GENERAL EXCISE TAX LAW
CHAPTER237,Page1(UnofficialCompilation)
CHAPTER 237GENERAL EXCISE TAX LAW
Definitions;Administration
Section237-1 Definitions237-2 “Business”, “engaging” in business, defined237-2.5 Engaging in business in the State237-3 “Gross income”, “gross proceeds of sale”, defined237-4 “Wholesaler”, “jobber”, defined237-4.5 Marketplace facilitators237-5 “Producer” defined237-6 “Contractor”, “contracting”, “federal cost-plus contractor”, defined237-7 “Service business or calling”, defined237-8 Administration and enforcement by department237-8.5 Repealed237-8.6 County surcharge on state tax; administration
Licenses;Tax;Exemptions
237-9 Licenses; penalty237-9.3 General excise tax benefits; denial of tax benefits for failure to properly claim237-9.5 No separate licensing, filing, or liability for certain revocable trusts237-10 Repealed237-10.5 Reporting requirement for contractors on federal construction projects237-11 Tax year237-12 Tax cumulative; extent of license237-13 Imposition of tax237-13.3 Repealed237-13.5 Assessment on generated electricity237-13.8 Sales of telecommunications services through prepaid telephone calling service237-14 Segregation of gross income, etc., on records and in returns237-14.5 Segregation of gross income, etc., on records and in returns of telecommunications businesses237-15 Technicians237-16 Repealed237-16.5 Tax on written real property leases; deduction allowed237-16.8 Exemption of certain convention, conference, and trade show fees237-17 Persons with impaired sight, hearing, or who are totally disabled237-18 Further provisions as to application of tax237-19 Repealed237-20 Principles applicable in certain situations237-21 Apportionment237-22 Conformity to Constitution, etc.237-23 Exemptions, persons exempt, applications for exemption237-23.5 Related entities; common paymaster; certain exempt transactions237-24 Amounts not taxable237-24.3 Additional amounts not taxable237-24.5 Additional exemptions237-24.7 Additional amounts not taxable237-24.75 Additional exemptions237-24.8 Amounts not taxable for financial institutions237-24.9 Aircraft service and maintenance facility237-25 Exemptions of sales and gross proceeds of sales to federal government, and credit unions237-26 Exemption of certain scientific contracts with the United States
GENERAL EXCISE TAX LAW
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237-27 Exemption of certain petroleum refiners237-27.1 Repealed237-27.5 Air pollution control facility237-27.6 Solid waste processing, disposal, and electric generating facility; certain amounts exempt237-28 Repealed237-28.1 Exemption of certain shipbuilding and ship repair business237-28.2 Repealed237-29 Exemptions for certified or approved housing projects237-29.5 Exemption for sales of tangible personal property shipped out of the State237-29.53 Exemption for contracting or services exported out of State237-29.55 Exemption for sale of tangible personal property for resale at wholesale237-29.57 Exemption for intangible property used outside the State237-29.6 Repealed237-29.65 Repealed237-29.7 Exemption of insurance companies237-29.75 Repealed237-29.8 Call centers; exemption; engaging in business; definitions237- Temporarysuspensionofexemptionofcertainamounts;levyoftax (temporary uncodified section)237- Informationreporting (temporary uncodified section)
ReturnsandPayments
237-30 Monthly, quarterly, or semiannual return, computation of tax, payment237-30.5 Collection of rental by third party; filing with department; statement required237-31 Remittances237-32 Penalties237-33 Annual return, payment of tax237-33.5 Federal assessments; adjustments of gross income or gross proceeds of sale; report to the department237-34 Filing of returns; disclosure of returns unlawful, penalty; destruction of returns237-35 Consolidated reports; interrelated business
Assessments,Refunds,andRecords
237-36 Erroneous returns, disallowance of exemption, payment237-37 Refunds and credits237-38 Failure to make return237-39 Audits; procedure, penalties237-40 Limitation period237-41 Records to be kept; examination237-41.5 Certain amounts held in trust; liability of key individuals
Appeals
237-42 Appeals237-43 Bulk sales; transfers; penalties237-44 Entertainment business237-45 Repealed237-46 Collection by suit; injunction237-47 District judges; concurrent civil jurisdiction in tax collections
Offenses;Penalties
237-48 Repealed237-49 Unfair competition; penalty
ThisisanunofficialcompilationoftheHawaiiRevisedStatutes.
Cross Reference
Taxcollection;mainlandcontractorsworkingonfederalconstructionprojects,see§231-9.3.
