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HomeMy WebLinkAboutCOM 0449.001 2020-2022 HEATHER L. KIMBALL Contact Information Council Member (808)961-8828 Chair, Committee on Governmental Operations, -,Z, (808)961-8018(staff) Relations and Economic Development heather.kimball@hawaiicounty.gov Council District I HAWAVI COUNTY COUNCIL County of Hawai'i Hawai'i County Building 25 Aupuni Street, Suite 1402 Hilo, Hawai'i 96720 ,.4 -H DATE: October 11, 2021 TO: Maile David, Council Chair ZIP And Members of the Hawaii County Council FROM: Heather L. Kimball, Council Member Council District I SUBJECT: Concerning 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. Attached please find the Kaua'i TAT Bill (Exhibit A) and the Maui TAT Bill (Exhibit B) which I am submitting in order to facilitate the discussion on the proposed ordinance that will be discussed at the October 19, 2021, Committee Meeting. Thank you. HK/jlk Attachments Comm. No. Ref. To:.— C/ Ref. Dat'e— !T Hawai'i County is an Equal Opportunity Provider and Employer EXHIBIT A ORDINANCE NO. 1099 BILL NO. 2829, Draft 1 A BILL FOR AN ORDINANCEESTABLISHING CHAPTER 5,ARTICLE 4, KAUA'I COUNTY CODE 1987, AS AMENDED, IMPLEMENTINGA COUNTY TRANSIENT ACCOMMODATIONS TAX E IT ORDAINED BY THE COUNCIL OF THE COUNTY OF UA`I, STATE OF WAIJ: SECTION 1. Purpose. Pursuant to Act 1, Special Session Laws of Hawaii 2021, Counties were stripped of the statutory allocation of State-collected Transient Accommodations Tax revenues set forth under Section 237D-6.5(b), Hawaii Revised Statutes. This annual allocation most recently provided close to $15,000,000.00 in County general fund revenues to support the impacts of tourism activities, and mitigative cost of County services on island. Without this revenue, the County faces the prospect of future financial shortfalls. However, Act 1 did provide authority for the Counties, via their respective Directors of Finance, to collect a County transient accommodations tax in addition to the State transient accommodations tax. While maintaining a Charter-mandated balanced budget picture could be achieved via an increase in real property taxes, it is clear that the policy of burdening residents and commercial enterprises with funding the impacts of tourism activities on island is inequitable. Average daily census rates of visitors on island account for close to 30% of the County-serviceable population, and our tax policy should reflect recouping this impact proportionally to the burden on County government. This Ordinance implements the authority under Act 1, Special Session Laws of Hawaii 2021, and establishes a transient accommodations tax program for the County of Kauai. - SECTION 2. Chapter 5, Kauai County Code 1987, as amended, is hereby amended by establishing a new Article 4, as follows: "ARTICLE 4. COUNTY TRANSIENT ACCOMMODATIONS TAX See. 5-4.1 Tax Established. Pursuant to Part III, Act 1, Session Laws of Hawaii 2021, a three-percent (3.0%) 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 considered levied upon the enactment of this Ordinance. See. 5-4.2 Definitions. The definitions in Section 237D-1, Hawaii Revised Statutes, are incorporated by reference for the purposes of this Article. 1 "County Finance Director" means the Director of Finance for the County of Ka a`i. Sec. 5-4.3 Imposition of Tax. (a) There is levied and shall be assessed and collected each month a tax on the gross rental or gross rental proceeds derived from furnishing transient accommodations. (b) Every transient accommodations broker, travel agency, and tour packager who arranges transient accommodations at noncommissioned negotiated contract rates and every operator shall pay to the County the tax imposed. (c) Every plan manager shall be liable for and pay to the County the transient accommodations tax imposed by Section 5-4.1. Every resort time share vacation plan shall be represented by a plan manager who shall be subject to this Article. Sec. 5-4.4 Exemptions. The exemptions set forth in Section 237D-3, Hawaii Revised Statutes, are hereby incorporated by reference as exemptions to this Article. Sec. 5-4.5 Registration, Required Statements. All operators, plan managers, transient accommodations brokers, travel agencies, or tour packagers within the County must hold a State certificate of registration pursuant to Sections 237D-4 and 237D-4.5, Hawaii Revised Statutes. Failure to obtain a certificate of registration pursuant to this section is considered an additional County civil violation punishable of up to one thousand dollars ($1,000.00) per infraction under authority of Section 46-1.5(24)(a), Hawaii Revised Statutes. Infractions are appealable to the County Finance Director consistent with Chapter 91, Hawaii Revised Statutes. Sec. 5-4.6 Return and Payments. (a) On or before the twentieth day of each calendar month, every operator taxable, or plan manager liable under this Article during the preceding calendar month shall file a sworn return with the State Director of Taxation together with a remittance for the amount of the tax as prescribed by the County Finance Director. (b) Notwithstanding subsection (a), the County Finance Director or designee, for good cause, may permit a taxpayer to file the taxpayer's return required under this section and make payments thereon: (1) On a quarterly basis during the calendar or fiscal year, the return and payment to be made on or before the twentieth day of the calendar month after the close of each quarter, to wit: for calendar year taxpayers, on or before April 20, July 20, October 20, and January 20 or, for fiscal year taxpayers, on or before the twentieth day of the fourth month, seventh month, and tenth month following the beginning of the fiscal year and on or before the twentieth 2 day of the month following the close of the fiscal year;provided that the County Finance Director or designee is satisfied that the