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Hawaii tax agency boosts peer-to-peer car rental oversight

  • George F. Lee / GLEE@STARADVERTISER.COM
                                The dropbox of the State Department of Taxation, seen April 14, fronting the Princess Ruth Keelikolani Building on Punchbowl Street.

    George F. Lee / GLEE@STARADVERTISER.COM

    The dropbox of the State Department of Taxation, seen April 14, fronting the Princess Ruth Keelikolani Building on Punchbowl Street.

The Hawaii Department of Taxation has been boosting its monitoring of peer-to-peer car rentals.

The industry operates with the help of apps like Turo, which people can use to rent their personal cars to others.

Department Director Isaac Choy told Hawaii Public Radio that residents should do research before doing so.

One thing to know, he said, is that Hawaii law requires taxes and a rental car surcharge to be collected on every vehicle.

“I think it’s along the lines of vacation rentals and everything. Everybody’s trying to make a little extra money,” Choy said. “Peer-to-peer cars, I don’t know if it’s going to be the next big thing, but it’s going to be a thing and we just want to make sure that if you’re renting your car that you’re being really, really fair with any commercial car rental operation.”

The state requires Turo to pay rental car taxes, he said. The person who owns the car must pay a half-a-percent wholesale rate.

Lou Bertuca, the head of government relations for Turo, told The Associated Press rental car companies don’t pay sales taxes on vehicles they purchase in most states, creating what he called a “front-end sales-tax loophole.” In Hawaii, Bertuca said the companies must pay a 0.5% tax on vehicle purchases, which is significantly less than the more than 4% general excise tax plus paid by Hawaii retail car buyers.

Choy said owners should also check with their insurance agent or attorney before posting their vehicle on Turo because it’s important to know what their liability would be if a renter damages the vehicle or private property.

Some residents have complained to officials after seeing their streets become parking lots for vehicles. The issue emerged at a Waialae-Kahala neighborhood board meeting this month.

Tax department investigators recently checked out a site in Kahala and took pictures of more than a dozen cars offered on Turo that were parked on public streets.

The Honolulu Department of Planning and Permitting has received complaints from Kahala as well as Ewa, Kalihi and Salt Lake.

Turo wants people to reach out to the company to let them know if a host is not being a good neighbor, Bertuca said. “We want hosts to be good community members and citizens,” he said.

Hawaii airport officials have ticketed operators in Honolulu and Maui. They said they are monitoring the situation closely and considering changing some administrative rules.

Turo is trying to obtain parking permits from airports around the country, Bertuca said. It already has such arrangements with airports in Denver and Tampa, he said.

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