DC4MS

Does anyone know if any of the Destination Clubs that have homes in Hawaii are affected by the enforcement of the Hawaii Transient Accommodation Tax?

Even thought destination clubs technically don't rent their homes, I wonder if this could be an issue in the future as club members do pay a membership fee and annual dues.

Of course the interpretation and enforcement would be difficult and perhaps the DCA has already looked into this, I was not able to find any quick answers to how Hawaii views Destination Clubs in terms of the Hawaii Transient Accommodation Tax.

Here is an interesting article from 2006 about Home Rentals from USA Today.

USATODAY.com - Hawaii residents making inns out of their homes

Bourne

In the past decade or so, many golf clubs across the states have been hit by this.

Here are some salient points regarding the same...
1. You cannot be taxed on a refundable deposit.
2. The tax would primarily be on dues.
3. In most cases, the states get greedy and force back taxes to be paid.
4. The past taxes are always phased out.
5. IMO, the consumer would have to foot the bill.
5. Being a nascent industry, the tax liability, if any is limited. Even if EVERY state where a DC owns a home decides to levy taxes, the number will not be earth shattering. An example...
ER - 5 Years at average 30,000 dues * 0-10(NYC, CHI, LAX)% = $15,000
HCC - 3 Years at average 5000 dues * 0-10% = $1500.
Compared to the membership, these numbers will be a blip in the radar.

Chances of the worst case scenario(minor blip) happening are less than 1%.

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vineyarder

As Bourne points out, the big issue is not with the Hawaii Transient Accomodation Tax, but with sales taxes in all 50 states, if states were to determine that the deposits and/or annual dues should be subject to sales tax. Not being an accountant or tax specialist, I have no real basis to judge the chances of this, other than the fact that country club dues seem to be subject to sales tax in many states.

Bourne - regarding #1, a refundable deposit not being taxable, is that across all states, or is that a state taxation law issue that will vary state-by-state? And if a deposit is 80% refundable, would the 20% non-refundable portion be potentially taxable?

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