GENERAL EXCISE TAX LAW §237-1
CHAPTER237,Page3(UnofficialCompilation)
TaxInformationReleaseNo.89-6,“GeneralExciseTaxontheFund-RaisingActivitiesofPublicSchoolSponsoredGroups”TaxInformationReleaseNo.89-10,“TaxabilityofGrossReceiptsDerivedbyHelicopterTourOperators”
Law Journals and Reviews
TaxesinHawaiisinceJuly1,1968:AReportontheUnreportedDecisionsofJudgeDickYinWong,ArthurB.Reinwald,9HBJ95.TaxesinHawaii1983-1988:AFunnyThingHappenedattheForum.22HBJ53.Hawaii’sGeneralExciseTaxLaw:AComprehensiveReviewoftheDecisions.IIHBJNo.13,atpg.1.
Case Notes
Valueofmanagementandadministrativeservicestaxpayerprovidedtoitswhollyownedsubsidiarieswastaxableunderthischapter.6H.App.260,718P.2d1122.
Whereplaintiffwasa“retailer”licensedunderthischapter,usedthegoodsinHawaiiafteritpurchasedandimportedthemfromthemainland“forpurposesofresale”,itwasliablefortheusetaxunderthissection.128H.116,284P.3d209(2012).
DEFINITIONS; ADMINISTRATION
§237-1 Definitions. Whenusedinthischapter,unlessotherwiserequiredbythecontext,thedefinitionscontainedinthissectionandinsections237-2to237-7shallgovern.
“Casualsale”meansanoccasionalorisolatedsaleortransactioninvolving:(1) Tangiblepersonalpropertybyapersonwhoisnotrequiredtobelicensedunderthischapter,or(2) Tangiblepersonalpropertywhichisnotordinarilysoldinthebusinessofapersonwhoisregularlyengaged
inbusiness.“Comptroller”meansthecomptrolleroftheState.“Legalserviceplan”or“plan”meansaplaninwhichthecostoftheservicesarepaidbyamemberorbysome
otherpersonororganizationinthemember’sbehalf.Alegalserviceplanisaplanbywhichlegalservicesarerenderedtomembersidentifiableintermsofsomecommoninterest.Aplanshallprovide:
(1) That individualmembers shall be afforded freedom of choice in the selection of their own attorney orattorneystoprovidelegalservicesundertheplan;and
(2) For thepaymentofequalamountsfor thecostofservicesrenderedwithoutregardto theidentityof theattorneyorattorneysselectedbytheplanmemberormembers.Noplanshallotherwisediscriminateonthebasisoftheselection.
“Marketplacefacilitator”meansanypersonwhosellsorassistsinthesaleoftangiblepersonalproperty,intangibleproperty,orservicesonbehalfofanothersellerby:
(1) Providingaforum,whetherphysicalorelectronic,inwhichsellerslistoradvertisetangiblepersonalproperty,intangibleproperty,orservicesforsale;and
(2) Collectingpaymentfromthepurchaser,eitherdirectlyorindirectlythroughanagreementwithathirdparty.“Overhead”meanscontinuousorgeneral costsoccurring in thenormalcourseofabusiness, includingbutnot
limitedtocostsforlabor,rent,taxes,royalties,interest,discountspaid,insurance,lighting,heating,cooling,accounting,legalfees,equipmentandfacilities,telephonesystems,depreciation,andamortization.
“Penalty”or“penalties”,whenusedinconnectionwiththeadditionstothetaximposedfordelinquencyinpayment,includesinterestaswell.
“Person”or“company”includeseveryindividual,partnership,society,unincorporatedassociation,jointadventure,group,hui,jointstockcompany,corporation,trustee,personalrepresentative,trustestate,decedent’sestate,trust,trusteeinbankruptcy,orotherentity,whethersuchpersonsaredoingbusinessforthemselvesorinafiduciarycapacity,andwhethertheindividualsareresidentsornonresidentsoftheState,andwhetherthecorporationorotherassociationiscreatedororganizedunderthelawsoftheStateorofanotherjurisdiction.Anypersonwhohasintheperson’spossession,forsaleintheState,thepropertyofanonresidentowner,otherthanasanemployeeofsuchowner,shallbedeemedtheselleroftheproperty,whensold.
“Purchasingagent”meansanypersonwho,asanagentandnotaseller,foraconsideration,isengagedintheStateinthebusinessofpurchasingforthepurchasingagent’sprincipalorprincipalsfromanunlicensedsellerorsellerspropertyforusebysuchprincipalsintheState,forexample,byforwardingordersforsuchpurchases,inbehalfofsuchprincipals,itbeingimmaterialwhetherthepurchasingagentiscompensatedforthepurchasingagent’sservicesbythesellerorbythepurchaser;buttheterm“purchasingagent”doesnotincludeanemployeeofthepurchaser.
