State authorities looking for unpaid vacation rental taxes

By Lynda Arakawa
Advertiser Staff Writer

The state is running a separate campaign on vacation units, but its focus is on collecting taxes.

The state Department of Taxation has launched a pilot project to make sure bed-and-breakfast and vacation rental operators are paying the 4 percent general excise and 7.25 percent transient accommodations taxes, said director Kurt Kawafuchi.

"A lot of them are operating illegally under county laws," he said. "We suspect they may also not be paying their fair share of taxes."

At least some illegal bed-and-breakfast and vacation rental operators say even though they are unlicensed, they still pay their taxes to the state.

The department is checking whether about 1,400 such operations kept up with their taxes and will initially encourage delinquent filers to come forward and pay. If they don't, the department will be "much more aggressive and vigilant," Kawafuchi said. Those who continue to evade taxes may face criminal or civil penalties, he said.