grant of the permit will not unduly jeopardize the collection of the taxes due thereon and the taxpayer's total tax liability for the calendar or fiscal year under this Article will not exceed four thousand dollars ($4,000.00); or (2) On a semiannual basis during the calendar or fiscal year, the return and payment to be made by or before the twentieth day of the calendar month after the close of each six-month period, to wit: for calendar year taxpayers, on July 20 and January 20 or, for fiscal year taxpayers, on or before the twentieth day of the seventh month following the beginning of the fiscal year and on or before the twentieth day of the month following the close of the fiscal year; provided that the County Finance Director or designee is satisfied that the grant of the permit will not unduly jeopardize the collection of the taxes due thereon and the taxpayer's total tax liability for the calendar or fiscal year under this Article will not exceed two thousand dollars ($2,000.00). The County Finance Director or designee, for good cause, may permit a taxpayer to make monthly payments based on the taxpayer's estimated quarterly or semiannual liability; provided that the taxpayer files a reconciliation return at the end of each quarter or at the end of each six-month period during the calendar or fiscal year, as provided in this section. (c) If a taxpayer filing the taxpayer's return on a quarterly or semiannual basis, as provided in this section, becomes delinquent in either the filing of the taxpayer's return or the payment of the taxes due thereon, or if the liability of a taxpayer, who possesses a permit to file the taxpayer's return and to make payments on a semiannual basis exceeds two thousand dollars ($2,000.00) in transient accommodations taxes during the calendar year or exceeds four thousand dollars ($4,000.00) in transient accommodations taxes during the calendar year if making payments on a quarterly basis, or if the County Finance Director or designee determines that any such quarterly or semiannual filing of return would unduly jeopardize the proper administration of this Article, including the assessment or collection of the transient accommodations tax, the County Finance Director or designee, at any time, may revoke a taxpayer's permit, in which case the taxpayer shall then be required to file the taxpayer's return and make payments thereon as provided in subsection (a). Sec. 5-4.7 Annual Return. On or before the twentieth day of the fourth month following the close of the taxable year, every person who has become liable for the payment of the taxes under this Article during the preceding tax year shall file with the State Director of Taxation a return as set forth under Section 237D-7, Hawaii Revised Statutes, and a remittance covering the residue of the tax due, if any, as prescribed by the County Finance Director. Sec. 5-4.8 Federal assessments; adjustments of gross rental, gross rental proceeds, or fair market rental value; report to the County Finance 3 Director. Any person required to report under Section 237D-7.5, awai`i Revised Statutes, must also respectively make reflective adjustments and report to the County Finance Director, Sec. 5-4.9 Collection of rental by third arty;filing with e County Finance Director; statement required. (a) Every person 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 also include in bold print and in ten-point type size: " U `I COUNTY TRANSIENT ACCOMMODATIONS TAXES MUST E PAID ON THE GROSS RENTS COLLECTED BY ANY PERSON RENTING TRANSIENT ACCOMMODATIONS IN THE COUNTY OF KAUA`I." Every person entering an oral rental collection agreement shall furnish the County Finance 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 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 237-34.5 the following in parentheses: "HAWAI`I (INCLUDING KAUAI COUNTY ADDED) TRANSIENT ACCOMMODATIONS TAXES AND". (c) Every person authorized to collect rent for another person shall file a copy of the first page of the rental collection agreement with the County Finance Director within thirty (30) days after entering into the agreement, or shall file a copy of federal Internal Revenue form 1099, the property owner's social security or federal identification number, and, if available, the general excise tax license and transient accommodations tax registration numbers of the owner of such property being rented with the County Finance Director at the same time as such forms must be filed with the Internal Revenue Service for the applicable tax year. The person also shall notify the owner that such information is being furnished and give the owner a copy of the notice. Sec. 5-4.10 Reconciliation; form requirement. (a) On or before the twentieth day of the fourth month following the close of the taxable year, every person who has become liable for the payment of taxes under this Article during the preceding taxable year and who has furnished transient 4 accommodations which were exempt, for any portion of the taxable year, from the tax imposed under this Article, shall file a copy with the County Finance Director of the reconciliation for transient accommodations as prescribed by Section 237D-8.69 Hawaii Revised Statutes. (b) On or before the twentieth day of the fourth month following the close of the taxable year, every plan manager who has become liable for the payment of taxes under this Article during the preceding taxable year shall file with the County Finance Director a copy of the filed reconciliation with the State as prescribed by Section 237D-8.6, Hawaii Revised Statutes, indicating the period of time that the owner of a resort time share vacation unit was subject to the general excise tax or the tax under Section 237D-2(a), Hawaii Revised Statutes. Sec. -4.11 Assessment oft x upon failure to make return;limitation period; exceptions; extension by agreement. (a) If any operator or