July 21, 1999


RE: Act 223, Session Laws of Hawaii 1999 (Act 223), Relating to Motor Vehicle Rental Industry

Act 223, as it applies to taxes, increases the rental motor vehicle surcharge tax from $2 to $3 for an eight-year period beginning September 1, 1999, and ending August 31, 2007.

Hawaii Revised Statutes (HRS) Chapter 251 imposes the tax on the lessor of a rental motor vehicle. Act 223 increases the tax rate and exempts a lessor from the tax during the period starting September 1, 1999 through August 31, 2007 if the lessor rents a vehicle to replace the vehicle of a lessee that is being repaired. The repair order for the vehicle must be retained by the lessor for four years for verification purposes.

The Department is reprogramming its computer system and revising the tax forms to implement the increased tax rate. Because the rate change is effective beginning September 1, 1999 the tax due must be reported on the revised periodic tax form beginning October 1999 for the prior month unless the lessor meets the requirements of HRS section 251-4 for filing on a quarterly basis (if tax liability does not exceed $2,000 for the year) or a semi-annual basis (if tax liability does not exceed $1,000 for the year).

Forms and other tax information may be downloaded from the Department's website at: http://www.state.hi.us/tax/tax.html. On Oahu, forms may be ordered by calling the Department's Forms Request Line at: 587-7572. Persons who are not calling from Oahu may call: 1-800-222-7572 to receive forms by mail or 808-678-0522 from a fax machine to receive forms by fax.

Director of Taxation