HONOLULU — Some Hawaii landlords have rejected about $8 million in back rent payments because they do not have general excise tax licenses, officials said.
The Honolulu Star-Advertiser reported Tuesday that some landlords are believed to be refusing direct payments for rent owed to them because they do not pay taxes on their rental income.
The refusals have created uncertainty for renters approved for rental payment coverage through the state’s Rent Relief & Housing Assistance Program.
Officials involved in the program could not immediately identify how many island landlords rejected direct payments and where the units are located.
A ban on evictions for residents with overdue rent because of the economic fallout from the coronavirus pandemic is scheduled to expire at the end of the year.
Gavin Thornton, executive director of the Hawaii Appleseed Center for Law and Economic Justice, said the program launched in September has approved $55.1 million in overdue payments for rents, mortgages and homeowner association fees.
Thornton told members of the state House Select Committee on COVID-19 Economic and Financial Preparedness Monday that Rent Relief & Housing Assistance Program data show $45 million already has been paid.
The $10 million gap includes about $8 million of declined direct payments to rental landlords, Thornton said.
The remaining $2 million is likely a result of landlords who have yet to provide required documentation, “allegedly because they don’t have their GE (general excise tax) licenses,” Thornton said.
“They’re not paying their taxes on that rental income,” Thornton said. “So that’s potentially a problem that could prevent tenants who otherwise are eligible for the program, not receiving those funds that they really need.”
The program, which receives assistance from Aloha United Way and Catholic Charities Hawaii, is scheduled to expire next week.
The program averages $1 million to $1.5 million in approvals daily, Hawaii Housing Finance and Development Corp. spokesman Kent Miyasaki said.
Typical applicants are approved for about $4,400, Miyasaki said. But Thornton said payments can be as high as $6,000.
Applicants must provide proof of economic hardship such as layoffs and reductions in hours or pay as a result of the pandemic, Miyasaki said.
For most people, the coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks. For some — especially older adults and people with existing health problems — it can cause more severe illness, including pneumonia, and death.
Easy solution. Landlords cannot collect back rent. They get their rental business in order say January 2021 and they get their rent payment. In essence there was no rental transaction occurred.