HB1590 HD2

PART I

SECTION 1. Chapter 46, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§46- Short-term vacation rental enforcement; evidence. (a) Any county enforcing an ordinance pertaining to short-term vacation rentals may consider time-stamped screenshots of vacation rentals operating illegally on a hosting platform as evidence of the offering or advertising of illegal short-term vacation rentals.

(b) As used in this section:

"Hosting platform" has the same meaning as in section 237D‑1.

"Illegal short-term vacation rental" means any short-term vacation rental that a court has determined violates a county ordinance related to short-term vacation rentals, minimum stay requirements, or zoning.

"Short-term vacation rental" has the same meaning as in section 237D-1."

SECTION 2. Section 201B-1, Hawaii Revised Statutes, is amended by amending the definition of "destination management" to read as follows:

""Destination management" means a collaborative and coordinated process with public, private, and community stakeholders to manage the various elements of a visitor destination to:

(1) Create, implement, and monitor strategies that attract targeted visitor markets and improve visitor experiences;

(2) Improve natural and cultural resources valued by Hawaii residents and visitors;

(3) Develop and maintain tourism-related infrastructure to prevent overcrowding and overtaxing sites and resources; [~~and~~]

(4) Ensure that the provision of services enhances the visitor experience[.]; and

(5) Promote positive visitor experiences aimed at encouraging visitors to stay at traditional transient accommodations, such as hotels or time shares, or legal vacation rentals and discouraging the use of illegal short-term vacation rentals. For the purposes of this paragraph, "illegal short-term vacation rental" has the same meaning as in section 46- ."

SECTION 3. Section 237D-2.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§237D-2.5[]] County transient accommodations tax; administration. (a) The county transient accommodations tax, upon the adoption of a county ordinance and in accordance with the requirements of section 46-20.7, shall be levied, assessed, and collected as provided in this section on all gross rental, gross rental proceeds, and fair market rental value taxable under this chapter. No county shall set its transient accommodations tax at a rate greater than three per cent of all gross rental, gross rental proceeds, and fair market rental value taxable under this chapter. With respect to the county transient accommodations tax, the applicable county director of finance shall have all the rights and powers of the director of taxation provided under this chapter.

(b) The county transient accommodations tax, if adopted, shall be imposed on the gross rental, gross rental proceeds, and fair market rental value of all written contracts that require the passing on of the taxes imposed under this chapter; provided that if the gross rental, gross rental proceeds, and fair market rental value are received as payments beginning in the taxable year in which the taxes become effective, on contracts entered into [~~prior to~~] before the adoption of the ordinance pursuant to section 46-20.7, and the written contracts do not provide for the passing on of increased rates of taxes, the county transient accommodations tax shall not be imposed on the gross rental, gross rental proceeds, and fair market rental value covered under the written contracts. The county transient accommodations tax shall be imposed on the gross rental, gross rental proceeds, and fair market rental value from all contracts entered into on or after the adoption of the ordinance pursuant to section 46-20.7, regardless of whether the contract allows for the passing on of any tax or any tax increases.

(c) No county transient accommodations tax shall be established on any form of accommodation that is exempt from the taxes imposed by this chapter pursuant to section 237D-3.

(d) The counties may use any revenue from the county transient accommodations tax for the enforcement of short-term vacation rentals."

SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2026-2027 for the department of taxation to collect taxes owed by illegal short-term vacation rental operators.

The sum appropriated shall be expended by the department of taxation for the purposes of this Act.

PART II

SECTION 5. Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§237- Hosting platforms as tax collection agent. (a) A hosting platform that earns service fees for providing booking services shall register with the department of taxation as a tax collection agent under this section, as a condition precedent to providing booking services. Upon registration, the department of taxation shall issue to the hosting platform a separate license for its activities as a tax collection agent, with respect to taxes due under this chapter on behalf of its operators and, if applicable, for taxes payable under this chapter for its own business activities. The director of taxation may prescribe the form and manner of registration and may require any information necessary for the administration of this section.

(b) In addition to its own responsibilities under this chapter, a hosting platform registered as a tax collection agent shall report, collect, and pay over the taxes due under this chapter on behalf of all operators for whom the hosting platform provides booking services; provided that the hosting platform's obligation to report, collect, and pay taxes on behalf of its operators shall apply solely to short-term vacation rentals located in the State for which booking services were provided by the hosting platform. For all other business activities not related to the booking services, each operator shall remain subject to all applicable requirements of title 14 as if this section did not apply.