“Representative”meansanysalesperson,commissionagent,manufacturer’srepresentative,brokerorotherpersonwhoisauthorizedoremployedbyasellertoassistthesellerinsellingpropertyforuseintheState,byprocuringordersforthesalesorotherwise,andwhocarriesonthoseactivitiesintheState,itbeingimmaterialwhethertheactivitiesareregularorintermittent.Theterm“representative”shallnotinclude:
(1) Amanufacturer’srepresentativewhosefunctionsarewhollypromotionalandtoactasliaisonbetweenanunlicensedsellerandasellerorsellers,andthatdonotincludetheprocuring,solicitingoracceptingofordersforpropertyorthemakingofdeliveriesofproperty,orthecollectingofpaymentfordeliveriesofproperty,
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CHAPTER237,Page4(UnofficialCompilation)
orthekeepingofbooksofaccountconcerningpropertyorders,deliveriesorcollectionstranspiringbetweenanunlicensedsellerandasellerorsellers;and
(2) Amarketplacefacilitator.“Retailing” or “sales at retail” includes the sale of tangible personal property for consumption or use by the
purchaserandnotforresale,therentingoftangiblepersonalproperty,andtherenderingofservicesbyoneengagedinaservicebusinessorcalling,asdefinedinsection237-7,toapersonwhoisnotpurchasingtheservicesforresale.Personsdescribedinthisdefinitionare“retailers”.
“Sale”or“sales”includestheexchangeofpropertiesaswellasthesalethereofformoney.“Taxpayer”meansanypersonliableforanytaxhereunder.“Taxyear”or“taxableyear”meanseitherthecalendaryearorthetaxpayer’sfiscalyearwhenthesameconstitutes
thetaxperiodinsteadofthecalendaryearpursuanttosection237-11.[L1935,c141,ptof§1;amL1941,c265,§1(c);RL1945,§§5441,5442;amL1947,c113,§6;RL1955,§117-1;amL1957,c34,§3andc152,§1;HRS§237-1;amL1969,c46,§1andc137,§2;amL1976,c156,§9andc200,ptof§1;amimpL1984,c90,§1;gench1985;amL1991,c23,§1;gench1993;amL1999,c71,§3;amL2003,c135,§1;amL2012,c34,§20;amL2017,c12,§48;amL2019,c2,§2]
Note
Definitionof“prepaidlegalserviceplan”changedto“legalserviceplan”.L2012,c34,§20.
Cross Reference
TaxInformationReleaseNo.91-9,“GeneralExciseTaxontheGrossIncomeofaTrusteeinBankruptcy”TaxInformationReleaseNo.93-7,“TaxabilityofRevocableLivingTrustsUndertheHawaiiGeneralExciseTaxLaw,TransientAccommodations
TaxLaw,andRentalMotorVehicleandTourVehicleSurchargeTaxLaw”TaxInformationReleaseNo.94-1,“TaxationofInterestIncomeEarnedbyTrustsUndertheHawaiiGeneralExciseTaxLaw”TaxInformationReleaseNo.98-2,“ApplicationoftheGeneralExciseandUseTaxestoCertainLeasingTransaction”TaxInformationReleaseNo.2001-1,“TheApplicationofCertainHawaiiTaxestoQualifiedSubchapterSSubsidiaryCorporations,Qualified
SubchapterSTrusts,andElectingSmallBusinessTrusts”TaxInformationReleaseNo.2019-3,“GuidanceRegardingMarketplaceFacilitators,Act2,SessionLawsofHawaii2019”
Attorney General Opinions
Taxcreditsofonepartnercanbeappliedagainstgrossincometaxdueandowingbythepartnership.Att.Gen.Op.64-5.
Law Journals and Reviews
RuleofStrictConstructioninTaxCases,aQuestionofClassificationorExemption,ArthurB.Reinwald,11HBJ98.
Case Notes
Bytheirterms,thissectionand§383-1appliedonlytopartiesactivelydoingbusinessasanemployer;thus,whileplaintiff(suretywhichissuedsubcontractor’sperformanceandpaymentbond)maybetaxedonanywagesitpaidwhileactingasanemployer,itmaynotbeheldliablefortaxesthataccruedwhileprincipal(subcontractor)wasactingastheemployer.67F.Supp.2d1183.