plan manager fails to make a return as required by this Article, the County Finance Director or designee shall make an estimate of the tax liability of the operator or plan manager from any information the County Finance Director or designee obtains, and according to the estimate so trade, assess the taxes, interest, and penalty due the County from the operator or plan manager, give notice of the assessment to the operator or plan manager, and make demand upon the operator or plan manager for payment. The assessment shall be presumed to be correct until and unless, upon an appeal duly taken, the contrary shall be clearly proved by the person assessed, and the burden of proof upon such appeal shall be upon the person assessed to disprove the correctness of assessment. (b) After a return is filed under this Article the County Finance Director or designee shall cause the return to be examined, and may make such further audits or investigation as the County Finance Director or designee considers necessary. If the County Finance Director or designee determines that there is a deficiency with respect to the payment of any tax due under this Article, the County Finance Director or designee shall assess the taxes and interest due the County, give notice of the assessment to the persons liable, and make demand upon the persons for payment. (c) Except as otherwise provided by this section, the amount of taxes imposed by this Article shall be assessed or levied within three years after the annual return was filed, or within three years of the due date prescribed for the filing of the return, whichever is later, and no proceeding in court without assessment for the collection of any of the taxes shall begin after the expiration of the period. Where the assessment of the tax imposed by this Article has been made within the period of limitation applicable thereto, the tax may be collected by levy or by a proceeding in court under Chapter 231, Hawaii Revised Statutes; provided that the levy is made or the proceeding began within fifteen years after the assessment of the tax. Notwithstanding any other provision to the contrary in this section, the limitation on collection after assessment in this section shall be suspended for the period. 5 (1) The taxpayer agrees to suspend the period; (2) The assets of the taxpayer are in control or custody of a court in any proceeding before any court of the United States or any State, and for six (6) months thereafter; (3) An offer in compromise under Section 231-3(10)9 Hawaii Revised Statutes, is pending, and (4) During which the taxpayer is outside the County if the period of absence is for a continuous period of at least six (6) months; provided that if at the time of the taxpayer's return to the County the period of limitations on collection after assessment would expire before the expiration of six (6) months from the date of the taxpayer's return, the period shall not expire before the expiration of the six (6) months. (d) In the case of a false or fraudulent return with intent to evade tax, or of a failure to file the annual return, the tax may be assessed or levied at any time; provided that the burden of proof with respect to the issues of falsity or fraud and intent to evade tax shall be upon the County. (e) Where, before the expiration of the period prescribed in subsection (c), the County Finance Director or designee and the taxpayer have consented in writing to the assessment or levy of the tax after the date fixed by subsection (c), the tax may be assessed or levied at any time prior to the expiration of the period agreed upon. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon. Sec. 5-4.12 Appeals. Any person aggrieved by any assessment of the tax or liability imposed by this Article may appeal from the assessment to tax appeal court. Sec. 5-4.13 Disclosure of returns unlawful; destruction of returns. (a) All tax returns and return information required to be filed under this Article, and the report of any investigation of the return or of the subject matter of the return, shall be confidential. It shall be unlawful for any person or any officer or employee of the County, including the auditor or the auditor's agent, to intentionally make known information imparted by any tax return or return information filed pursuant to this Article, or any report of any investigation of the return or of the subject matter of the return, or to willfully permit any return, return information, or report so made, or any copy thereof, to be seen or examined by any person; provided that for tax purposes only the taxpayer, the taxpayer's authorized agent, or persons with a material interest in the return, return information, or report may examine them. Unless otherwise provided by law, persons with a material interest in the return, return information, or report shall include: (1) Trustees; (2) Partners; 6 (3) Persons named in a board resolution or a one per cent shareholder an the case of a corporate return, (4) The person authorized to act for a corporation in dissolution; (5) The shareholder of an S corporation; (6) The personal representative, trustee, heir, or beneficiary of an estate or trust in the case of the estate's or decedent's return; (7) The committee, trustee, or guardian of any person in paragraphs (1) through (6) who is incompetent, (8) The trustee in bankruptcy or receiver, and the attorney-in-fact of any person in paragraphs (1) through (7); (9) Persons duly authorized by the State in connection with their official duties; (10) Any duly accredited tax official of the United States, or of any state or territory, or of any county of this State, (11) The Multistate Tax Commission or its authorized representative; and (12) Members of a limited liability company. Violation of this subsection is punishable in accordance Section 237D-13, Hawaii Revised Statutes. Nothing in this subsection