HONOLULU — Airbnb Inc. has agreed to provide Hawaii with records of many of its island hosts as the state tries to track down vacation rental operators who haven’t been paying their taxes.
Airbnb and the state Department of Taxation reached the agreement last week after negotiating the scope of a subpoena sought by the state. First Circuit Court Judge Bert Ayabe approved the agreement. He’s also due to evaluate the state’s claim that there are a significant number of hosts who haven’t been paying their taxes. A hearing before Ayabe has been scheduled for Wednesday.
The state needs the court’s permission to serve the subpoena because its investigation targets a group of taxpayers and not specific individuals.
The state’s court filing said it has struggled to collect taxes from vacation rental and bed-and-breakfast operators in part because many hosts don’t generate enough revenue for Airbnb to send the IRS relevant tax forms for them. It also blames the relative anonymity hosts are given on the Airbnb website, where rental operators are often identified by a first name.
In addition, many Hawaii hosts have been illegally running their businesses without permits. Hawaii’s counties issue permits for short-term rentals, and each of them have different regulations.
Honolulu, the most populous county, cracked down on illegal operators with a strict new law enacted earlier this year. Before this law took effect, Honolulu was estimated to have about 800 legal vacation rental and bed-and-breakfast units and about 10 times as many illegal ones.
Agreement details filed in state Circuit Court last week said Airbnb will provide the state Department of Taxation with the records of the 1,000 hosts who made the most revenue from 2016 through 2018. The company will give these hosts two weeks’ notice before it hands over the information.
Airbnb will provide the state with anonymized data for hosts who had more than $2,000 in annual revenue during those years. The state may then request individualized records for these hosts, though it will be able to obtain information on only 500 hosts every two weeks.
If a host files a legal motion challenging the transfer of records, Airbnb won’t provide the state with the data until the legal case is resolved.
Audrey McAvoy, The Associated Press
