Judge denies state Tax Department’s request to subpoena Airbnb records

A judge in Honolulu today denied a subpoena from the state Department of Taxation seeking rental records from online vacation rental booking site Airbnb as part of its investigation into whether the company’s hosts are paying excise and transient taxes.

Airbnb had sought to quash the subpoena on the grounds that it was “ unprecedented attempt to amass a decade’s worth of detailed private data about 16,000 people.”

The state had sought the subpoena Aug. 31 as part of its investigation into Airbnb’s tax compliance. The state wanted Airbnb to provide access to its Hawaii booking invoices, receipts, statements and confirmations from 2008 to now. It also wanted personal host information, including names, user IDs, taxpayer IDs, Social Security numbers, addresses, and booking activity and charges.

First Circuit Court Judge James Ashford ruled that the state’s request failed to meet two provisions of state law HRS 231-7(e). Ashford said the state did not show a reasonable basis for believing that Airbnb hosts were not paying their taxes and that the information the state was seeking was not readily available from other sources.

Officials from Airbnb and the state Attorney General’s Office were not immediately available for comment.

During the hearing, Jacob Sommer, an attorney for Airbnb, argued that the Tax Department’s evidence “here is very low,” alluding to the fact that the state had not provided the court with proof that it had investigated and found many members in the group or class were violating tax law.

During today’s hearing, Kristen Sakamoto, an attorney for the state, said, “Quite frankly, we don’t know who these people are. To place a standard that not all members are complying would be an extraordinarily high burden,”

“The point of the subpoena was to identify hosts who are not registered (with the Tax Department) and have not filed returns,” Sakamoto said.

She told the judge that Airbnb refused the state’s offer to confer about the breadth of the request and provide a counter proposal if they thought 16,000 hosts was too broad.

In a court filing, the state had previously alleged that Airbnb had admitted that its users were not paying state taxes during its previous legislative attempts in support of a bill that would have allowed Airbnb to serve as tax collectors and remit taxes for its hosts.

“There would be no need for such a bill if its hosts were compliant with tax laws,” Sakamoto said, adding that Airbnb had argued that if such a bill were adopted it would have resulted in $41 million of tax revenue to the state.