DAVID Y. IGE

ISAAC W. CHOY

GOVERNORDIRECTOR OF TAXATIONJOSH GREEN M.D.
LT. GOVERNORSTATE OF HAWAII

DEPARTMENT OF TAXATIONP.O. BOX 259
HONOLULU, HAWAII 96809

PHONE NO: (808) 587-1530
FAX NO: (808) 587-1584

February 10, 2021

DEPARTMENT OF TAXATION ANNOUNCEMENT NO. 2021-04
RE:

Temporary Administrative Rules Related to Peer-to-Peer Car-Sharing Marketplaces

Under its authority in section 231-10.7, Hawaii Revised Statutes (HRS), the Departmentof Taxation (Department) recently promulgated temporary administrative rules sections 18-2511-01 to 02 relating to peer-to-peer car-sharing marketplaces. The temporary rules are effective
February 9, 2021 and automatically expire August 9, 2022.
In order to provide sufficient time for taxpayers to comply, Department will be enforcing
the temporary rules beginning on March 1, 2021. Affected taxpayers must register for a license
prior to March 1, 2021. All rentals occurring on or after March 1, 2021 and before August 9,
2022 are subject to these temporary rules. As such, all “lessors” as defined by the temporary
rules must report and pay the Rental Motor Vehicle Surcharge Tax under Chapter 251, HRS, forthis period.
The Department will also be issuing the rules as proposed administrative rules for formal
adoption subject to the procedural requirements of Chapter 91 and Chapter 201M, HRS,
including providing a public hearing and opportunity for public input.
The temporary rules define rental motor vehicle lessors to include peer-to-peer carsharing marketplaces, meaning such persons would be responsible for reporting and paying theRental Motor Vehicle Surcharge Tax under Chapter 251, HRS, on any rental car transactions
carried out on the provided marketplace. The temporary rules define a peer-to-peer car-sharing
marketplace as:
Any person who assists in the business of providing rental motor vehicles orvehicles to the public by:(1) Providing a forum, whether physical or electronic, in which vehicle owners orauthorized possessors list or advertise vehicles for rent; and(2) Collecting payment from the lessee, either directly or indirectly through anagreement with a third party.
The temporary rules also provide the following example to help explain how the tax will
apply under these temporary rules:

Department of Taxation Announcement No. 2021-04
February 10, 2021
Page 2 of 2

Giro Transportation (Giro) is a peer-to-peer car-sharing marketplace company
that provides a forum where prospective rental motor vehicle lessees may browse
for cars they wish to rent. Giro enters into an agreement with car owners toprovide cars to lessees for ground transportation. The lessee pays Giro the rental
amount for the car and takes possession from the owner. The surcharge tax is
imposed on Giro, not the owner, because Giro is the lessor, Giro provided thelessee a rental vehicle for a fee, and Giro is not a wholesaler, tour packager, nortravel agent. The owner is a wholesaler and is not subject to the tax under thischapter.
As stated above, although the temporary rules are effective February 9, 2021, theDepartment will not begin enforcing them until March 1, 2021, in order to give any peer-to-peer
car-sharing marketplaces operating in Hawaii opportunity to prepare to file and pay taxes onthese transactions. Thus, the first Rental Motor Vehicle Surcharge Tax return a peer-to-peer carsharing marketplace would need to file would be due April 20, 2021.
The temporary rules can be viewed on the Department's website athttps://tax.hawaii.gov/legal/taxlawandrules/ and are attached to this Announcement. Forms andinstructions are available on the Department's website at https://tax.hawaii.gov/forms/.
If you have any questions, you may contact the Department of Taxation Rules Office at
tax.rules.office@hawaii.gov, or call (808) 587-1530.

ISAAC W. CHOY
Director of Taxation

Attached: Temporary HAR §§ 18-251-1-01 to 02

TEMPORARY ADMINISTRATIVE RULESTHESE ADMINISTRATIVE RULES ARE TEMPORARY RULES ISSUEDPURSUANT TO SECTION 231-10.7, HAWAII REVISED STATUTES.
AS TEMPORARY RULES, THESE ADMINISTRATIVE RULES BECOMEEFFECTIVE SEVEN DAYS AFTER PUBLIC NOTICE IS ISSUED.
THESE TEMPORARY ADMINISTRATIVE RULES TAKE EFFECT ONFebruary 9, 2021.
TEMPORARY ADMINISTRATIVE RULES ARE EFFECTIVE FOR
EIGHTEEN MONTHS. THESE TEMPORARY ADMINISTRATIVE RULESWILL EXPIRE ON August 9, 2022.
PERMANENT ADMINISTRATIVE RULES, SUBJECT TO THE
PROCEDURAL REQUIREMENTS OF CHAPTER 91, HAWAII REVISEDSTATUTES (THE HAWAII ADMINISTRATIVE PROCEDURES ACT),ARE SIMULTANEOUSLY BEING PROPOSED FOR FORMAL ADOPTION.

