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OTCs owe Hawaii tax on rental cars

 Hawaii seeks more tax revenue from OTCs.

Hawaii general excise tax is owed on charges for rental cars booked through online travel companies (OTCs).

For years, tax collection has been a point of contention between OTCs and the state. Last year, the Hawaii Supreme Court ruled that online travel companies are required to collect and remit general excise tax (GET) on the sale of hotel rooms in Hawaii. Now state circuit judge Gary W.B. Chang has ruled that OTCs must also collect on certain sales of rental cars.

Taxable rental car transactions are those “not sold as part of a travel or tour package with other services like airline or hotel reservations.” In addition, OTCs owe GET on “their net receipts from car rental transactions that were included in a travel or tour package sold to consumers.”

As with the tax on hotel rooms, OTCs will be required to pay a certain amount of back taxes, interest and penalties. The final amount, yet to be determined, is “expected to be in the millions of dollars,” according to the office of the general attorney. See News Release 2016-51 for additional information.

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Sales 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.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.