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HomeMy WebLinkAboutBIL 081 Draft 01 2020-2022 i I i i OJ�tY OG N,,y COUNTY OF HAWAVI STATE OF IIAWAI`I ,rF OF•NrA BILI, NO. 81 ORDINANCE NO. AN ORDINANCE AMENDING CHAPTER 2, OF THE HAWAII COUNTY CODE 1983 (2016 EDITION,AS AMENDED), BY ADDING A NEW ARTICLE TO IMPLEMENT A COUNTY TRANSIENT ACCOMMODATIONS TAX. BE IT ORDAINED BY THE COUNCIL OF THE COUNTY OF HAWAII: SECTION 1. Purpose. The transient accommodations tax was established by the Hawaii State Legislature through Act 340, Session Laws of Hawaii 1986, and took effect in 1987 to provide revenue to the counties to offset the impacts of visitor activities on county infrastructure and services. Over time, the statutory allocation of transient accommodations tax distributed to the counties was reduced to a proportional fraction of the total collections. In fiscal year 2019, pre-pandemic,the total transient accommodations tax received by Hawaii County from the State was approximately $19,000,000. In fiscal year 2020, Hawaii County received approximately $16,000,000 in transient accommodations tax, which was reduced to zero the following fiscal year due to the ongoing COVID crisis. The Hawaii State Legislature, through Act 1 of the First Special Session of 2021, permanently removed the distribution of State transient accommodations tax to the counties; however, Act 1 also established authority for the counties, through their respective directors of finance,to levy a county transient accommodations tax in addition to the transient accommodations tax collected by the State. In 2019, pre-pandemic, Hawaii County received an average of 150,000 visitors per month. The burden of support for infrastructure and services provided for these visitors persists, though the proportional allocation of the State-collected transient accommodations tax will not. To maintain a similar level of service without significant budget shortfalls, the County's tax policy should reflect recouping the impacts of visitor activities. While a balanced budget could be achieved by increasing local property taxes, this would be inequitable. A county transient accommodations tax more justly provides for visitor-related expenditures. This ordinance implements the transient accommodations tax for the County of Hawaii, authorized by Act 1, Special Session Laws of Hawaii 2021. SECTION 2. Chapter 2, of the Hawaii County Code 1983 (2016 Edition, as amended), is amended by adding a new article to be appropriately designated and to read as follows: "Article Transient Accommodations Tax. Section 2- Tax established. Pursuant to Part III of Act 1, Special Session Laws of Hawaii 2021, a three percent transient accommodations tax is established on all gross rental, gross rental proceeds, and fair market rental value considered taxable under the definitions of section 237D-1, Hawaii Revised Statutes. This tax shall be levied beginning on January 1, 2022. i 3 If the gross rental, gross rental proceeds, and fair market rental value are received as payments beginning in the taxable year in which this tax becomes effective, on written contracts entered into prior to the establishment of this article, and the written contracts do not provide for the passing on of increased rates of taxes, the County transient accommodations tax will not be imposed on the gross rental, gross rental proceeds, and fair market rental value covered under the written contracts. i Section 2- Definitions. (a) "Director"means the director of finance of the County. E (b) Unless otherwiseprovided in this article or by rule adopted by the director, the definitions provided in section 237D-1, Hawaii Revised Statutes, as may be amended, and by State administrative rule adopted for application to chapter 237D, Hawaii Revised Statutes, shall apply to this article. Section 2- Payment of tax. (a) Unless otherwise provided in this article or by rule adopted by the director, any taxpayer required to pay State transient accommodations tax pursuant to chapter 237D, Hawaii Revised Statutes, shall also pay the County transient accommodations tax imposed pursuant to this article. (b) Unless otherwise provided in this article or by rule adopted by the director, any taxpayer required to pay the County transient accommodations tax shall remit payment to the director together with a periodic return approved by the director. (c) County transient accommodations tax payments shall be made on or before the date by which the person is required to pay the State transient accommodations tax. Section 2- Annual return. Every taxpayer required to file an annual reconciliation return and submit residue tax with the State Director of Taxation set forth under section 237D-7, Hawaii Revised Statutes, shall also remit to the director residue County transient accommodations tax together with an annual reconciliation return approved by the director pursuant to this article. Section 2-_ Rent collection by third party; filing with the director; statement required. (a) Every taxpayer authorized under an agreement by the owner of transient accommodations located within this County to collect rent on behalf of such owner shall be subject to this section. (b) Every written rental collection agreement, in addition to the requirements of section 237D-8.5, Hawaii Revised Statutes, shall include the following statement in bold print and ten-point type size: "HAWAI`I COUNTY TRANSIENT ACCOMMODATIONS TAXES MUST BE PAID ON THE GROSS RENTS COLLECTED BY ANY TAXPAYER RENTING TRANSIENT ACCOMMODATIONS IN THE COUNTY OF HAWAI`I." Every taxpayer entering an oral rental collection agreement shall furnish the director a copy of the information furnished