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Judge blocks Hawaii from subpoenaing Airbnb host records

  • Feb 18, 2019 | Jennifer Sokolowsky


A federal judge has denied the state of Hawaii’s attempt to subpoena 10 years of records from Airbnb in order to find out which of its hosts are paying lodging taxes.

The state wanted Airbnb to produce names, addresses, and financial records for 16,000 hosts, but Hawaii First Circuit Court Judge James Ashford said the state failed to prove that a substantial number of Airbnb hosts are disobeying tax laws. The Hawaii Department of Taxation plans to appeal the ruling.

Many short-term rentals in Hawaii are operating illegally in the first place. In Honolulu, which has not issued new short-term rental permits since 1989, it’s estimated that around 800 bed-and-breakfasts and short-term rentals are operating legally, while 10 times more are operating without the required permit.

On the Big Island, more than 6,000 short-term rental operators are doing business without registering with the state or collecting lodging taxes, according to data compiled by Ross Birch, executive director of the Island of Hawaii Visitors Bureau.

In Hawaii, short-term rental income is subject to transient accommodations tax (TAT) and general excise tax (GET). Short-term rental hosts are required to get licenses for both types of tax and can pass these taxes on to their guests.

Unlike many states, Hawaii does not allow short-term rental platforms such as Airbnb and HomeAway to collect lodging taxes on behalf of their hosts. This means that hosts are responsible for collecting all lodging taxes on their short-term rentals and remitting the taxes to authorities. Many Hawaii short-term rental operators use MyLodgeTax automation to simplify and manage lodging tax compliance.

Linda Chu Takayama, Hawaii’s director of taxation, said in a statement after the ruling that the state will continue to work on enforcing taxation laws for short-term rental businesses. “While we are disappointed with the outcome of the hearing today, we owe it to the community to continue to apply the law to those in the vacation rental business to ensure they are paying their fair share of taxes,” she said.

Bills introduced in the Legislature this year could help with that effort. The measures, one each in the House and Senate, would require short-term rental platforms such as Airbnb, HomeAway, and VRBO to report information about their short-term rental hosts to the state, including names, addresses, social security numbers, GET license numbers, and amount of rent collected in the previous year.

Reporting requirements for short-term rental platforms have also been controversial in other states. Earlier this year, another federal judge blocked part of a new New York City law requiring short-term rental platforms to disclose information on their hosts.

The new law, which the City Council passed unanimously in July, requires online rental platforms to provide data on hosts to the city’s Office of Special Enforcement every month. This includes the name, address, phone number, email, and profile URL of active hosts, as well as the total number of days the property was rented, fees that were paid, and whether hosts are renting out a whole home or just part of one. Short-term rental platforms that fail to disclose this information could be fined $1,500 per listing.

Under the New York State multiple dwelling law, apartments in buildings with more than three units can only be used for “permanent resident purposes.” Short-term rentals are only allowed in most buildings if the permanent tenant lives in the apartment while guests are staying there.

Airbnb and HomeAway sued the city over the reporting law last August, claiming the requirement to release host data to the city violates privacy. U.S. District Judge Paul Engelmayer ruled to freeze the law’s data-disclosure requirement while the lawsuit is being decided.

Following the New York City ruling, Washington, D.C., Mayor Muriel Bowser said she believed a new Washington, D.C., short-term rental law with reporting requirements similar to New York City’s law would likely be overturned by the courts. She sent the law back to the City Council without either signing or vetoing it.

Airbnb has agreed to share some user data with governments in San Francisco and Chicago as part of regulation deals in those cities.    

Lodging tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Jennifer Sokolowsky
Avalara Author Jennifer Sokolowsky
Jennifer Sokolowsky writes about tax, legal, and tech topics. She has an extensive international background in journalism and marketing, including work with The Seattle Times, The Prague Post, Avvo, and Marriott.