Corporateadministratordoingbusinessforestateisa“person”subjecttoexcisetax.34H.493.L1935,c141,originallegislation,heldconstitutionalasappliedtosalestoPX’sandshipsstores.37H.314,aff’d174F.2d21.Seealso38
H.188,204.Grossincomeearnedbytrusteeinbankruptcyistaxableunderchapter.52H.56,469P.2d814.Nondomiciliarytrusteeholdingpropertyforanotherfoundliablefortax.57H.436,559P.2d264.Taxabilityoftransactionsbetweenjointventureanditsmember.59H.307,582P.2d703.“Person”includespartnershipsandjointventures.61H.572,608P.2d383.Measurementofgasolineandterminatingchargeupondeliverywere“sale”.65H.283,651P.2d469.Cited33H.766,771.
§237-2 “Business”, “engaging” in business, defined. Asusedinthischapter:“Business”includesallactivities(personal,professional,orcorporate)engagedinorcausedtobeengagedinwith
theobjectofgainoreconomicbenefiteitherdirectorindirect,butdoesnotincludecasualsales.“Engaging”,withreferencetoengagingorcontinuinginbusiness,includestheexerciseofcorporateorfranchise
powers.[L1935,c141,ptof§1;RL1945,§5443;RL1955,§117-2;HRS§237-2;amL2017,c12,§49]Cross Reference
TaxInformationReleaseNo.42-74,“ApplicationoftheGeneralExciseTaxtoInterestIncome”TaxInformationReleaseNo.91-9,“GeneralExciseTaxontheGrossIncomeofaTrusteeinBankruptcy”TaxInformationReleaseNo.92-7,“ApplicationofStateTaxesonInventoryandBusinessInterruptionInsuranceProceeds”TaxInformationReleaseNo.2008-01,“RevocationofOutline,Act70,SLH1999andAct198,SLH2000,RevocationofOutline,Act71,SLH
1999andAct198,SLH2000”TaxInformationReleaseNo.2008-02,“AdvancedNoticeofProposedAdministrativeRulesRelatingtotheTaxationoftheMotionPictureand
TelevisionFilmProductionIndustry”TaxInformationReleaseNo.2009-05,“AdvancedNoticeofProposedAdministrativeRulesRelatingtotheTaxationoftheMotionPictureand
TelevisionFilmProductionIndustry”
GENERAL EXCISE TAX LAW §237-3
CHAPTER237,Page5(UnofficialCompilation)
Attorney General Opinions
Agreementofsaleexecutedbyapartnershipdealinginlandwasnota“casualsale”.Att.Gen.Op.62-1.Co-opapartment corporationoperatingandmanagingapartmentbuilding is engaged inbusiness and is taxableon its receiptsofmonthly
“maintenance”chargesfromstockholder-lessees.Att.Gen.Op.62-47.Applicationofexcisetaxtoactivitiesinforeigntradezone.Att.Gen.Op.64-52.
Case Notes.
“Casualsale”doesnotexcludeunusualsaleswithintaxpayer’sbusiness.40H.722.Engaginginactivitywith“objectofgainoreconomicbenefit”construed.53H.435,496P.2d1.Attorney’sactivitiesastrustee,executorandcorporatedirectorwerenotsoisolatedorunconnectedastoconstitute“casual”transactions.53
H.435,496P.2d1.Out-of-statecompany’scontinuingleasingoftelecastrightsperformableonlyinHawaiiis“business”withinthissection,althoughagreement
consummatedoutsideofHawaii.57H.175,554P.2d242.NondomiciliarycorporationinvestingcapitalinHawaiianlandheldtobe“engaginginbusiness.”57H.436,559P.2d264.Taxabilityoftransactionsbetweenjointventureanditsmember.59H.307,582P.2d703.Taxpayerpartnership’sprovisionofmedicalequipmentandancillaryservicestoitsjointventureconstituted“business”underthissectionand
wasthusmadesubjecttothegeneralexcisetaxby§237-20.93H.267(App.),999P.2d865.Wheretaxpayergainedoreconomicallybenefitedfromsubleasingtransactions,thedirector’sassessmentandimpositionofthegeneralexcise
taxfortaxpayer’ssubleasingactivitieswasproper.110H.25,129P.3d528(2006).Cited:48H.486,490,405P.2d382.
Decisions under prior law.Receivingadistributionofincomefromatrustestateasabeneficiaryisnot“doingbusinesswithintheTerritory”.34H.404.Administration
ofanestateisdoingbusiness.34H.493.