(c) If a hosting platform registered as, or required to be registered as, tax collection agent fails to collect and pay the tax as required under subsection (b), the hosting platform shall be liable to pay to the State any unpaid portion of the amount of tax that was required to be paid under subsection (b), together with penalties and interest as provided by law.

(d) A hosting platform registered as a tax collection agent shall file periodic returns in accordance with section 237-30 and annual returns in accordance with section 237-33. Each annual return required under section 237-33 shall include, in a form prescribed by the department of taxation, the following information for each operator on whose behalf the hosting platform is required to report, collect, and pay over taxes due under this chapter:

(1) Address of each short-term vacation rental;

(2) Gross receipts;

(3) General excise tax license number; and

(4) Transient accommodations tax registration number.

(e) Information provided by a hosting platform pursuant to subsection (d) shall be confidential and shall not be divulged to any other department or official or any other political subdivision of the State. The information may be used only for the purpose of levying and collecting taxes due under this chapter.

(f) This section shall not apply to a real estate broker or real estate salesperson or to the collection of rentals by a third party under section 237-30.5 or 237D-8.5.

(g) For the purposes of this section, and unless the context otherwise requires:

"Booking service" has the same meaning as in section 237D‑1.

"Hosting platform" has the same meaning as in section 237D‑1.

"Operator" has the same meaning as in section 237D-1.

"Real estate broker" has the same meaning as in section 467-1.

"Real estate salesperson" has the same meaning as in section 467-1.

"Short-term vacation rental" has the same meaning as in section 237D‑1.

"Tax collection agent" has the same meaning as in section 237D-1."

SECTION 6. Chapter 237D, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§237D- Hosting platform as tax collection agent. (a) A hosting platform that earns service fees for providing booking services shall register with the department of taxation as a tax collection agent under this section, as a condition precedent to providing booking services. Upon registration, the department of taxation shall issue to the hosting platform a separate certificate of registration for its activities as a tax collection agent, with respect to taxes due under this chapter on behalf of its operators and, if applicable, for taxes payable under this chapter for its own business activities. The director of taxation may prescribe the form and manner of registration and may require any information necessary for the administration of this section.

(c) If a hosting platform registered as, or required to be registered as, a tax collection agent fails to collect and pay the tax as required under subsection (b), the hosting platform shall be liable to pay to the State any unpaid portion of the amount of tax that was required to be paid under subsection (b), together with penalties and interest as provided by law.

(d) A hosting platform registered as a tax collection agent shall file periodic returns in accordance with section 237D-6 and annual returns in accordance with section 237D-7. Each annual return required under section 237D-7 shall include, in a form prescribed by the department of taxation, the following information for each operator on whose behalf the hosting platform is required to report, collect, and pay over taxes due under this chapter:

(1) Address of each short-term vacation rental;

(2) Gross receipts;

(3) General excise tax license number; and

(4) Transient accommodations tax registration number.

SECTION 7. Section 231-8.5, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) If the requirements of subsection (c) are satisfied, the department may require electronic filing of any tax return, application, report, or other document required under the provisions of title 14 administered by the department for the following taxpayers:

(1) For withholding tax filings required under chapter 235, only employers whose total tax liability under sections 235-61 and 235-62 for the calendar or fiscal year exceeds $40,000;

(2) For income tax filings required under chapter 235, only taxpayers who are subject to tax under section 235-71, 235-71.5, or 235-72;

(3) For general excise tax filings required under chapter 237, only taxpayers whose total tax liability under chapter 237 for the calendar or fiscal year exceeds $4,000;

(4) For transient accommodations tax filings required under chapter 237D, only [~~operators and plan managers~~] taxpayers whose total tax liability under chapter 237D for the calendar or fiscal year exceeds $4,000; and

(5) For filings required under the following chapters, all taxpayers subject to tax under those chapters:

(A) 236E;

(B) 239;

(D) 243;

(E) 244D;

(F) 245; and

(G) 251."

SECTION 8. Section 237-30.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Every person authorized under an agreement by the owner of real property located within this State to collect rent on behalf of the owner shall be subject to this section[.]; provided that this section shall not apply to any hosting platform registered as a tax collection agent under section 237‑ ."

