State need not ID Airbnb hosts

Hawaii law doesn’t let tax­payer in­for­ma­tion be shared with the city

Honolulu Star-Advertiser - - LOCAL&BUSINESS - By Kevin Day­ton kday­ton@starad­ver­tiser.com

The pro­posed agree­ment that Gov. David Ige’s ad­min­is­tra­tion has been ne­go­ti­at­ing with Airbnb to col­lect taxes on va­ca­tion rentals would not al­low the state to dis­close rental prop­erty own­ers’ names or rental lo­ca­tions to the city for en­force­ment pur­poses, ac­cord­ing to an Airbnb rep­re­sen­ta­tive.

Matt Mid­dle­brook, head of pol­icy for Hawaii for Airbnb Inc., said the pro­posed agree­ment would al­low state tax of­fi­cials to au­dit Airbnb trans­ac­tions in Hawaii, but Hawaii law does not al­low the state to share any tax­payer in­for­ma­tion with the city.

That means the data col­lected by the state Depart­ment of Tax­a­tion un­der the pro­posed new ad­min­is­tra­tive agree­ment could not be mined for in­for­ma­tion to as­sist the city in a crack­down on the many il­le­gal va­ca­tion rentals op­er­at­ing on Oahu.

Ed Case, se­nior vice pres­i­dent and chief le­gal of­fi­cer for Outrig­ger En­ter­prises Group, said that ar­range­ment would be “in no way ac­cept­able” to the ho­tel in­dus­try in Hawaii.

Case said Airbnb “is try­ing to ig­nore the ques­tion of whether the units that it lists are le­gal or not,” adding, “It’s pre­tend­ing that that’s some­body else’s busi­ness, and it’s everybody’s busi­ness, in­clud­ing Airbnb.”

Airbnb ex­ec­u­tives Mon­day is­sued a pub­lic state­ment and cir­cu­lated a memo to law­mak­ers de­scrib­ing the ma­jor fea­tures of the “vol­un­tary col­lec­tion agree­ments” it has en­tered into with other ju­ris­dic­tions, which pre­sum­ably would be sim­i­lar to the pro­posed agree­ment with the Ige ad­min­is­tra­tion.

The com­pany says such an agree­ment would have al­lowed the state to col­lect $70 mil­lion in tax rev­enue from Airbnb tran­sient va­ca­tion rentals from the be­gin­ning of 2015 through the end of this year. Of that amount, $30 mil­lion would have been col­lected in 2017 alone, the com­pany said.

Mid­dle­brook said in a writ­ten state­ment that such an agree­ment “pro­tects the right of lo­cal ju­ris­dic­tions to en­force and en­act short­term rental reg­u­la­tions.”

“Airbnb has reached agree­ments with over 300 ju­ris­dic­tions around the U.S., cov­er­ing 55 per­cent of our book­ings from coast to coast,” the com­pany said. “These agree­ments have gen­er­ated more than $500 mil­lion in ho­tel and tourist taxes in the U.S.”

A vol­un­tary col­lec­tion agree­ment al­lows Airbnb to col­lect taxes for book­ing trans­ac­tions com­pleted on its plat­form and de­liver the money to the state in the ag­gre­gate on a sin­gle re­turn.

Own­ers of rentals can­not opt out of the agree­ments if they use the Airbnb sys­tem for book­ings, ac­cord­ing to the com­pany.

Law­mak­ers have considered bills in each of the past three years to al­low Airbnb to col­lect taxes from va­ca­tion rentals on be­half of the state. Ige ve­toed a bill to ac­com­plish that in 2016, and then told law­mak­ers and Airbnb rep­re­sen­ta­tives dur­ing the ses­sion this year he would pre­fer to ne­go­ti­ate di­rectly with Airbnb, Mid­dle­brook said.

Law­mak­ers then shelved the bills they had been con­sid­er­ing, and Airbnb then be­gan ne­go­ti­a­tions in May with the state Depart­ment of Tax­a­tion to try to reach an agree­ment, Mid­dle­brook said. Ear­lier this month ad­min­is­tra­tion of­fi­cials pub­licly ac­knowl­edged those ne­go­ti­a­tions.

Ige has not yet an­nounced whether he will sign the agree­ment, but his chief of staff, Mike McCart­ney, noted Mon­day that the gov­er­nor has said pub­licly that “peo­ple should be pay­ing taxes now if they’re do­ing this.”

It is un­clear how a vol­un­tary col­lec­tion agree­ment with Airbnb would square with Ige’s past pub­lic state­ments on the is­sue.

At the start of the 2015 ses­sion of the state Leg­is­la­ture, Ige told re­porters he wanted a so­lu­tion that both col­lects taxes from op­er­a­tions such as Airbnb and sup­ports en­force­ment of city and county zon­ing and per­mit­ting.

“We need to en­sure that we can col­lect the taxes that are al­ready owed, but I am con­cerned if we are fa­cil­i­tat­ing il­le­gal rental ac­tiv­ity in our com­mu­nity, and so I’m com­mit­ted to find­ing a way that we can col­lect the taxes and en­sure that the prop­er­ties are ap­pro­pri­ately zoned and per­mit­ted for that use, what­ever that use is,” Ige said at the time.

The fol­low­ing year Ige ve­toed House Bill 1850, which was strongly sup­ported by Airbnb, its lob­by­ists and the state Tax Depart­ment. That mea­sure also would have al­lowed short-term rental bro­kers such as Airbnb to act as tax col­lec­tion agents for the state, but op­po­nents ar­gued it would un­der­mine ef­forts to crack down on Hawaii’s per­va­sive il­le­gal va­ca­tion rentals.

Ige ac­knowl­edged the state would have en­joyed a tax rev­enue wind­fall if he had signed the bill, but said the mea­sure would have en­cour­aged the il­le­gal va­ca­tion rental mar­ket “at a time when af­ford­able rental hous­ing is in such short sup­ply in our com­mu­ni­ties.”

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