[§237-2.5] Engaging in business in the State. Aperson isengaging inbusiness in theState,whetherornot thepersonhasaphysicalpresenceintheState,ifinthecurrentorimmediatelyprecedingcalendaryear:
(1) Theperson’sgrossincomeorgrossproceedsfromthesaleoftangiblepersonalpropertydeliveredintheState,servicesusedorconsumedintheState,orintangiblepropertyusedintheStateis$100,000ormore;or
(2) ThepersonsoldtangiblepersonalpropertydeliveredintheState,servicesusedorconsumedintheState,orintangiblepropertyusedintheStateintwohundredormoreseparatetransactions.[L2018,c41,§1]
Note
SectionappliestotaxableyearsbeginningafterDecember31,2017.L2018,c41,§3.
§237-3 “Gross income”, “gross proceeds of sale”, defined. (a) “Grossincome”meansthegrossreceipts,cashoraccrued,ofthetaxpayerreceivedascompensationforpersonalservicesandthegrossreceiptsofthetaxpayerderivedfromtrade,business,commerce,orsalesandthevalueproceedingoraccruingfromthesaleoftangiblepersonalproperty,orservice,orboth,andallreceipts,actualoraccruedashereinafterprovided,byreasonoftheinvestmentofthecapitalofthebusinessengagedin,includinginterest,discount,rentals,royalties,fees,orotheremolumentshoweverdesignatedandwithoutanydeductionsonaccountofthecostofpropertysold,thecostofmaterialsused,laborcost,taxes,royalties,interest,ordiscountpaidoranyotherexpenseswhatsoever.Everytaxpayershallbepresumedtobedealingonacashbasisunlessthetaxpayerprovestothesatisfactionofthedepartmentoftaxationthatthetaxpayerisdealingonanaccrualbasisandthetaxpayer’sbooksaresokept,orunlessthetaxpayeremploysorisrequiredtoemploytheaccrualbasisforthepurposesofthetaximposedbychapter235foranytaxableyearinwhicheventthetaxpayershallreportthetaxpayer’sgrossincomeforthepurposesofthischapterontheaccrualbasisforthesameperiod.
“Grossproceedsofsale”meansthevalueactuallyproceedingfromthesaleoftangiblepersonalpropertywithoutanydeductiononaccountofthecostofpropertysoldorexpensesofanykind.
(b) Thewords“grossincome”and“grossproceedsofsales”shallnotbeconstruedtoinclude:grossreceiptsfromthesaleofsecuritiesasdefinedin15UnitedStatesCodesection78corsimilarlawsofjurisdictionsoutsidetheUnitedStates,contractsforthesaleofacommodityforfuturedeliveryandotheragreements,options,andrightsasdefinedin7UnitedStatesCodesection2thatarepermittedtobetradedonaboardoftradedesignatedbytheCommoditiesFuturesTradingCommission under theCommodityExchangeAct, or evidence of indebtedness or,exceptasotherwiseprovided,fromthesaleoflandinfeesimple,improvedorunimproved,dividendsasdefinedbychapter235;cashdiscountsallowedandtakenonsales;theproceedsofsaleofgoods,wares,ormerchandisereturnedbycustomerswhenthesalepriceisrefundedeitherincashorbycredit;orthesalepriceofanyarticleacceptedaspartpaymentonanynewarticlesold,ifthefullsalepriceofthenewarticleisincludedinthe“grossincome”or“grossproceedsofsales”;grossreceiptsfromthesaleortransferofmaterialsorsupplies,interestonloans,ortheprovisionofengineering,construction,maintenance,ormanagerialservicesbyone“member”ofan“affiliatedpublicservicecompanygroup”toanother“member”ofthesamegroupassuchtermsaredefinedinsection239-2.Accountsfoundtobeworthlessandactuallychargedoffforincometaxpurposesmaybededucted,atcorrespondingperiods,fromgrossproceedsofsale,orgrossincome,withinthischapter,sofarastheyreflecttaxablesalesmade,orgrossincomeearned,afterJuly1,1935,butshallbeaddedtogrossproceedsofsaleorgrossincomewhenandifafterwardscollected.