shall prohibit the publication of statistics that are classified to prevent the identification of particular reports or returns and the items of the reports or returns. (b) The County Finance Director may destroy the monthly, quarterly, or semiannual returns filed pursuant to Section 5-4.7, or any of them, upon the expiration of three (3) years after the end of the calendar or fiscal year in which the taxes so returned accrued. Sec. 5-4.14 Collection by suit; injunction. The County Finance Director may collect taxes due and unpaid under this Article, together with all accrued penalties, by action in assumpsit or other appropriate proceedings in the fifth circuit court. After delinquency shall have continued for sixty (60) days, or if any person lawfully required so to do under this Article shall fail to register as provided by this Article for a period of sixty (60) days after the first date when the person was required under this Article to register, the County Finance Director may proceed in the fifth circuit court to obtain an injunction restraining the further furnishing of transient accommodations or the operation of the resort time share vacation plan until full payment shall have been made of all taxes and penalties and interest due under this Article, or until such registration is secured, or both, as the circumstances of the case may require. Sec. 5-4.15 Penalty and interest. (a) Penalties and interest shall be added to and become a part of the tax, when: (1) Failure to pay tax. 7 (A) If any part of any underpayment is due to negligence or intentional disregard (but without intent to defraud), there shall be added to the tax an amount up to twenty-five percent (25%) of the underpayment as determined by the County Finance Directors (B) If any part of any underpayment of tax required to be shown on a return is due to fraud, there shall be added to the tax an amount up to fifty percent (50%) of the underpayment as determined by the County Finance Director. (2) Interest on underpayment or nonpayment of tax. (A) If any amount of tax is not paid on or before the last date prescribed for payment, interest on such amount at the rate of two-thirds (213) of one percent (1%) a month or fraction of a month shall be paid for the period beginning with the first calendar day after the date prescribed for payment. (B) Interest prescribed under this paragraph on any tax shall be paid upon notice and demand, and shall be assessed, collected, and paid in the same manner as taxes. (C) No interest under this paragraph shall be imposed on interest provided by this paragraph. (D) If any portion of a tax is satisfied by credit of any overpayment, then no interest shall be imposed under this paragraph on the portion of the tax so satisfied for any period during which, if the credit had not been made, interest would have been allowable with respect to the overpayment. (b) No taxpayer shall be exempt from any penalty or interest by reason of having contested the tax, but only to the extent that the tax is adjudged to be excessive or contrary to law. Sec. 5-4.16 Application of tax. (a) The tax imposed by this Article shall be in addition to any other taxes imposed by any other laws of the State. In order to determine if the tax under this Article is to be levied, assessed, and collected upon transient accommodations the following presumptions shall control. (1) If a person lets a transient accommodation for less than one hundred eighty (180) consecutive days, it shall be presumed that the accommodation furnished is for a transient purpose. 8 (2) If a person lets a transient accommodation for one hundred eighty (180) days or more, there is no presumption one way or another as to the purpose for which the accommodation is furnished. The operator shall have the burden of proving to the County Finance Director whether an accommodation is not being furnished for a transient purpose. If the County Finance Director is satisfied that an accommodation is not furnished for a transient purpose, then the County Finance Director shall not levy any tax under this Article. (b) Except as otherwise provided, this Article shall apply to a transient accommodations broker, travel agency, or tour packager who enters into an agreement to furnish transient accommodations at noncommissioned negotiated contract rates in the same manner as it applies to an operator. Sec. -4.17 County Finance Director. The County Finance Director has all the rights and powers of the director of taxation under Section 237D, Hawaii Revised Statutes. The County Finance Director is authorized to enter into an agreement with the Director of Taxation, other state agency, other county of the State of Hawaii, or multiple counties of the State of Hawaii, for the collection of the taxes authorized by this Article. The County Finance Director is further authorized to delegate any authority provided in this Article to accomplish this. In the event that any section in this Article conflicts with this authority to enter into an agreement, for the collection of taxes, it shall be void. The County Finance Director shall appropriately notify taxpayers of any void section. See. 5-4.18 Promulgation of Rules. The County Finance Director shall be authorized to promulgate rules to implement the purposes of this Article." SECTION 3. If any provision of this Ordinance or the application thereof to any person 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. The County Clerk is authorized to revise this Ordinance to reflect appropriate references relating to dates of enactment and codification. SECTION 5. This Ordinance shall be effective October 1, 2021. Introduced by: /s/ARRYL KANESHIRO (By Request) DATE OF INTRODUCTION: July 21, 2021 Lihu`e, Kauai, Hawaii V:\BILLS\2020-2022 TERM\Bill No. 2829 Draft 1 AKKAMKiy.docx 9 CERTIFICATE OF THE COUNTY CLERK I hereby certify that heretofore attached is a true and