Monday, January 24, 2022
Hawai'i Free Press

Current Articles | Archives

Sunday, July 14, 2019
So What Really Is a Resort Fee?
By Tom Yamachika @ 5:00 AM :: 3314 Views :: Taxes, Tourism

So What Really Is a Resort Fee?

by Tom Yamachika, President, Tax Foundation Hawaii

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. 

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

808 Silent Majority

ACA Signups Hawaii

Alliance Defending Freedom

Aloha Pregnancy Care Center

American Council of Trustees and Alumni

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Astronomy Hawaii

Back da Blue Hawaii

Ballotpedia Hawaii

Better Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

ChinaTownWatch.com

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii Coalition Against Legalized Gambling

Hawaii ConCon Info

Hawaii Credit Union Watch

Hawaii Crop Improvement Association

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Advocates

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii Future Project

Hawaii Gathering of Eagles

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Life Alliance

Hawaii March for Life

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

HIEC.Coop

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

July 4 in Hawaii

Kakaako Cares

Keep Hawaii's Heroes

Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Malulani Foundation

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

Mauna Kea Recreational Users Group

MentalIllnessPolicy.org

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Christian Foundation Hawaii

National Parents Org Hawaii

NFIB Hawaii News

No GMO Means No Aloha

Not Dead Yet, Hawaii

NRA-ILA Hawaii

Oahu Alternative Transport

Obookiah

OHA Lies

Opt Out Today

OurFutureHawaii.com

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Pritchett Cartoons

Pro-GMO Hawaii

P.U.E.O.

RailRipoff.com

Rental by Owner Awareness Assn

ReRoute the Rail

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

Save Dillingham Airfield

School Choice in Hawaii

SenatorFong.com

Sink the Jones Act

Statehood for Guam

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

UCC Truths

US Tax Foundation Hawaii Info

VAREP Honolulu

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii

Yes2TMT