GET and TAT Licenses
A few months ago a customer bought an Ala Moana Hotel Condo unit which was in the hotel rental pool. In order to keep their unit in the hotel rental pool, one of the procedures required by the hotel was that the new owner obtain General Excise Tax (GET) and Transient Accommodations Tax (TAT) licenses. We'll explain how to get these licenses in this article.
What Are These Licenses For?
General Excise Tax is similar in some respects to a sales tax. When you buy something at a store, GET is usually added on to the purchase price. GET also applies to independent contractors, such as landlords, realtors, handymen etc. The State of Hawaii collects GET at several different levels.
Transient Accommodations Tax is also known as the hotel room tax. It applies primarily to short term rentals, generally defined as less than 180 days.
The GET rate is 4.5%. However, the taxpayer must pay the State of Hawaii "tax on tax". For example a $100 sale would normally generate $4.50 in tax. Vendors generally pass the tax on to the consumer and one might conclude the amount with passed on tax would be $104.50. Actually, the state charges 4.5% on the amount collected, which is $104.50 so the tax due is $4.70 ($104.50 x 4.5%).
TAT is charged at 10.25% (the rate just increased from 9.25% effective January 1, 2018). The state does not charge "tax on tax" for this room tax.
Short term rentals such as hotel rooms are subject to BOTH GET and TAT. Thus, a $100 room rate would cost a customer about $115 with the taxes added..
What the Hotels Do With This Money
If you're a hotel room owner at the Ala Moana for example, the hotel will take it's cut of the room rate, along with some other fees. The cut varies from hotel to hotel. At the Ala Moana, one can expect to receive about 40% back from the hotel room revenues. GET and TAT are not part of the cut and the hotel remits these taxes to the owner OR pays them to the State on the owner's behalf. At the Ala Moana, owners with units in the pool can opt to have the hotel operator file the forms and pay their taxes to the state.
How to Apply for the Licenses
The Traditional Way
Complete the BB-1 form and mail it in with the application fee (approximately $20). If you're getting the licenses for a transient rental, make sure an apply for both the GET and TAT licenses. For long term rentals, a GET license maybe all you need.
The High Tech Way
Apply for the licenses online! Visit the Hawaii Business Express website. Then click "Create an Account". If you're a first time user, click "No" and proceed to setting up your account.
Applying for GET and TAT Specifically for Ala Moana Hotel
Note - If you already have a GET and/or TAT license, and want the Ala Moana Hotel to handle your GET/TAT taxes for this unit, you'll want to apply for a new, separate license specifically for your units owned at this property.
Here are detailed instructions for applying for a license for your Ala Moana Hotel pool units. Please use this info as a guide, read each question on the form and select the answer appropriate for your situation.
NAICS # 721199
Hotel Address - 410 Atkinson Drive, Honolulu, HI 96814
1. Business Category - Profit.
Location - wherever you currently reside.
2. Business Type - Sole Proprietorship is usually the best answer.
3. Business Name - Your own name is often the best.
4. Nature of Business - Condo Hotel
5. Number of Establishments - 1
6. Principal Office Address - Your home address.
7. Hawaii Address - 410 Atkinson Drive, Honolulu, HI 96814
8. Date Business Began or Will Begin in Hawaii - The date your unit first enters the hotel rental pool (and owned by you).
9. Business Contact Information - will be your business phone, fax and e-mail.
10. Business Owner - You.
11. Have Employees? - No.
12. Transient Accommodations Business Activity? - Yes.
If Yes, Number of Units? - Number of units you own.
13. Disability Exemption? If you qualify for this exemption for Federal Taxes you may.
Trade Name Registration Assigned? No.
Request Trade Name? No, unless you want a trade name and are willing to pay $50 for it.
Accounting Period - Calendar.
Accounting Method - Cash.
Filing Period - Monthly.
After completing the online form, you will be prompted to pay a fee of about $27.50. Within a few days, the State should be e-mailing you with your GET/TAT number.
If you're planning to buy at the Ala Moana Hotel Condo and want help with this, I will be happy to represent you on the transaction and setup your GET/TAT licensing.
Aloha, Mike Bates