correct copy of Bill No. 2829, Draft 1,which was adopted on second and final reading by the Council of the County of Kauai at its meeting held on September 15, 2021,by the following vote: FOR ADOPTION: Carvalho, Chock, Cowden, DeCosta, Evslin, Kuali`i, Kaneshiro TOTAL— 7, AGAINST OPTION: None TOTAL— 0, EXCUSED & NOT VOTING: None TOTAL— 0, RECUSED & NOT VOTING: None TOTAL—0. Lahu`e, awai`i September 16, 2021 Jade . ountain-Tanigawa County Clerk, County of Kauai ATTEST: OIWQt�OA" Arryl K Shiro Chairman & Presiding.Officer DATE OF TRANSMITTAL TO MAYOR: September 16, 2021 Approved this�day of 2021. Derek S.K. Kawakami, Mayor County of Kauai EXHIBIT B ORDINANCE NO. 5273 BILL NO. 101 (2021) Draft 1 A BILL FOR AN ORDINANCE ESTABLISHING A NEW CHAPTER 3.47, MAUI COUNTY CODE, IMPLEMENTING A COUNTY TRANSIENT ACCOMMODATIONS TAX BE IT ORDAINED BY THE PEOPLE OF THE COUNTY OF AUI: SECTION 1. By Act 1 of the First Special Session of 2021, counties were stripped of their statutory allocation of State-collected Transient Accommodations Tax revenue and granted the authority to collect a County Transient Accommodations Tax of 3 percent. This Ordinance implements the authority under Act 1 and establishes a Transient Accommodations Tax for the County of Maui. SECTION 2. Title 3, Maui County Code, is amended by adding a new chapter to be appropriately designated and to read as follows: "CHAPTER 3.47 TRANSIENT ACCOMMODATIONS TAX Sections: 3.47.010 Tax established. 3.47.020 Definitions. 3.47.030 Imposition of tax. 3.47.040 Exemptions. 3.47.050 Registration. 3.47.060 Return and payments. 3.47.070 Annual return. 3.47.080 Federal assessments. 3.47.090 Rent collection by third party. 3.47.100 Reconciliation. 3.47.110 Assessment for failure to file a return. 3.47.120 Appeals. 3.47.130 Disclosure and destructionreturns. 3.47.140 Collectionsit. 3.47.150 Penaltyinterest. 3.47.160 Applicationf tax. 3.47.170 Director of finance. 3.47.180 Administrativeles. 3.47.010 Tax established. A 3 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 is considered levied on November 1, 2021. 3.47.020 Definitions. For the purposes of this chapter, defined terms in section 237D-1, Hawaii Revised Statutes, mean the same in this chapter. "Director" means the director of finance for the County of Maui. 3.47.030 Imposition of tax. A. Each month, a tax on the gross rental or gross rental proceeds derived from furnishing transient accommodations is levied and imposed in accordance with section 3.47.010, and must be assessed and collected. B. Every transient accommodations broker, travel agency, and tour packager who arranges transient accommodations at noncommissioned negotiated contract rates, and every operator or other taxpayer who received gross rental proceeds must pay to the County the tax imposed. C. Every plan manager is liable for and must pay to the County the transient accommodations tax imposed by section 3.47.010. Every resort time share vacation plan must be represented by a plan manager who is subject to this chapter. 3.47.040 Exemptions. The exemptions in section 237D-3, Hawaii Revised Statutes, are also exemptions to this chapter. 3.47.050 Registration. All operators, plan managers, transient accommodations brokers, travel agencies, or tour packagers within the County must hold State registration in accordance with sections 237D-4 and 4.5, Hawaii Revised Statutes. Notwithstanding any penalties imposed under State law, failure to obtain registration under this section is a County civil violation punishable by up to $1,000 per infraction under authority of section 46-1.5(24)(a), Hawaii Revised Statutes. Infractions are - 2 - appealable to the director consistent with chapter 91, Hawaii Revised Statutes within thirty days from the issuance of the citation in accordance with section 237D-4(b), Hawaii Revised Statutes. 3.47.060 Return . A. On or before the twentieth day of each calendar month, every person liable under this chapter during the preceding calendar month must file a sworn return with the State director of taxation in the form the director prescribes together with a remittance for the amount of the tax. B. Notwithstanding subsection A, the director or designee, for good cause, may permit a taxpayer to file and make payments on the taxpayer's return required under this section: 1. On a quarterly basis during the calendar or fiscal year, on or before the twentieth day of the calendar month after the close of each quarter. For calendar year taxpayers, the return and payment must be made on or before April 20, July 20, October 20, and January 20, or for fiscal year taxpayers, on or before the twentieth day of the fourth month, seventh month, and tenth month following the beginning of the fiscal year, and on or before the twentieth day of the month following the close of the fiscal year. This subsection applies only if the director or designee is satisfied that the grant of the permit will not unduly jeopardize the collection of the taxes due and the taxpayer's total tax liability for the calendar or fiscal year under this chapter will not exceed $4,000. 2. On a semiannual basis during the calendar or fiscal year, the return and payment to be made by or before the twentieth day of the calendar month after the close of each six-month period. For calendar year taxpayers, on July 20 and January 20, or for fiscal year taxpayers, on or before the twentieth day of the seventh month following the beginning of the fiscal year, and on or before the twentieth day of the month following the close of the fiscal year. This subsection applies only if the director or designee is satisfied that the grant of the permit will not unduly jeopardize the collection of the taxes due and the taxpayer's total tax liability for the calendar or fiscal year under this chapter will not exceed $2,000. 