 2021, authorizes the counties to establish and administer their own transient accommodations tax (TAT) at a maximum rate of 3 percent.  In order to establish the county TAT, the county must first adopt a local ordinance.  The Director of Finance in each county that establishes a county TAT is granted the same authority that the Director of Taxation has under chapter 237D, Hawai‘i Revised Statutes (HRS).

The Hawai‘i County Council introduced a bill to amend Chapter 2, Hawai‘i County Code (HCC), which implements the HCTAT.  The first Finance Committee meeting to discuss Bill 81 (HCTAT) was held on October 19, 2021, and postponed to a subsequent meeting.  On November 3, 2021, the Finance Committee amended Bill 81 to Draft 2 and recommended its passage on first reading by the Hawai‘i County Council.  Bill 81, Draft 2, passed first reading on November 18, 2021. On December 8, 2021, Bill 81, Draft 2, passed second and final reading, without further amendments.  On December 10, 2021, Ordinance No. 21-89, Bill No. 81 (2021), Draft 2, was signed into law by Mayor Mitchell D. Roth.

Imposition of Hawai’i County Transient Accommodations Tax (HCTAT)

Beginning January 1, 2022, the HCTAT is levied at a rate of 3 percent  on every taxpayer that has taxable gross rental proceeds  and/or total fair market rental value  attributable to the County of Hawai’i.  The HCTAT is imposed in addition to the State Transient Accommodations Tax (State TAT), which is currently levied at a rate of 10.25 percent.   These amounts can be found on Forms TA-1 and TA-2 which must be filed with the State of Hawai’i Department of Taxation (DOTAX).

Registration

Under Hawai’i County Code section 2 all operators, timeshare plan managers, transient accommodations brokers, travel agents, and tour packages subject to the HCTAT must have a State transient accommodations tax license issued pursuant to sections 237D-4 or 237D-4.5, HRS.  Taxpayers who are registered with the State and have a valid State TAT number, will be deemed registered for HCTAT.  Taxpayer subject to the HCTAT do not need to register separately with the County of Hawai’i.

Tax Returns

Under Hawai’i County Code section 2, the County Director of Finance has the authority to prescribe how periodic and annual HTAT returns are filed.  Per the Director of Finance, transient accommodations tax returns filed with DOTAX will be deemed to have been filed with the County of Hawai’i also.  Therefore, taxpayers who are subject to the HCTAT will only need to file the Forms TA-1 and TA-2 with DOTAX, as they are already required to do.   Taxpayers subject to the HCTAT will not need to file separate HCTAT returns with the County of Hawai’i.

HCTAT Payment Due Dates

HCTAT payments are due on the same date that the State TAT returns and payments are due.  Thus, payments are due on or before the 20th day of the calendar month following the close of the filing period.  For periodic returns, taxpayers are required to file Form TA-1 on a monthly, quarterly, or semi-annual basis.  

• For monthly filers, the first HCTAT payment is due on or before February 22, 2022.  

• For quarterly filers, the first HCTAT payment is due on or before April 20, 2022.  

• For semi-annual filers, the first HCTAT payment is due on or before July 20, 2022.

The annual reconciliation State TAT return (Form TA-2) is due on or before the 20th day of the calendar month following the close of the taxable year.  As a general rule, a HCTAT payment will only be due when filing Form TA-2 if taxable gross rental proceeds or fair market rental value attributable to Hawai’i Island is reported on Form TA-2 that was not reported on Form TA-1 during the taxable year.  If a HCTAT payment is due, payment must be made by the deadline to file Form TA-2.  For calendar year taxpayers, the Form TA-2 is due April 20, 2023.  Therefore, calendar year taxpayers who have a HCTAT payment due with Form TA-2, must pay on or before April 20, 2023. 

How to Calculate and Make HCTAT Payments

The HCTAT payment due is the sum of the taxable gross rental proceeds (including resort fees) and fair market rental value attributable to Hawai’i island, multiplied by 3 percent.  For a monthly filer, the first HCTAT payment due will equal the taxable gross rental proceeds and fair market rental value attributable to Hawai’i island, as reported on the taxpayer’s January 2022 TA-1, multiplied by 3 percent.  As mentioned above, this first payment is due on or before February 22, 2022.

Where to Find Information about HCTAT

Please visit our website at www.hawaiicounty.gov/tat for frequently asked questions or contact our office by email at hawaiicountytat@hawaiicounty.gov.  

An online payment option will be available prior to the February 1, 2022, deadline for the first TAT payment, so please continue to check our website for updates and links to additional resources.

DOTAX will not be able to answer any questions regarding the HCTAT.