to the State as required under section 237D-8.5, Hawaii Revised Statutes, and shall give the owner of the property a copy of the notice required by this subsection. The statement required by this subsection may be combined with the 2 statement-required language under section 237D-8.5, Hawaii Revised Statutes, by adding in bold print and in ten-point type size to the front of the statement in section 237-30.5, Hawaii Revised Statutes, the following in parentheses: " AWAI`I (INCLUDING HAWAII COUNTY ADDED) TRANSIENT ACCOMMODATIONS TAXES AND" Section 2-_ Assessment of tax for failure to make payment; limitation period; exceptions; extension by agreement. (a) If any taxpayer fails to make payment as required by this article, the director or designee shall estimate the tax liability of the taxpayer from any information the director or designee obtains, and according to the estimate, assess the taxes, interest, and penalty due to the County from the taxpayer, give notice of the assessment to the taxpayer, and make demand upon the taxpayer for payment. The assessment shall be presumed correct unless, upon an appeal duly taken, the contrary is proved by the taxpayer assessed. The burden of proof on appeal to disprove the correctness of assessment shall be on the taxpayer assessed. (b) The director or designee shall cause the payment to be examined and may conduct further audits or investigations as the director or designee considers necessary. If the director or designee determines that there is a deficiency in the payment of any tax due under this article, the director or designee shall assess the taxes and interest due the County, give notice of the assessment to the taxpayers liable, and make demand upon the taxpayers for payment. (c) Except as provided by this section, the amount of taxes imposed by this article shall be assessed or levied within three years of the due date prescribed for the submission of payment. Without an assessment, no proceeding in court for the collection of any of the taxes may be commenced after the expiration of the period. Where the assessment of the tax imposed by this article has occurred within the applicable period of limitation, the tax may be collected by levy or by a proceeding in court. Unless otherwise provided in this article or rule adopted by the director, the limitation period for collecting the County transient accommodations tax shall be suspended for any period set forth in chapter 237D, Hawaii Revised Statutes. Section 2-_ Appeals. Any taxpayer aggrieved by any assessment of the tax or liability imposed by this article may appeal from the assessment within thirty days of the issuance of the assessment to the appropriate State of Hawaii court located within the third circuit having jurisdiction over the amount in controversy, unless otherwise superseded by State law. Alternatively, if the taxpayer aggrieved has also filed a proceeding against the State for the State tax or liability imposed, the aggrieved taxpayer may also join the County in the State proceeding. Section 2- Collection by suit; injunction. (a) The director may collect taxes due and unpaid under this article, together with all accrued penalties, by filing suit or other appropriate proceeding in an appropriate State of Hawaii court located in the third circuit having jurisdiction over the amount due and unpaid. (b) Notwithstanding subsection(a) above, the director may join any proceeding filed by the State of Hawaii to collect State transient accommodations tax and assert the County's claims regardless of whether the venue is located in the third circuit. 3 i I I I I Section 2- Penalty and interest. Unless otherwise provided in this article or rule adopted by the director, penalties and interest shall be added to and become a part of the County tax in the same manner as penalties and interest are added to and become part of the State transient accommodations tax. Section 2- Director of finance. (a) The director shall administer and enforce this article, in respect of: (1) The examination of books and records of taxpayers; (2) Procedure and powers upon failure or refusal by a taxpayer to make a return, a proper return, or payment; (3) The general administration of this article; (4) To enter into agreements with the director of taxation, other State agency, or entity approved in furtherance of the administration and enforcement of this article; and (5) To identify taxpayers and delinquencies to the director of any County department charged with permitting, oversight or enforcement of transient accommodations. (b) The director shall have the rights and powers conferred by section 6-6.3, Hawaii County Charter. (c) The director is further authorized to delegate any authority provided in this article. (d) If any section in this article conflicts with this authority to enter into an agreement for the collection of taxes, it shall be void. The director must appropriately notify taxpayers of any voided section. Section 2- Administrative rules. The director may adopt administrative rules pursuant to chapter 91, Hawaii Revised Statutes, as amended, as may be necessary to implement this article." SECTION 3. Severability. If any provision of this ordinance, or the application thereof to any taxpayer or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the ordinance which can be given effect without the invalid provision or application, and to this end the provisions of this ordinance are severable. SECTION 4. This ordinance shall take effect upon its approval. INTRODUCED BY: OUNCIL ME BER, COUNTY OF HAWAII Hawaii Date of Introduction: Date of 1 st Reading: Date of 2nd Reading: Effective Date: REFERENCE Comm. 449 4