3. The director or designee, for good cause, may permit a taxpayer to make monthly payments based on the taxpayer's estimated quarterly or semiannual liability. However, the taxpayer must file a reconciliation return at the end of each quarter or at the end of each six-month period during the calendar or fiscal year, as required in this section. - 3 - C. If a taxpayer filing the taxpayer's return on a quarterly or semiannual basis, as provided in this section, becomes delinquent in either the filing of the taxpayer's return or the payment of the taxes due, or if the liability of a taxpayer who possesses a permit to file the taxpayer's return and to make payments on a semiannual basis exceeds $2,000 in transient accommodations taxes during the calendar year, or exceeds $4,000 in transient accommodations taxes during the calendar year if making payments on a quarterly basis, or if the director or designee determines that any such quarterly or semiannual filing of return would unduly jeopardize the proper administration of this chapter, including the assessment or collection of the transient accommodations tax, the director or designee, at any time, may revoke a taxpayer's permit, in which case the taxpayer must then file the taxpayer's return and make payments as provided in subsection A. 3.47.070 Annual return. On or before the twentieth day of the fourth month following the close of the taxable year, every person who has become liable for the payment of taxes under this chapter during the preceding tax year must file with the State director of taxation a return as set forth under section 237D-7, Hawaii Revised Statutes, and a remittance covering the residue of the tax due, if any, as prescribed by the director. 3.47.080 Federal assessments. Any person required to report under section 237D-7.5, Hawaii Revised Statutes, must also respectively make reflective adjustments and report to the director. 3.47.090 Rent collection by third party. A. Every person authorized under an agreement by the owner of transient accommodations located within this County to collect rent on behalf of such owner is subject to this section. B. Every written rental collection, in addition to the requirements of section 237D-8.5, Hawaii Revised Statutes, must also include in bold print and ten-point type size: "MAUI COUNTY TRANSIENT ACCOMMODATIONS TAXES MUST BE PAID ON THE GROSS RENTS COLLECTED BY ANY PERSON RENTING TRANSIENT ACCOMMODATIONS IN THE COUNTY OF MAUI" Every person entering an oral rental collection agreement must furnish the director a copy of the information furnished to the State as required under section 237D-8.5, Hawaii Revised Statutes, and must give the owner of the property a copy of the notice required - 4 - by this subsection. The statement required by this subsection may be combined with the 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 the following in parentheses: " AWAVI (INCLUDING MAUI COUNTY ADDED) TRANSIENT ACCOMMODATIONS TAXES AND" Every person authorized to collect rent for another person must file a copy of the first page of the rental collection agreement with the director within thirty days after entering into the agreement, or must file a copy of federal Internal Revenue form 1099, the property owner's social security or federal identification number, and, if available, the general excise tax license and transient accommodations tax registration numbers of the owner of such property being rented with the director at the same time as such forms must be filed with the Internal Revenue Service for the applicable tax year. The person also must notify the owner that such information is being furnished and give the owner a copy of the notice. 3.47.140 Reconciliation. A. On or before the twentieth day of the fourth month following the close of the taxable year, every person who has become liable for the payment of taxes under this chapter during the preceding taxable year and who has furnished transient accommodations that were exempt, for any portion of the taxable year, from the tax imposed under this chapter, must file a copy with the director of the reconciliation for transient accommodations as prescribed by section 237D-8.6, Hawaii Revised Statutes. B. On or before the twentieth day of the fourth month following the close of the taxable year, every plan manager who has become liable for the payment of taxes under this chapter during the preceding taxable year must file with the director a copy of the filed reconciliation with the State as prescribed by section 237D-8.6, Hawaii Revised Statutes, indicating the period of time that the owner of a resort time share vacation unit was subject to the general excise tax or the tax under section 237D-2(a), Hawai`i Revised Statutes. 3.47.110 Assessment of tax for failure to file a return. A. If any person fails to make a return as required by this chapter, the director or designee must estimate the tax liability of the person from any information the director or designee obtains, and according to the estimate, assess the taxes, interest, and - 5 - penalty due to the County from the person, give notice of the assessment to the person, and make demand upon the person for payment. The assessment is presumed correct unless, upon an appeal duly taken, the contrary is proved by the person assessed. The burden of proof on appeal to disprove the correctness of assessment is on the person assessed. E. After a return is filed under this chapter, the director or designee must cause the return 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 chapter, the director or designee must assess the taxes and interest due the County, give notice of the assessment to the persons liable, and make demand upon the persons for payment. C. Except as provided by this section, the amount of taxes imposed by this chapter must be assessed or levied within three years after the annual return was filed, or within three years of the due date prescribed for the filing of the return, whichever is later. 