County mulls tax on Turo providers

LIHU‘E — State tax officials are interested in the ramifications of car-rental apps like Turo, but agencies aren’t commenting on suspected levels of tax delinquency among the platform’s users.

The state Department of Taxation told taxpayers using “peer-to-peer car-sharing apps” to obtain the proper registrations and a general excise tax license before starting a business, in an Aug. 10 announcement.

Car-rental revenue generated through a marketplace-facilitator app is subject to the general excise tax and the state income tax, the DOT said. Taxpayers who rent their motor vehicle without using such apps are subject to the general excise, net income and daily rental vehicle surcharge tax.

Department spokesperson Joshua Mapanao declined to estimate car-rental-related tax delinquency on Kaua‘i.

“The department cannot disclose any specifics on whether there are current investigations into taxpayers,” he told The Garden Island. “However, there may be cases of individuals failing to comply because they believe that the marketplace facilitator is fulfilling their tax responsibilities on their behalf.”

The DOT is being proactive, Mapanao said, noting the department wants taxpayers to know their tax obligations rather than subject them to additional taxes, penalties and interest.

A Turo spokesperson declined to provide The Garden Island with the number of Turo users and vehicles on Kaua‘i.

“We do not break out data market by market at this time,” the spokesperson said. “Turo has created community guidelines that state that hosts are expected to obey the law, and they are responsible for ensuring their vehicle complies with all aplicable regulatory laws.”

The Kaua‘i County Council is now considering Bill 2828, which addresses the local surge in car-rental-apps’ popularity by quantifying a fleet size of more than 10 as a commercial vehicular rental operation.

“We do not want to discourage a reasonable use of Turo, but want to be able to limit car-rental operations in residential neighborhoods,” county Department of Finance Director Reiko Matsuyama said in a July 8 memo. “This ordinance creates a new tax class to provide for fairer distribution during the annual setting of real-property-tax rates as required by charter.”

The bill does not set a tax rate on the proposed tax classification. If it passes into law, a tax rate would need to be established through the county’s next annual budget process, Matsuyama told The Garden Island in an email.

The bill is up for a council public hearing Wednesday.

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Scott Yunker, general assignment reporter, can be reached at 245-0437 or syunker@thegardenisland.com.

14 Comments
  1. therealhawaiian August 16, 2021 6:03 am Reply

    Yep! Government’s got another hard on! Happens every time they can find another system or item to TAX! Wasn’t it taxes that caused the Patriots to leave England and create America?


  2. Kauaidoug August 16, 2021 6:29 am Reply

    These Turo people should be applauded and might be a way from keeping untold amounts of rental cars from retuning to our roads and the money is staying on the island! Leave em alone.


    1. Dug August 16, 2021 9:33 am Reply

      For once. I agree wholeheartedly with you sir.


  3. Kauai Ken August 16, 2021 8:43 am Reply

    If you own and operate even just one vacation rental property, the state and county require you to collect and remit (quarterly if not monthly) all the same excise and transient taxes as a giant hotel. How is renting your car, putting another car on the road just like Avis or Hertz, any different? Turo or otherwise independently owned / operated car rental business, even if just one car, should collect and remit all the same taxes as Avis. In fact if you look at the daily rental rates being charged by Turo, $200-$300 PER DAY, these people are making more money than vacation rentals on a tiny investment. Without holding people responsible for taxes from renting their cars Kauai and the state of Hawaii lose out on the tax revenue otherwise paid by rental car companies, lost taxes which have to be made up by increased taxes somewhere else (like local income tax and property tax). Come on, fair is fair, keep the playing field level for all.


    1. randy kansas August 16, 2021 11:52 am Reply

      Half of the island, it’s probably working for cash under the table, how about focusing on that…..


  4. Chris G August 16, 2021 9:34 am Reply

    Of course. Can’t redirect profits from the tourist industry titans into the hands of regular people. Need to tax and restrict to avoid that.


    1. Dc August 16, 2021 8:52 pm Reply

      Turo pays a portion and the host are paying a portion so I’m not sure why you think they are being treated differently. If you think it’s so amazing join right in and see how much fun it is.


  5. Doug August 16, 2021 9:51 am Reply

    Turo is not just people renting their cars, it is also (1) people buying more cars to rent as a business and (2) off islanders adding cars to our roads to rent them to people. This adds substantially to traffic on the island (been to Kapaa lately?). And 10 rental cars in a neighborhood is ridiculous, there isn’t street parking now in some neighborhoods let alone add 10 rental cars to the mix with tourists picking up and dropping off at all times of the day! Sorry, but if you rent your car(s) it’s a business, just like the mom and pop restaurant, you need to pay the normal taxes just like the mom and pop restaurant does, and they need to be kept out of residential neighborhoods.


    1. Dc August 16, 2021 8:53 pm Reply

      They are required the last the taxes. I’m not sure what your rant is about. It’s nothing new.


  6. Lynn Last August 16, 2021 12:28 pm Reply

    It seems that Mayor Kawakami is falsely equating Turo or private locals who rent their cars, with the big companies like Hertz and Avis. Cars rented from local owners keep their money in the community, paying rent, mortgages, utilities, food etc. These payments ultimately help everyone on our island. They aren’t sitting in a Hertz corporate account on the mainland. Also, these cr owners will get a 1099 from Turo and will pay Hawaii income tax on that income. Please don’t impose onerous taxes on locals trying to make a buck.


  7. Turo August 16, 2021 9:02 pm Reply

    Leave the local TURO rentals alone. At least the money stays on island. Please don’t tax them anymore than needed. At least the pay Hawaii car tax when bought. Corporate car companies don’t pay the Hawaii tax on there cars and pay a lower tax then what your imposing. I thought you wanted to stimulate the local economy? Support local TURO not make it any harder it’s just normal people try to make ends meat. If anything limit corporate rental cars to the island instead and also make sure your taxing them accordingly.


  8. DUH August 16, 2021 9:12 pm Reply

    What are you mulling around about? Just do it. Business is business, you get taxed and need to follow rules. Small businesses, big business, any business. Sole proprietorships are a form of business and are not exempt from paying taxes. It’s that simple. And while you’re at it, County, why isn’t anyone addressing all the illegal food sales online?? No permits, no certified commissary, posting ads on social media, making shakas from the kitchen table while making pork dishes in their home kitchen. Auwe. No can. (Make rules, no enforcement, why make rules? Only good fo’ ack.)


  9. doc August 17, 2021 11:35 am Reply

    Mandate maximum car insurance on anyone who rents a car on Turo, just like the major car rentals. Turo is suppose to cover insurance, but what about injured persons disabled by a collision under Turo rentals?
    Also, anyone renting a car needs to pay the same fees and taxes as required by the major car rental companies.


  10. Marie August 17, 2021 11:37 am Reply

    They need to add a lot more taxes if you rent over 1 car out. I know I wouldn’t want even 3 extra rental cars with extra noise, taking up parking spaces and endangering the keiki that live there. Some areas have hardly any parking already and who wants tourists coming and going in their neighborhood?


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