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(c) Forpurposesofthetaximposedbythischapter,ataxpayerundersection237-13(3)mayreportonacashbasis;providedthetaxpayernotifiesthedepartmentoftaxationofthebasisuponwhichthetaximposedbythischapteristobereported.[L1935,c141,ptof§1;amL1941,c265,§1(a);RL1945,§5444;RL1955,§117-3;amLSp1957,c1,§3(a);amLSp19592d,c1,§16;HRS§237-3;amL1977,c26,§2;amimpL1984,c90,§1;gench1985;amL1988,c295,§2;amL1989,c118,§1;amL1997,c178,§3;amL2000,c262,§2]
Cross Reference
TaxInformationReleaseNo.42-74,“ApplicationoftheGeneralExciseTaxtoInterestIncome”Tax InformationReleaseNo.82-5, “TaxabilityofRebatesonAutomobilesSoldUnderManufacturer/DealerSales IncentivePrograms for
GeneralExciseTaxPurposes”TaxInformationReleaseNo.90-13,“GeneralExciseTaxImposedUponaPersonReceivingGrossIncomefromtheRentalofResidentialReal
Property”TaxInformationReleaseNo.92-5,“ApplicationoftheGeneralExciseTaxontheRecoveryofRealPropertyTaxesfromLesseesandSublessees”TaxInformationReleaseNo.92-7,“ApplicationofStateTaxesonInventoryandBusinessInterruptionInsuranceProceeds”TaxInformationReleaseNo.93-7,“TaxabilityofRevocableLivingTrustsUndertheHawaiiGeneralExciseTaxLaw,TransientAccommodations
TaxLaw,andRentalMotorVehicleandTourVehicleSurchargeTaxLaw”TaxInformationReleaseNo.94-1,“TaxationofInterestIncomeEarnedbyTrustsUndertheHawaiiGeneralExciseTaxLaw”Tax InformationReleaseNo. 94-4, “Application of StateTaxes onRebates for the Purchase and Installation ofUltra-low FlushToilets”
OBSOLETETaxInformationReleaseNo.95-1,“ApplicationoftheGeneralExciseTaxontheGrossReceiptsfromaCovenantNottoCompete”Tax InformationReleaseNo.2010-05,“Act155,SessionLawsofHawaii2010,Relating toGeneralExciseTax;TheGeneralExciseTax
ProtectionAct”
Attorney General Opinions
Withtheexceptionofpre-bidcosts,all itemsenteringintothetotalcontractpriceofaCapehartprojectcontractorconstitutegrossincomesubjecttogeneralexcisetaxation.Att.Gen.Op.61-85.
Interestincomefromagreementofsalenotexemptasincomefrom“saleofland”.Att.Gen.Op.62-1.Taxabilityofout-of-statetravelagencyconductinglocaltoursandoflocaltravelagentconductingout-of-statetours.Att.Gen.Op.65-6.
Case Notes
“Grossincome”,defined.34H.269.Exemptionfromgrossincome,“saleofrealproperty”.44H.584,358P.2d539.Saledefined.Id.Paymentsbymanufacturersandothersellerstoretailersundercooperativemerchandisingoradvertisingagreementsarepaymentsforservices
andconstitutegrossincome.51H.281,458P.2d664.Interestreceivedonagreementofsaleoflanddoesnotcomewithin“grossreceiptsfromthesaleoflandinfeesimple”.52H.279,474P.2d538.InterestincomereceivedbyanondomiciliaryvendorfromsalesofHawaiianlandfoundnotwithinexemptions.57H.436,559P.2d264.Taxabilityoftransactionsbetweenjointventureanditsmember.59H.307,582P.2d703.Cited:40H.722,728,56H.321,536P.2d91.
§237-4 “Wholesaler”, “jobber”, defined. (a)“Wholesaler”or“jobber”appliesonlytoapersonmakingsalesatwholesale.Onlythefollowingaresalesatwholesale:
(1) Salestoalicensedretailmerchant,jobber,orotherlicensedsellerforpurposesofresale;(2) Salestoalicensedmanufacturerofmaterialsorcommoditiesthataretobeincorporatedbythemanufacturer
intoafinishedorsaleableproduct(includingthecontainerorpackageinwhichtheproductiscontained)duringthecourseofitspreservation,manufacture,orprocessing,includingpreparationformarket,andthatwillremaininsuchfinishedorsaleableproductinsuchformastobeperceptibletothesenses,whichfinishedorsaleableproductistobesoldandnototherwiseusedbythemanufacturer;
(3) Salestoalicensedproducerorcooperativeassociationofmaterialsorcommoditiesthataretobeincorporatedbytheproducerorbythecooperativeassociationintoafinishedorsaleableproductthatistobesoldandnototherwiseusedbytheproducerorcooperativeassociation,includingspecificallymaterialsorcommoditiesexpendedasessentialtotheplanting,growth,nurturing,andproductionofcommoditiesthataresoldbytheproducerorbythecooperativeassociation;
(4) Salestoalicensedcontractor,ofmaterialsorcommoditiesthataretobeincorporatedbythecontractorintothefinishedworkorprojectrequiredbythecontractandthatwillremaininsuchfinishedworkorprojectinsuchformastobeperceptibletothesenses;
