(a) In general.
"Transient accommodations" means the furnishing of a room, apartment, suite, or
the like which is customarily occupied for less than one-hundred-eighty
consecutive days for each letting by a hotel, apartment hotel, motel,
condominium property regime or apartment as defined in chapter 514A, HRS,
cooperative apartments, or rooming house that provides living quarters,
sleeping, or housekeeping accommodations, or other place in which lodgings are
regularly furnished to transients for a consideration.
(b) Applicable presumptions. If the room,
apartment, or the like is customarily occupied by transients and the hotel or
condominium regularly furnishes such accommodations to transients, the
following apply:
(1) It shall be presumed
that accommodations are transient accommodations if the accommodations are let
for a period of less than one-hundred-eighty consecutive days; and
(2) No presumption applies if the
accommodations are let for a period of one-hundred-eighty consecutive days or
longer.
(3) See section
18-237D-15-01 for further discussion of the one hundred-eighty day presumption
set forth in section
237D-15(b),
HRS.
(c) "Customarily",
defined. "Customarily" means:
(1) By virtue of
common usage, the hotel room, apartment, suite, and the like is occupied for
less than one-hundred-eighty consecutive days, such as the following:
(A) Hotel rooms which are customarily rented
to guests who stay for short periods of time, such as periods of consecutive
days and nights which are generally less than a week; or
(B) Condominium apartments which are
customarily rented to guests who occupy the apartments for longer periods, such
as thirty consecutive days or more.
(C) There may be situations where a hotel
room or a condominium apartment is customarily rented to transients, but also
is periodically rented for more than one-hundred-eighty consecutive days. For
example, a hotel room or condominium which is customarily rented to tourists
for periods averaging thirty days, but at times is rented to a construction
company for temporary housing of its employees. This temporary housing may last
for one year or more whenever the companies have jobs in the Neighbor Islands
and housing is required to be provided. Whether the hotel, condominium, or
apartment operator periodically rents the room, apartment, or suite for
one-hundred-eighty consecutive days or more shall not change an accommodation
from a transient to a non-transient accommodation. For the period in which the
hotel or condominium is rented for one-hundred-eighty consecutive days or
longer, however, the revenue from the rental is not subject to the transient
accommodations tax.
(2)
Example. Paragraph (1) is illustrated as follows:
During the past 5 years, Convenient Apartments has rented its
apartments to Canadian tourist families who vacation in Hawaii. The rental
period has averaged 30 consecutive days. For a 1 year period, however,
Convenient Apartments agrees to rent all of its apartments to ABC Construction
Company for construction workers who are in need of housing during construction
of a neighboring resort hotel. Based on these facts, Convenient Apartments is
not liable for the transient accommodations tax for the gross rental income
received for the 1 year period the accommodations are rented to ABC
Construction Company. Following this 1 year period, Convenient Apartments again
returns to its practice of renting the apartments for periods ranging from 2 to
179 consecutive days. In this situation, Convenient Apartments is engaged in
the business of furnishing transient accommodations because the apartments are
customarily occupied by transients for less than 180 consecutive days, and the
apartments are regularly furnished for a consideration. The apartments are
transient accommodations even though for the period of time apartments are
rented to ABC Construction Company, the revenue from such rental is not subject
to the transient accommodations tax.
(d) "Regularly", defined. "Regularly" means
that the accommodation is systematically, usually but not necessarily
continuously or exclusively, rented to transients, such as the following:
(1) Hotels which usually, but not
exclusively, furnish rooms to people who only stay for short periods of time;
or
(2) A house or apartment rented
for a portion of the year to transients and which is rented for the remainder
of each year for more than one hundred-eighty days to residents.
(3) Example. Paragraphs (1) and (2) are
illustrated as follows:
Each year the owner of a house on the North Shore of Oahu
rents the house to a tourist family for four months. The rest of the year, the
owner rents the house for more than 180 days to Hawaii residents. The fact that
the owner rents the house to transients for a portion of the year makes the
house a transient accommodation which is regularly furnished to transients. The
transient accommodations tax; therefore, is to be paid for each period the
house is rented to transients. There is no transient accommodations tax for the
time period the house is rented to Hawaii residents.
(e) Application of the
one-hundred-eighty consecutive day rule.
(1)
The one-hundred-eighty day rule shall be applied in determining the following:
(A) Whether the room, apartment, suite, or
similar facility falls within the definition of a transient accommodation;
and
(B) Whether the revenue derived
from the room, apartment, suite, or similar facility is subject to the
tax.
(2) If it is
determined that the facility falls within the definition of a transient
accommodation, then the next determination is whether or not the gross rental
proceeds results from the rental of the facility for less than
one-hundred-eighty consecutive days. The law creates a presumption that if a
facility is let for less than one-hundred-eighty consecutive days, the
accommodation is furnished for a transient purpose. If the taxpayer is able to
prove to the director's satisfaction that the facility is not let for a
transient purpose, there shall be no tax imposed. If the facility is let for
one-hundred-eighty consecutive days or more, there is no presumption and the
burden of proof remains with the taxpayer to prove that the facility is not let
for a transient purpose. See section
18-237D-15-01 for further
discussion.
