Hawaii: A state judge has blocked the Hawaii Department of Taxation from forcing Airbnb to hand over names, addresses and records of thousands of vacation rental owners.
The state had said the subpoena was necessary as it needed to have the records to see which owners were not paying general excise and transient accommodations taxes.
Deputy Attorney General Kristen Sakamoto told HawaiiNewsNow: “It’s difficult for (the Department of Taxation) to identify exactly how many taxpayers are not complying. But we just don’t know who these people are.”
Airbnb responded by saying that the state was conducting a “fishing expedition” and that the subpoena violated the privacy rights of the vacation rental owners in Hawaii.
Jacob Sommer, an Airbnb attorney, said: “If you’re going to ask for 16,000 people’s records, I think you’ve got to show that most violated the law.”
Why has a judge blocked the state’s efforts to obtain Airbnb hosts’ records?
Circuit judge James Ashford blocked Hawaii’s efforts to obtain the hosts’ records, ruling the state was not within its right to use its subpoena power as it had failed to meet the required legal thresholds.
In its court papers, the state Attorney General’s office said that Airbnb officials had admitted Hawaii hosts who list properties on their site are not paying their state taxes in full.
The state cited the company’s prior testimony in the state legislature, where it said that if it collected the tax from its Hawaii-based hosts, it would be able to generate $41 million in new revenue in two years.
However, Ashford disagreed, saying the company’s testimony in the legislature was not an admission of guilt and blocked the state’s bid.
Ashford told Sakamoto: “I’m candidly chiding you to be very careful with the language that you use. Just to be blunt, do not exaggerate. I do not appreciate it.”
Why did the Attorney General need the court’s approval to serve a subpoena?
The Attorney General’s office needed the court’s approval to serve a subpoena because the investigation was targeting a group of taxpayers rather than specific individuals.
The Attorney General’s office reportedly said in court documents that they have the right to these receipts and other documents since Airbnb hosts have already contractually agreed that the company may disclose their information to government entities.
The ruling places the burden back on the state legislature to get the vacation rental operators to pay their fair share of taxes.
What will happen now?
As a result, lawmakers are now considering several bills to ensure that is the case.
State representative Della Au Belatti Makiki said: “We want to ensure that taxes are being collected because we know that these Airbnb establishments are bringing in commercial users. There’s a tax that’s placed on our resources and we have roads to take care of, we have highways and beaches and trails to take care of.”
In recent years, lawmakers have sought to address the problems caused by illegal vacation rentals, such as the increased competition in a congested housing market and the alienation of local residents.
Experts say the number of vacation rental listings have skyrocketed in the past few years, due largely to the omnipresence of online advertising.