(5) Salestoalicensedproducer,ortoacooperativeassociationdescribedinsection237-23(a)(7)forsaletoalicensedproducer,or toa licensedpersonoperatingafeedlot,ofpoultryoranimalfeed,hatchingeggs,semen, replacement stock, breeding services for the purpose of raising or producing animal or poultryproductsfordispositionasdescribedinsection237-5orforincorporationintoamanufacturedproductasdescribedinparagraph(2)orforthepurposeofbreeding,hatching,milking,oregglayingotherthanforthecustomer’sownconsumptionofthemeat,poultry,eggs,ormilksoproduced;providedthatinthecaseofafeedlotoperator,onlythesegregatedcostofthefeedfurnishedbythefeedlotoperatoraspartofthefeedlotoperator’sservicetoalicensedproducerofpoultryoranimalstobebutcheredortoacooperativeassociationdescribedinsection237-23(a)(7)ofsuchlicensedproducersshallbedeemedtobeasaleatwholesale;andprovidedfurtherthatanyamountderivedfromthefurnishingoffeedlotservices,otherthanthesegregated
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costoffeed,shallbedeemedtaxableattheservicebusinessrate.Thisparagraphshallnotapplytothesaleoffeedforpoultryoranimalstobeusedforhauling,transportation,orsportspurposes;
(6) Salestoalicensedproducer,ortoacooperativeassociationdescribedinsection237-23(a)(7)forsaletotheproducer,ofseedorseedstockforproducingagriculturalandaquaculturalproducts,orbaitforcatchingfish(includingthecatchingofbaitforcatchingfish),whichagriculturalandaquaculturalproductsorfisharetobedisposedofasdescribedinsection237-5ortobeincorporatedinamanufacturedproductasdescribedinparagraph(2);
(7) Salestoalicensedproducer,ortoacooperativeassociationdescribedinsection237-23(a)(7)forsaletosuchproducer; of polypropylene shade cloth; of polyfilm; of polyethylene film; of cartons and such othercontainers,wrappers,andsacks,andbinders tobeusedforpackagingeggs,vegetables,fruits,andotheragriculturalandaquaculturalproducts;ofseedlingsandcuttingsforproducingnurseryplantsoraquaculturalproducts;orofchickcontainers;whichcartonsandsuchothercontainers,wrappers,andsacks,binders,seedlings,cuttings,andcontainersaretobeusedasdescribedinsection237-5,ortobeincorporatedinamanufacturedproductasdescribedinparagraph(2);
(8) Salesoftangiblepersonalpropertywhere:(A) Tangiblepersonalpropertyissoldupontheorderorrequestofalicensedsellerforthepurposeof
renderingaserviceinthecourseoftheperson’sservicebusinessorcalling,orupontheorderorrequestofapersonsubjecttotaxundersection237D-2forthepurposeoffurnishingtransientaccommodations;
(B) Thetangiblepersonalpropertybecomesorisusedasanidentifiableelementoftheservicerendered;and
(C) Thecostofthetangiblepersonalpropertydoesnotconstituteoverheadtothelicensedseller;(9) Salestoalicensedleasingcompanyofcapitalgoodsthathaveadepreciablelife,arepurchasedbytheleasing
companyforleasetoitscustomers,andarethereafterleasedasaservicetoothers;(10)Salesofservicestoalicensedsellerengaginginabusinessorcallingwhenever:
(A) Either: (i)Inthecontextofaservice-to-servicetransaction,aserviceisrenderedupontheorderorrequest
of a licensed seller for the purpose of rendering another service in the course of the seller’sservicebusinessorcalling,includingadealer’sfurnishingofgoodsorservicestothepurchaseroftangiblepersonalpropertytofulfillawarrantyobligationofthemanufactureroftheproperty;
(ii)Inthecontextofaservice-to-tangiblepersonalpropertytransaction,aserviceisrenderedupontheorderorrequestofalicensedsellerforthepurposeofmanufacturing,producing,orpreparingtangiblepersonalpropertytobesold;
(iii)Inthecontextofaservices-to-contractingtransaction,aserviceisrenderedupontheorderorrequest of a licensed contractor as defined in section 237-6 for the purpose of assisting thatlicensedcontractor;or
(iv)Inthecontextofaservices-to-transientaccommodationsrentaltransaction,aserviceisrenderedupon theorderor requestofapersonsubject to taxundersection237D-2for thepurposeoffurnishingtransientaccommodations;
(B) Thebenefitoftheservicepassestothecustomerofthelicensedseller,licensedcontractor,orpersonfurnishingtransientaccommodationsasanidentifiableelementoftheotherserviceorpropertytobesold,thecontracting,orthefurnishingoftransientaccommodations;
(C) Thecostoftheservicedoesnotconstituteoverheadtothelicensedseller,licensedcontractor,orpersonfurnishingtransientaccommodations;
(D) Thegrossincomeofthelicensedsellerisnotdividedbetweenthelicensedsellerandanotherlicensedseller,contractor,orpersonfurnishingtransientaccommodationsforimpositionofthetaxunderthischapter;
(E) Thegrossincomeofthelicensedsellerisnotsubjecttoadeductionunderthischapterorchapter237D;and
(F) The resale of the service, tangible personal property, contracting, or transient accommodations issubjecttothetaximposedunderthischapteratthehighesttaxrate.
