DAVID Y. IGE

MARIA E. ZIELINSKI

GOVERNORDIRECTOR OF TAXATIONSHAN TSUTSUIDAMIEN A. ELEFANTE

LT. GOVERNOR

DEPUTY DIRECTOR

STATE OF HAWAII

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

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

September 19, 2017

DEPARTMENT OF TAXATION ANNOUNCEMENT NO. 2017-10
RE:Tax Law Changes from the 2017 Special Legislative Session

This Announcement summarizes the tax provisions in Act 1 (Senate Bill 4), enacted aspart of the State of Hawaii’s 2017 Special Legislative Session.
Act 1, effective September 5, 2017, authorizes the extension of the City and County ofHonolulu surcharge on state general excise and use taxes at the 0.5% rate, authorizes othercounties to adopt ordinances establishing a county surcharge at a rate of no more than 0.5%, andincreases the transient accommodations tax (TAT) by 1% from 9.25% to 10.25% from January 1,
2018 to December 31, 2030.
General Excise and Use Tax
Act 1 authorizes the City and County of Honolulu to extend the sunset of its county
surcharge from January 1, 2027 to December 31, 2030 at the 0.5% rate. The extension must beestablished by ordinance adopted before January 1, 2018.
Act 1 also authorizes the other counties to establish a county surcharge, which may belevied from January 1, 2019 to December 31, 2030 at a rate of no more than 0.5%. A new
county surcharge must be established by ordinance adopted before March 31, 2018.
Additionally, Act 1 reduces the amount deducted from the revenues generated by thecounty surcharges from 10% to 1% to reimburse the State for assessment, collection, dispositionand oversight.
Transient Accommodations Tax
Act 1 increases the TAT rate by 1% from 9.25% to 10.25% on the: (1) furnishing oftransient accommodations and (2) use of resort time share vacation units, from January 1, 2018
to December 30, 2030.
The TAT is levied upon: (1) every operator on the gross rental or gross rental proceeds
derived from furnishing transient accommodations and (2) every occupant of a resort time sharevacation unit on the fair market rental value of the time share unit.

Department of Taxation Announcement No. 2017-10
September 19, 2017
Page 2 of 2

Determining the proper TAT rate on gross rental or gross rental proceeds derived fromfurnishing transient accommodations depends on the accounting the method of the taxpayer andwhen the gross rental or gross rental proceeds are actually or constructively received.
Under the cash basis accounting method, gross rental or gross rental proceeds derived
from transient accommodations will be subject to the 9.25% TAT rate if payments are actually orconstructively received before January 1, 2018. However, gross rental or gross rental proceeds
will be subject to the 10.25% TAT rate if payments are actually or constructively received on orafter January 1, 2018.
Under the accrual basis accounting method, gross rental or gross rental proceeds fromtransient accommodations will be subject to the 9.25% TAT rate if the right to receive suchincome is fixed under the all events test before January 1, 2018, but will be subject to the 10.25%
TAT rate if the right to receive such income is fixed under the all events test on or after January
1, 2018. All events that fix the right to receive income occur when: (1) the required performancetakes place, (2) payment is due, or (3) payment is made, whichever happens first.
The taxpayer's accounting method governs when gross rental or gross rental proceeds
will be taxable. Accordingly, any income taken into account under the taxpayer's method of
accounting after January 1, 2018 will be subject to the 10.25% TAT rate. The same analysis
applies to the fair market rental value of resort time share vacation units.
Tax form books will not be re-issued. New Forms TA-1 and TA-2 will be available
January 2, 2018 at the Department's website at tax.hawaii.gov or the e-filing site at
hitax.hawaii.gov. If you would like to request forms to be mailed, please call the Department'sCustomer Call Center at 587-4242 or toll-free at 1-800-222-3229.
For more information, please contact the Rules Office at 808-587-1530 or by email at
Tax.Rules.Office@hawaii.gov.

MARIA E. ZIELINSKI
Director of Taxation