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 chapter has occurred within the applicable period of limitation, the tax may be collected by levy or by a proceeding in court under chapter 231, Hawaii Revised Statutes, if the levy is made or the proceeding was begun within fifteen years after the assessment of the tax. Notwithstanding any other provision to the contrary in this section, the limitation on collection after assessment in this section must be suspended for the period: 1. The taxpayer agrees to suspend the period. 2. The assets of the taxpayer are in control or custody of a court in any proceeding before any court of the United States or any state, and for six months after the court is no longer in control or custody. 3. An offer in compromise under section 231-3(10), Hawaii Revised Statutes, is pending. 4. During which the taxpayer is outside the County if the period of absence is for a continuous period of at least six months. However, if at the time of the taxpayer's return to the County the period of limitations on collection after assessment would expire before the expiration of six months from the date of the taxpayer's return, the period does not expire before the expiration of the six months. D. In the case of a false or fraudulent return with intent to evade tax, or of a failure to file the annual return, the tax may be assessed or levied at any time. The burden of proof with respect - 6 - to the issues of falsity or fraud and intent to evade tax rests with the County. E. Where, before the expiration of the period prescribed in subsection C, the director or designee and the taxpayer have consented in writing to the assessment or levy of the tax after the date fixed by subsection C, the tax may be assessed or levied at any time prior to the expiration of the period agreed upon. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon. 3.47.120 eals. Any person aggrieved by any assessment of the tax or liability imposed by this chapter may appeal from the assessment within thirty days of the issuance of the assessment to the tax appeal court in accordance with section 232-16, Hawaii Revised Statutes. 3.47.13® Disclosure and destruction of returns. A. All tax returns and return information required to be filed under this chapter, and the report of any investigation of the return or of the subject matter of the return, is confidential. It is unlawful for any person or any officer or employee of the County, including the auditor or the auditor's agent to intentionally make known information imparted by any tax return or return information filed in accordance with this chapter, or any report of any investigation of the return or of the subject matter of the return, or to willfully permit any return, return information, or report so made, or any copy, to be seen or examined by any person. For tax purposes, only the taxpayer, the taxpayer's authorized agent, or persons with a material interest in the return, return information, or report may examine them. Unless otherwise provided by law, persons with a material interest in the return, return information, or report include: 1. Trustees. 2. Partners. 3. Persons named in a board resolution or a 1 percent shareholder in the case of a corporate return. 4. The person authorized to act for a corporation in dissolution. 5. The shareholder of an S corporation. 6. The personal representative, trustee, heir, or beneficiary of an estate or trust in the case of the estate's or decedent's return. 7. The committee, trustee, or guardian of any person in paragraphs 1 through 6 who is incompetent. - 7 - 8. The trustee in bankruptcy or receiver, and the attorney-in-fact of any person in paragraphs 1 through 7. 9. Persons duly authorized by the State in connection with their official duties. 10. Any duly accredited tax official of the United States, any state or territory, or any county of this State. 11. The multistate tax commission or its authorized representative. 12. Members of a limited liability company. Violation of this subsection is punishable in accordance with section 237D-13, Hawaii Revised Statutes. Nothing in this subsection prohibits the publication of statistics that are classified to prevent the identification of particular reports or returns and the items of the reports or returns. B. The director may destroy any of the monthly, quarterly, or semiannual returns filed under section 3.47.070 upon the expiration of three years after the end of the calendar or fiscal year in which the taxes so returned accrued. .4 .140 Collection by suit. The director may collect taxes due and unpaid under this chapter, together with all accrued penalties, by filing suit or other appropriate proceeding in the second circuit court. After delinquency has continued for sixty days, or if any person required to register under this chapter fails to do so for a period of sixty days after the first date when the person was required to register, the director may proceed in the second circuit court to obtain an injunction restraining the further furnishing of transient accommodations or the operation of the resort time share vacation plan until full payment has been made of all taxes and penalties and interest due under this chapter, or until such registration is secured, or both, as the circumstances of the case may require. 