(f) Lease of
six months or longer broken before one hundred-eighty days have expired.
(1) In general. Where a tenant breaches a
lease of one hundred-eighty days or longer by moving out before one
hundred-eighty days have expired, the owner may not be deemed to be the
operator of a transient accommodation insofar as this particular facility is
concerned.
(2) Example. Paragraph
(1) is illustrated as follows:
Landlord enters into a lease of 6 months or longer with
Tenant. Tenant breaches the lease by moving out after living in the apartment
for 60 days. Landlord is not deemed to be an operator of transient
accommodations regarding this particular apartment because the lease is for a
period in excess of 180 consecutive days.
(3) Tax avoidance scheme. If the department
finds that a landlord is continuously entering into leases of six months or
longer and the tenants are continuously breaking these leases after one or two
months, the burden is upon the landlord to show that the operation is not a tax
avoidance scheme and subject to the transient accommodations tax.
(g) Application to time sharing
plans. For the period beginning on January 1, 1999, and thereafter, the
occupant of a resort time share vacation unit shall be subject to the transient
accommodations tax under section
237D-2(c),
HRS. Every plan manager shall be liable for and pay the transient
accommodations tax as provided under section
237D-2(d),
HRS; provided that if the unit is rented the transient accommodations tax under
section
237D-2(c),
HRS, is not applicable and the operator of the transient accommodations shall
be liable for the transient accommodations tax as provided in section
237D-2(b),
HRS.
Example. A, a time share interval owner, has use
of a time share unit in Waikiki for two weeks at the beginning of August. In
1999, A occupies the unit for the two weeks in August. The plan manager is
liable for the transient accommodations tax. In 2000, A exchanges the occupancy
of the unit for the two weeks in August for occupancy of a time share unit in
California. For 2000, A is not subject to the transient accommodations tax. The
plan manager, however, shall be liable for the transient accommodations tax
under section
237D-2(d),
HRS, if the unit is occupied. The plan manager shall be liable for the
transient accommodations tax under section
237D-2(b)
if the unit is rented out by the plan manager.
In 2001, A rents the time share unit during the two weeks in
August to Mr. Tourist for a consideration. In 2001, the time share unit is
being furnished as a transient accommodation and the plan manager is liable for
the transient accommodations tax for the two weeks under section
237D-2(d),
HRS. A is not liable for the transient accommodations tax.
(h) Application of the transient
accommodations tax to gross income received pursuant to a long-term rental
agreement. The transient accommodations tax does not apply to transient
accommodations that are occupied by a party pursuant to a long-term rental
agreement (e.g., over 180 consecutive days) and used by its employees as an
integral part of conducting its business operations. A party entering into a
long-term rental agreement with an operator is not a "transient" under section
18-237D-1-06(a), because the contracting party is not occupying the premises
for a "short and temporary period", but has agreed to rent the accommodations
for an extended period. The fact that a contracting party allows its employees
to occupy the hotel rooms or apartments for a shorter period of time is
irrelevant because the contracting party is considered the occupant of the
accommodations under the long-term rental agreement. In addition, transient
accommodations that are occupied by a party pursuant to a long-term rental
agreement and used by its employees as an integral part of conducting its
business operations are not being furnished for a transient purpose.
Example 1. An airline enters into a one-year
contract with a hotel operator to rent several rooms for use by its crew
members who regularly lay over in Hawaii. The transient accommodations tax does
not apply to the gross income received by the hotel operator because the hotel
rooms are occupied by the airline for an extended period of time and used by
the airline's employees as an integral part of the airline's flight
operations.
Example 2. A construction company enters into a
nine-month contract with the owner of an apartment complex to rent several
units to house its employees at a job site. The transient accommodations tax
does not apply to the gross income received by the owner of the apartment
complex because the apartments are occupied by the construction company for an
extended period of time and used by the construction company's employees as an
integral part of conducting the company's construction operations at a
particular job site.
Example 3. A corporation enters into a one-year
contract with a hotel operator to rent several rooms for use by its employees
as part of its bonus/incentive plan. The transient accommodations tax does not
apply to the gross income received by the hotel operator because the hotel
rooms are occupied by the corporation for an extended period of time and used
by the corporation's employees as an integral part of the corporation's
bonus/incentive plan.
Example 4. A tour wholesaler enters into a
one-year contract with a hotel operator to rent a block of rooms to resell to
its customers. The transient accommodations tax applies to the gross income
received by the hotel operator despite the fact that the hotel rooms are
occupied by the tour wholesaler for an extended period. The accommodations are
being furnished for a transient purpose because the rooms are being resold by
the tour wholesaler to its customers who will occupy the hotel rooms for a
short and temporary period, rather than occupied by the tour wholesaler's
employees for some purpose integral to its business
operations..