DEPARTMENT OF TAXATIONAmendments to Chapter 18-251,
Hawaii Administrative Rules
Dated:February 2, 2021
SUMMARY

1.

§§18-251-1-01 and 18-251-1-02 are amended.

1§18-251-1-01 Definitions, generally. As used inthis chapter, unless the context otherwise requires:"Department" means the department of taxation.
"Director" means the director of taxation.
"Peer-to-peer car-sharing marketplace" means any
person who assists in the business of providing rental
motor vehicles or vehicles to the public by:(1) Providing a forum, whether physical orelectronic, in which vehicle owners or
authorized possessors list or advertisevehicles for rent; and(2) Collecting payment from the lessee, either
directly or indirectly through an agreementwith a third party.
"Person" has the same meaning as defined in
section 237-1, HRS, specifically, every individual,
partnership, society, unincorporated association,
joint adventure, group, hui, joint stock company,corporation, trustee, personal representative, trustestate, decedent’s estate, trust, trustee inbankruptcy, or other entity, whether such persons are
doing business for themselves or in a fiduciary
capacity, and whether the corporation or otherassociation is created or organized under the laws of
the State or of another jurisdiction.
"Surcharge tax" means the rental motor vehicle
and tour vehicle surcharge tax established underchapter 251, HRS, and implemented by this chapter [Eff1/27/92; Am 2/9/2021] (Auth: HRS §231-10.7) (Imp: HRS§251-1)

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§18-251-1-02 "Lessor", defined. (a) As used inthis chapter, "lessor" means any person in thebusiness of providing rental motor vehicles orvehicles to the public and includes any person
operating a peer-to-peer car-sharing marketplace.
Example 1:
ABC U-Drive (ABC) owns 100 cars and is in
the business of providing cars to customers for afee. ABC is the lessor of these cars, and theincidence of the rental motor vehicle surcharge
tax is on ABC.
Example 2:
Giro Transportation (Giro) is a peer-to-peer
car-sharing marketplace company that provides aforum where prospective rental motor vehicle
lessees may browse for cars they wish to rent.
Giro enters into an agreement with car owners toprovide cars to lessees for groundtransportation. The lessee pays Giro the rental
amount for the car and takes possession from theowner. The surcharge tax is imposed on Giro, notthe owner, because Giro is the lessor, Giroprovided the lessee a rental vehicle for a fee,and Giro is not a wholesaler, tour packager, nortravel agent. The owner is a wholesaler and isnot subject to the tax under this chapter.
(b) For purposes of this chapter, a wholesaler,
tour packager, or travel agent whose business andservice may include arranging the rental vehicletransportation for a person shall not be deemed alessor, unless the wholesaler, tour packager, ortravel agent actually rents or leases (as defined insection 18-251-1-04) the vehicle.
Example 1:3

Vacation Services (Vacation) is a tour
packager company that arranges a variety ofvisitor industry services, such as airtransportation, hotel room accommodations, groundtransportation, tours, classes, and luaus into
packages, and sells these services to tourists.
ABC U-Drive (ABC) enters into an agreement with
Vacation to provide the cars for groundtransportation. When the customer receives arental car from ABC, the rental motor vehicle
surcharge tax is triggered, and the surcharge tax
is imposed on ABC, not Vacation, because Vacation
is a tour packager who arranged rental vehicletransportation.
Example 2:
Vacation Services (Vacation) decides thatits business would become more profitable if it
started to use its own cars instead of makingarrangements with ABC U-Drive. Vacation acquires
5 cars and provides them to customers for a fee.
Vacation is now the lessor of these cars, and therental motor vehicle surcharge tax is imposed on
Vacation." [Eff 1/27/92; Am 2/9/2021] (Auth: HRS§231-10.7) (Imp: HRS §251-1)

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DEPARTMENT OF TAXATIONAs is required by section 231-10.7, Hawaii
Revised Statues, these temporary administrative rules
have been approved by the Governor and are also being
proposed for formal adoption pursuant to Chapter 91,
Hawaii Revised Statutes.
Public notice was given statewide in the Honolulu
Star-Advertiser, the Garden Island, the Maui News,West Hawaii Today, and the Hawaii Tribune-Herald
newspaper on January 29, 2021.
The temporary adoption of chapter 18-251, Hawaii
Administrative Rules, as amended, shall take effectseven days after public notice is issued. Pursuant tosection 231-10.7, Hawaii Revised Statutes, these rules
shall be effective for eighteen months from theireffective date.

/s/Isaac W. Choy/s/ _________ISAAC W. CHOY
Director of Taxation

APPROVED:/s/David Y. Ige/s/___________DAVID Y. IGE
Governor
State of Hawaii

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