3.47.250 Penalty and interest. A. Penalties and interest must be added to and become a part of the tax, when: 1. Failure to file tax return. In case of failure to file any tax return required to be filed on the date required (determined with regard to any extension of time for filing), unless it is shown that the failure is due to reasonable cause and not due to neglect, there will be added to the amount required to be shown as tax on the return 5 percent of the amount of the tax if the failure is for not more than one month, with an additional 5 percent for each additional month or fraction thereof during which the failure continues, not exceeding 25 percent in the aggregate. For purposes of this paragraph, penalties may not exceed the maximum - 8 - amount allowed under the revised charter of the County of Maui (1983) as amended. For purposes of this paragraph, the amount of tax required to be shown on the return will be reduced by the amount of any part of the tax paid on or before the date prescribed for payment of the tax and by the amount of any credit against the tax which may be claimed upon the return. 2. Failure to pay tax. a. If any part of any underpayment is due to negligence or intentional disregard but without intent to defraud, there must be added to the tax an amount up to 25 percent of the underpayment as determined by the director, or the maximum amount allowed under the revised charter of the County of Maui (1983), as amended, whichever is the lesser. b. If any part of any underpayment of tax required to be shown on a return is due to fraud, there must be added to the tax an amount up to 50 percent of the underpayment as determined by the director, or the maximum amount allowed under the revised charter of the County of Maui (1983), as amended, whichever is the lesser. 3. Interest on underpayment or nonpayment of tax. a. If any amount of tax is not paid on or before the last date prescribed for payment, interest on such amount at the rate of two-thirds of 1 percent a month or fraction of a month must be paid for the period beginning with the first calendar day after the date prescribed for payment. b. Interest prescribed under this paragraph on any tax must be paid upon notice and demand, and must be assessed, collected, and paid in the same manner as taxes. C. No interest under this paragraph can be imposed on interest provided by this paragraph. d. If any portion of a tax is satisfied by credit of any overpayment, then no interest must be imposed under this paragraph on the portion of the tax so satisfied for any period during which, if the credit had not been made, interest would have been allowable with respect to the overpayment. B. No taxpayer is exempt from any penalty or interest by reason of having contested the tax, except to the extent the tax is adjudged to be excessive or contrary to law. - 9 - 3.47.160 Applicationtax. A. The tax imposed by this chapter is in addition to any other taxes imposed by any other laws of the State. To determine if the tax under this chapter is to be levied, assessed, and collected upon transient accommodations the following presumptions control; 1. If a person lets a transient accommodation for less than one hundred eighty consecutive days, it must be presumed that the accommodation furnished is for a transient purpose. 2. If a person lets a transient accommodation for one hundred eighty days or more, there is no presumption as to the purpose for which the accommodation is furnished. The burden of proving to the director whether an accommodation is not being furnished for a transient purpose rests with the operator of the accommodation. If the director is satisfied that an accommodation is not furnished for a transient purpose, then the director must not levy any tax under this chapter. B. Except as otherwise provided, this chapter applies to a transient accommodations broker, travel agency, or tour packager who enters into an agreement to furnish transient accommodations at noncommissioned negotiated contract rates in the same manner as it applies to an operator. 3.47.170 Director of finance. The director has all the rights and powers of the State director of taxation under section 237D, Hawaii Revised Statutes. The director is authorized to enter into an agreement with the director of taxation, other State agency, or other entity approved or designated by the council for the collection of the taxes authorized by this chapter. The director is further authorized to delegate any authority provided in this chapter. If any section in this chapter conflicts with this authority to enter into an agreement for the collection of taxes, it is void. The director must appropriately notify taxpayers of any void section. 3.47.180 Administrative rules. The director is authorized to adopt administrative rules to implement the purposes of this chapter." SECTION 3. This Ordinance takes effect upon approval. APPROV AS TO FORM ANI) EGALITY: KRI,STTNA C. OSHIKI Depa,rtbie4crtion Counsel paHjcm:21-287d PAF 21-285 2021-10.04 Ord Ch 3.47 TAT - 10 - WE HEREBY CERTIFY that the foregoing BILL NO. 101 (2021), Draft l 1. Passed FINAL READING at the meeting of the Council of the County of Maui, State of Hawaii,held on the 1st day of October,2021,by the following vote: Alice L. Keani N_W. Gabhol Natalie A. Kelly T. Michael J. Tamara A.M. Shane M. Yuki Lei K_ LEE RAWLINS- JOHNSON KAMA KING MOLINA PALTIN SINENCI SUGIMURA Chair FERNANDEZ Vice-Chair Aye A e Ave Excused Excused A e A e A e A e 2. Was transmitted to the Mayor of the County of Maui,State of Hawaii,on the 4th day of October,2021. DATED AT WAILUKU,MAUI, HAWAII,this 4th day of October,2021. !mo- 0.- (4- z:� t -�,, - �- ALI t E L. LEE, CHAIR Lei Council of the County of Maui I'-11 o THY L. kAOHU, COUNTY CLERK County of Maui THE FOREGOING BILL IS HEREBY APPROVED THIS DAY OF to ,2021. L MICHAEL P. VICTORINO, MAYOR County of Maui I HEREBY CERTIFY that upon approval of the foregoing BILL by the Mayor of the County of Maui,the said BILL was designated as ORDINANCE NO. 5273 of the County of Maui, State of Hawaii. KATHY L. KAOHU, COUNTY CLERK County of Maui Passed First Reading on September 17,2021 Effective date of Ordinance October 5, 2021 t�7 I HEREBY CERTIFY that the foregoing is a true and correct copy of Ordinance CollS Na. 5273 the original of which is on file in the Office of the County Clerk,County of Maui,State of Hawaii. " Datcd at Wailuku,Hawaii,on County Clerk,County of Maui