Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 251 - RENTAL MOTOR VEHICLE AND TOUR VEHICLE TAX › Subchapter 4 - IMPOSITION OF RENTAL MOTOR VEHICLE SURCHARGE TAX › Section 18-251-2-03 - Surcharge tax on rental motor vehicles or vehicles; six-month time period

Current through June, 2024
(a) If the motor vehicle or vehicle is
				customarily rented or leased for six months or less, it shall be presumed that
				the motor vehicle or vehicle is rented or leased and subject to this
				chapter.
(b) No presumption applies
				if the motor vehicle or vehicle is rented or leased for a period longer than
				six months, and the burden of proof remains with the lessor. If the lessor is
				able to prove to the director's satisfaction that the motor vehicle or vehicle
				is rented or leased for more than six months, the rental motor vehicle
				surcharge tax shall not be imposed.
(c) If a lease of more than six months is
				terminated before one-hundred eighty days have expired, the motor vehicle or
				vehicle may not be deemed to be subject to the rental motor vehicle surcharge
				tax.
Example:
ABC Leasing Company leases cars for
				  periods of one year or longer. Ms. Rita Renter, who is an out-of-state
				  consultant on a long-term project in Hawaii, leases a car for a one-year term.
				  The project, however, hits a snag two weeks after it gets underway and is
				  postponed to the next year. Since her services are no longer needed, Ms. Renter
				  returns the car to ABC Leasing Company. Although the car actually was rented
				  for less than a full six months, the rental motor vehicle surcharge tax does
				  not apply.
(d) If the department finds
				that a lessor is continuously entering into leases of longer than six months
				and the lessees are continuously terminating these leases, the burden is upon
				the lessor to show that the operation is not a surcharge tax avoidance scheme
				and subject to the rental motor vehicle surcharge tax.
(e) When a vehicle is rented or leased under
				separate month-to-month contracts for a period over six months, only an
				intention to rent the vehicle for one month at a time arises. The rental motor
				vehicle surcharge tax is imposed in this situation.
If, however, the lessor is able to show that the
				  month-to-month rental or lease contracts conform to all of the following
				  criteria, an intent to rent or lease for more than six months may be found for
				  the lessor and the lessor will not be subject to the rental motor vehicle
				  surcharge tax:
(1) The monthly rental
				or lease contracts are continuous with less than 24 hours elapsed time between
				the expiration of one contract and the next monthly contract;
(2) The monthly rental or lease contracts are
				for consecutive days without any breaks for a continuous rental or lease period
				totaling more than six months; and
(3) The lessor has written documentation to
				substantiate the continuous rental or lease of the vehicle for more than six
				months as provided in paragraphs (1) and (2).
The rental motor vehicle surcharge tax will not be imposed
				  on the lessor for the seventh month and each month thereafter on the rental or
				  lease of the vehicle under month-to-month contracts which conform with all of
				  the criteria set forth above. The rental motor vehicle surcharge tax,
				  nevertheless, is applicable for the preceding six-month
				  period.