I have a question - You state you have to pay GET and TAT on a cleaning fee, are you sure that it is not just GET you have to pay on the cleaning fee that you collect?
You do not have to issue a 1099 to your cleaning crew if they are a Corporation, otherwise I agree that anything over $600 paid needs to have a 1099 issued.
I called the Hawaii Dept of Taxation on this last summer - the man I spoke with told me I only have to charge GET on the cleaning fee, not TAT. However, if in doubt, please call them.
When I purchased my vacation rental, the person before me charged TA & GE on the rental amount. The cleaning fee GE was payed by the cleaners. We have even discussed this issue with them. As long as the state is getting paid the ge fee on the cleaning, then I am compliant. They know they are responsible for the GE on the cleaning fee. If I charged the guest the GE and then paid the cleaners this fee, and then they paid tax on that too, that would be double taxation, right? Either way works, as long as both parties know how it is being done. I issue them a 1099 at the end of the year.
I pay my GE taxes on the cleaning fee I collect. Sometimes I do not charge my guest for cleaning or I charge them a reduced amount. So my housekeeper must pay the tax on what I pay her. It all gets rather confusing......but if I issued her a 1099 for $1,200 the state would want to see the tax on her return where she paid the GE on the $1,200 for her ID number not comingled with mine. It may sound like double taxation, but I am not paying the tax twice nor is the housekeeper nor is the guest.
Thanks all for the info. On the Hawaiian TAT FAQ it states that TAT is payable on accomodation only. Sometimes I charge the exit clean but if the stay is long enogh I will absorb the fee. Regardless the cleaner is paid for each clean and I have filed the 1099. I was under the impression that the cleaner was responsible for the GET portion of the clean.
jwe, in my conversations with the tax department and my accountant, I have been told that the cleaning lady is to charge GET on her services. Then if I pass the charge on to the guest, I charge GET again - yes, the government double-dips. When in doubt, ask your Hawaii accountant or call the tax department. It seems ridiculous, but there you have it.
On Maui many management companies are now charging their guests the cleaning fee (instead of letting the owner absorb it), I have started doing this also except with repeat guests. No complaints so far.
I am going to rewrite my submission to be more solution oriented as opposed to my last one which was very detailed but may have had a heavier tone. I will also resubmit the article from Business in Vancouver that alerted the potential negative investment climate that may be created if the first two bills had passed.
I wouldn't worry too much about this legislation, in two places it states that it takes effect January 1 3000!! Apparently proofreading isn't a required skill in the Hawaiian legislative branch, SB2089 referred to 990 tax forms which apparently really meant 1099 and now this new legislation won't take effect until the next century!!
FYI, the IRS tax instructions for the 1099 form indicate that congress passed an amendment which specifically excludes the need to file a 1099 on rental properties. My husband called and spoke to a lady at the IRS and confirmed this to be the case.
Don't count on that. It is quite common to have a placeholder date that's in the distant future in draft legislation. The date will be changed in committee. Hopefully to no sooner than January 1, 2013!
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