Hawaii Car Sharing Tax, January 2015
- Sales Tax News
- Jun 26, 2014 | Gail Cole
A new car sharing vehicle surcharge tax is on the books in Hawaii. It takes effect January 1, 2015.
Hawaii’s rental car surcharge “treats car share vehicles the same as regular rental cars, meaning they’re charged at the same $3 flat rate as car rentals that are used for the whole day.” The result? “[H]uge tax rates—more than 30 percent for one-hour rentals.”
Car2go owns a fleet of tiny, energy efficient vehicles that it rents by-the-minute. Its plan to bring 200 vehicles to Honolulu helped spark the new legislation, which taxes car share vehicles at a different rate than rental cars.
Effective January 1, 2015, there is to be a tax of 25 cents per half-hour, “or any portion of a half-hour, that a rental motor vehicle is rented or leased by a car-sharing organization….” The tax is to be levied “upon the car-sharing organization.” Tax on car sharing lasting six-hours or more is imposed in “a manner provided in section 251-2.”
The tax will apply to any organization qualifying as a car-sharing organization and registered as such with the Hawaii Department of Revenue. Car-sharing organizations must be subject “to at least one surcharged imposed by this chapter.”
Car-sharing organization is defined as a rental motor vehicle lessor with a membership program in which:
- Self-service access to a fleet of vehicles is provided (with or without a reservation) exclusively to members who have paid a membership fee;
- Members are charged an hourly or by the minute usage rate for each use of a vehicle;
- Members are not required to enter into a separate written agreement with the organization each time a vehicle is used;
- The average paid use period for all vehicles is six hours or less.
Evolving technology means evolving sales tax rules, rates and regulations. How does your business keep track of sales tax changes?