HAR § 18-251-2-05 — Surcharge tax on rental motor vehicles or vehicles; subject to general excise tax

(a) The surcharge tax imposed on a lessor is included as gross income subject to the general excise tax, chapter 237, HRS, except as provided in subsection (b). (b) surcharge taxes which are: (1) Separately stated and visibly passed on; and (2) Collected from persons renting or leasing vehicles by lessors holding certificates of registration under chapter 251, HRS, and this chapter shall be excluded from gross income subject to the general excise tax. Example: ABC Rentals (ABC) rents cars to residents and visitors. Every person renting a car is given a rental car agreement which includes a breakdown of charges for the customer. The surcharge tax amount is listed separately in every contract. The surcharge taxes that ABC collects from its customers are not included as gross income for general excise tax purposes. Example: Cheep Fleet (Cheep) targets the budget traveler and advertises a flat daily rate, “$12, no more, no less” in its flyers. Cheep’s rental contracts do not break out any costs and simply lists “Total Due: $12” on the last line. Although a portion of the $12 represents the surcharge tax which must be paid under this chapter, because the surcharge tax is not visibly broken out and shown on the contract, the entire $12 is gross income subject to the general excise tax.