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It’s July 2019, and already we are starting to see laws passed in the 2019 Legislature take effect.
One of these laws concerns “resort fees” that hotels both here and in other states and countries have been charging their guests. A resort fee is supposed to be a payment for amenities provided to guests of the hotel. But some hotels made it so difficult to decline the fee that tax authorities, including ours, concluded that such a fee could be a disguised part of the room rate.
Here, the reason why it matters is that we impose the Transient Accommodations Tax (TAT), a 10.25% tax on transient accommodation rentals, but the tax doesn’t apply to charges for Internet, laundry, meals, or other amenities. (The General Excise Tax, however, applies to both.)
Last year, the Legislature concluded that the State was getting shorted because it wasn’t getting the appropriate taxes on resort fees. It passed a bill to fix the issue but ran into problems by saying that EVERYTHING charged to a tourist is a resort fee. Clearly that wasn’t the right answer, and the bill was vetoed.
This year, the bill clarified that “mandatory” resort fees are subject to the TAT. The word “mandatory” is supposed to mean that if the charge can’t be avoided when a person stays at the resort, then the charge is part of the room rate and should be taxed accordingly. That bill was signed into law (Act 20 of 2019) and took effect on July 1st.
The Department of Taxation recently came out with a tax information release and proposed rules to implement this new law. That guidance was the first tax information release published on any 2019 law.
In it, the Department concluded that it must be possible for a guest to decline a resort fee just by asking; if not, it’s mandatory and needs to be taxed.
One example in the proposed rules discusses a hotel guest who wants to decline the resort fee and is told that the fee will be charged but may be removed if the guest calls the hotel’s customer complaint line later. Too much work! It’s a mandatory fee and will be subject to TAT.
Or, suppose the guest is told that the fee may be removed if the guest goes online and fully completes a customer satisfaction survey. The conclusion is the same – the fee is subject to TAT.
The proposed rules also try to tackle one other topic: whether GET and TAT are “visibly passed on.” TAT is not imposed on taxes that are visibly passed on, and GET is not imposed on TAT visibly passed on. On a $100 room where $10.25 TAT and $4.71 GET are charged and the tourist pays $114.96, the hotel would need to pay $16.38 (10.25% of $114.96 + 4% of $114.96) if the taxes are not visibly passed on and $14.96 (10.25% of $100.00 + 4% of $104.71) if they are.
The proposed rules say that the taxes are visibly passed on if (1) there are separate line items in the hotel folio for GET and TAT; (2) there is one line item for tax but the rates of GET and TAT passed on are separately stated; or (3) there is one line item for tax, the taxpayer passes on both taxes at the maximum rate allowed, and there are no charges on the folio subject to GET only.
These, of course, are still proposed rules, and the Department is welcoming public comment on them before finalizing them. The Tax Information Release includes the full text of the proposed rules and contact information for those who would like to make their views known
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Joseph D. Pluta
The West Maui Taxpayers Association planning team met with the mayor and asked him to be sure to let us work together with the Maui Emergency Management Agency and to use the WMTA and our plan as a resource as we examine an "After Action Report" on the recent fires and flooding issues.
We lobbied the County Council to add two persons to the MEMA staff. Hurricane season is just around the corner. We do not believe that both of these positions were funded in the new budget and are very disappointed. The brush has grown back where the fires were and become another fire hazard waiting to happen. We need to find out what went right and what went wrong during these last fires and floods. Preparing in advance and placing importance on that now can literally save lives!
We all know that hurricanes are on the way and more expected than ever before. The WMTA website at www.westmaui.org has great information on how to prepare and we urge you to get involved.
The WMTA has saved West Maui property owners millions of dollars in reduced fire insurance premiums when we and the West Maui Improvement Foundation Inc. built our own Napili Fire and Ambulance Station. Lives have been saved. Please consider how much money we saved you already. We know people who say that the ambulance from Napili literally saved their lives. How much support from you is that worth? Through all the legwork, testifying, community rallies we have done we have made small improvements, but with an ever-growing population and visitors in the islands, we need more.
The West Maui Community Plan (planning for the next 20 years), is in the works. A Community Plan Advisory Committee has been formed to be a voice on this plan that will become law. I have been chosen to be on the committee which brings hope, because all that we have fought for now is closer to reality as the committee meets and discusses what will go in the plan. The West Maui Community Plan will become law.
Together, we can make a difference! You can be a part of the solution or part of the problem. The choice is up to you.
Please choose wisely and support the community efforts of the WMTA.
* Joseph D. Pluta is president of the West Maui Taxpayers Association.
"Not planning for hurricane season is planning to fail" The Maui News 09 Jul 2019: A9
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