State again seeks to subpoena Airbnb records

The state Department of Taxation is again asking a judge for permission to force vacation rental giant Airbnb Inc. to turn over the booking records of operators in Hawaii who advertise with them.

The Department of the Attorney General filed a new petition Friday on behalf of state Tax Director Linda Chu Takayama seeking permission to serve an administrative subpoena on Airbnb for the records “relating to certain, yet unknown operators of short-term rentals in Hawai‘i.”

The subpoena is necessary because “there is a reasonable basis for believing that the ascertainable group or class may have failed to comply with any provision of Hawaii’s state tax laws,” and “the information sought is not readily available from other sources,” the petition says.

The matter is scheduled to be heard by Circuit Judge Bert Ayabe at 9:30 a.m. Aug. 21.

The filing is the latest in a series of unhappy news for Airbnb, other online booking platforms and vacation rental operators in the past week. Gov. David Ige announced Tuesday that he will veto a bill passed by state lawmakers in which the booking platforms would collect state taxes and hand over more information about operators. Vacation rental critics argue that ceding control to the platforms provides a cover that will make it more difficult for the state and counties to get a better handle on both the number of actual vacation rentals in the market or how much they should be collecting.

On Wednesday, Honolulu Mayor Kirk Caldwell signed a City Council measure imposing stricter regulations and stiffer fines on platform companies and operators who violate vacation rental laws. The bill also allows for the permitting of up to 1,700 “hosted” bed-and-breakfast establishments, but no new path to legalization for the more popular “whole-home” rentals of less than 30 days.

The new petition calls for information on two groups: hosts who received payments from Airbnb for the bookings of Hawaii properties from 2016 to the present, and operators who failed to include their tax identification numbers in listings on Airbnb’s website on or about April 24.

Airbnb’s website allows hosts to list their properties, but the listings do not display the host’s full name, email address, telephone number, physical address of the accommodation and payment information.

On Aug. 31 the state filed a similar petition as part of an investigation into whether the company’s hosts are paying excise and transient taxes. It was denied in February by Circuit Judge James Ashford, who said the state did not show a reasonable basis for believing that Airbnb hosts were not paying their taxes or that the information sought was not readily available from other sources.

Airbnb had argued that the state’s action was an “unprecedented attempt to amass a decade’s worth of detailed private data on about 16,000 people.”

That first filing sought access to a broader swath of information: Airbnb’s Hawaii booking invoices, receipts, statements and confirmations from 2008 to the date of the subpoena; and personal host information, including names, user IDs, taxpayer IDs, Social Security numbers, addresses and booking activity and charges.

The new filing, in essence a refiling, states the Special Enforcement Section of DoTAX investigated more than 600 taxpayers either identified through federal 1099 tax forms or public complaints. The investigation showed many Airbnb hosts did not have a general excise tax license or transient vacation tax account.

The investigation also showed “many taxpayers who were registered with DoTAX but who were failing to report all income received from their short-term rentals,” the filing said.

“Specifically, during the course of SES’ investigations of approximately 500 taxpayers who received income from Airbnb, approximately 380 (76%) had at least one delinquent GET and/or TAT return (periodic and/or annual return).”

In April a consultant hired by DoTAX began collecting data and screen shots of every listing of Hawaii properties on Airbnb’s site, the filing said. Of 26,907 listings obtained, only about 7,728 listings (less than 30%) included a presumptively valid tax ID number. “Stated differently, at least 70.4% of the listings on Airbnb’s website violated (state law),” the request states.

“We are very hopeful that the court will agree that there are potentially substantial violations,” Taka­yama told the Honolulu Star-Advertiser on Monday, pointing to the data showing that operators advertising on Airbnb have not been filing taxes. “Our suspicion is it’s fairly prevalent.”

Airbnb officials could not be reached for comment late Monday.

Throughout the nation, Airbnb has either negotiated agreements or litigated with various local government entities how much data and what kind of data about its members it can release.

The company used similar arguments in raising strong objections to the city bill that Caldwell signed last week. But Honolulu officials said they felt confident the new law can withstand legal challenges because it is similar to an ordinance in Santa Monica, Calif., that was recently upheld by the 9th Circuit Court of Appeals.

Like the Santa Monica ordinance, only a limited number of permits will be opened up for hosted vacation rentals, and none would be available for whole-home vacation rentals. Also like the Santa Monica law, vacation rental booking platforms are responsible for policing themselves for illegal rentals. The Honolulu law also requires the booking platforms to submit periodic reports listing information about their operators.

Airbnb and HomeAway, a subsidiary of Expedia, argued that Santa Monica’s ordinance violated the federal Communications Decency Act and the First Amendment.