SECTION 9. Section 237-41, Hawaii Revised Statutes, is amended to read as follows:

"§237-41 Records to be kept; examination. (a) Every taxpayer shall keep in the English language within the State, and preserve for a period of three years, suitable records of gross proceeds of sales and gross income, and such other books, records of account, and invoices as may be required by the department of taxation, and all such books, records, and invoices shall be open for examination at any time by the department or the Multistate Tax Commission pursuant to chapter 255, or the authorized representative thereof.

(b) Each hosting platform registered as a tax collection agent under section 237- shall maintain records for each operator for whom the hosting platform provides booking services, including the operator's name, the address of the short-term vacation rental, the period of occupancy, the gross rental or gross rental proceeds, and the taxes collected and remitted on behalf of the operator. The records shall be preserved and made available for examination as provided in subsection (a). Nothing in this subsection shall be construed to diminish or eliminate the responsibilities of taxpayers under this section."

SECTION 10. Section 237-41.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) There shall be personal liability for the taxes imposed under this chapter as provided in this section for the following amounts of gross income or gross proceeds:

(1) Any amount collected as a recovery of the taxpayer's liability under this chapter, where the amount is passed on as the tax owed by the taxpayer under this chapter for the transaction and is separately stated or accounted for in a receipt, contract, invoice, billing, or other evidence of the business activity; [or]

(2) An amount equal to the tax liability under this chapter on a transaction where a taxpayer does not separately state or account for the amount as a tax recovery as provided in paragraph (1). For purposes of this paragraph, the amount of the imputed tax liability is the result of multiplying the gross income or gross proceeds received in the transaction by the tax rate[.]; or

(3) Any amount collected by a hosting platform registered as a tax collection agent under section 237- .

The amounts under paragraphs (1) [~~and~~], (2), and (3) shall be held in trust for the benefit of the State and for payment to the State in the manner and at the time required by this chapter."

SECTION 11. Section 237D-1, Hawaii Revised Statutes, is amended by adding three new definitions to be appropriately inserted and to read as follows:

""Booking service" means any service, including a reservation or payment service, provided by a person or entity that facilitates a short-term vacation rental transaction between an operator and a prospective transient or occupant, and for which the person or entity collects or receives, directly or indirectly, through an agent or intermediary, a fee in connection with the reservation or payment service provided for the short-term vacation rental transaction.

"Hosting platform" means a person or entity that provides the booking services through an online or digital platform that allows an operator to list short-term vacation rentals and enables a renter to arrange, reserve, and pay for the rental of short-term vacation rentals, through the hosting platform. "Hosting platform" does not include a marketplace facilitator as defined in section 237-1 and described in section 237-4.5.

"Short-term vacation rental" means a residential dwelling unit rented to a transient that does not exceed a certain number of days as established by the counties. "Short-term vacation rental" does not include hotels, motels, inns, apartment hotels, boarding facilities, lodges, time shares, or other conventional lodging properties.

"Tax collection agent" means a person or entity that collects money and taxes from a renter owed to an operator, and the portion of the amounts representing taxes does not constitute the tax collection agent's own income."

SECTION 12. Section 237D-8.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Every person authorized under an agreement by the owner of transient accommodations located within this State to collect rent on behalf of the owner shall be subject to this section[.]; provided that this section shall not apply to any hosting platform registered as a tax collection agent under section 237D- ."

SECTION 13. Section 237D-12, Hawaii Revised Statutes, is amended to read as follows:

"§237D-12 Records to be kept; examination. (a) Every taxpayer shall keep in the English language within the State, and preserve for a period of three years, suitable records of gross rental, gross rental proceeds, or fair market rental value relating to the business taxed under this chapter, and such other books, records of account, and invoices as may be required by the department, and all such books, records, and invoices shall be open for examination at any time by the department or the Multistate Tax Commission pursuant to chapter 255, or the authorized representative thereof.

(b) Each hosting platform registered as a tax collection agent under section 237D- shall maintain records for each operator for whom the agent provides booking services, including the operator's name, the address of the short-term vacation rental, the period of occupancy, the gross rental or gross rental proceeds, and the taxes collected and remitted on behalf of the operator. The records shall be preserved and made available for examination as provided in subsection (a). Nothing in this subsection shall be construed to diminish or eliminate the responsibilities of taxpayers under this section."

PART III

SECTION 14. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 15. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 16. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 17. This Act shall take effect on July 1, 3000; provided that part II shall take effect on January 1, 2027.

HOUSE OF REPRESENTATIVES	H.B. NO.	1590
THIRTY-THIRD LEGISLATURE, 2026		H.D. 2
STATE OF HAWAII