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.