(11)Salestoalicensedretailmerchant,jobber,orotherlicensedsellerofbulkcondimentsorprepackagedsingle-servingpacketsofcondimentsthatareprovidedtocustomersbythelicensedretailmerchant,jobber,orotherlicensedseller;
(12)Salestoalicensedretailmerchant,jobber,orotherlicensedselleroftangiblepersonalpropertythatwillbeincorporatedorprocessedbythelicensedretailmerchant,jobber,orotherlicensedsellerintoafinishedorsaleable product during the course of its preparation for market (including disposable, nonreturnablecontainers,packages,orwrappers,inwhichtheproductiscontainedandthataregenerallyknownandmostcommonlyusedtocontainfoodorbeveragefortransferordelivery),andwhichfinishedorsaleableproductistobesoldandnototherwiseusedbythelicensedretailmerchant,jobber,orotherlicensedseller;
§237-4 GENERAL EXCISE TAX LAW
CHAPTER237,Page8(UnofficialCompilation)
(13)Salesofamusementssubjecttotaxationundersection237-13(4)toalicensedsellerengaginginabusinessorcallingwhenever:(A) Either: (i)Inthecontextofanamusement-to-servicetransaction,anamusementisrenderedupontheorder
orrequestofalicensedsellerforthepurposeofrenderinganotherserviceinthecourseoftheseller’sservicebusinessorcalling;
(ii)In the context of an amusement-to-tangible personal property transaction, an amusement isrenderedupontheorderorrequestofalicensedsellerforthepurposeofsellingtangiblepersonalproperty;or
(iii)Inthecontextofanamusement-to-amusementtransaction,anamusementisrenderedupontheorderorrequestofalicensedsellerforthepurposeofrenderinganotheramusementinthecourseoftheperson’samusementbusiness;
(B) Thebenefitoftheamusementpassestothecustomerofthelicensedsellerasanidentifiableelementoftheotherservice,tangiblepersonalpropertytobesold,oramusement;
(C) Thecostoftheamusementdoesnotconstituteoverheadtothelicensedseller;(D) Thegrossincomeofthelicensedsellerisnotdividedbetweenthelicensedsellerandanotherlicensed
seller,personfurnishingtransientaccommodations,orpersonrenderinganamusementforimpositionofthetaxunderchapter237;
(E) Thegrossincomeofthelicensedsellerisnotsubjecttoadeductionunderthischapter;and(F) Theresaleoftheservice,tangiblepersonalproperty,oramusementissubjecttothetaximposedunder
thischapteratthehighestrate. Asusedinthisparagraph,“amusement”meansentertainmentprovidedaspartofashowforwhichthereis
anadmissioncharge;and(14)Salesbyaprintertoapublisherofmagazinesorsimilarprintedmaterialscontainingadvertisements,when
thepublisherisundercontractwiththeadvertiserstodistributeaminimumnumberofmagazinesorsimilarprintedmaterialstothepublicordefinedsegmentofthepublic,whetherornotthereisachargetothepersonswhoactuallyreceivethemagazinesorsimilarprintedmaterials.
(b) Iftheusetaxlawisfinallyheldbyacourtofcompetentjurisdictiontobeunconstitutionalorinvalidinsofaras it purports to tax theuseor consumptionof tangiblepersonalproperty imported into theState in interstateorforeigncommerceorboth,wholesalersandjobbersshallbetaxedthereafterunderthischapterinaccordancewiththefollowingdefinition(whichshallsupersedetheprecedingparagraphotherwisedefining“wholesaler”or“jobber”):“Wholesaler”or“jobber”meansaperson,oradefinitelyorganizeddivisionthereof,definitelyorganizedtorenderandrenderingageneraldistributionservicethatbuysandmaintainsattheperson’splaceofbusinessastockorlinesofmerchandisethatthepersondistributes;andthattheperson,throughsalespersons,advertising,orsalespromotiondevices,sellstolicensedretailers,toinstitutionalorlicensedcommercialorindustrialusers,inwholesalequantitiesandatwholesalerates.AcorporationdeemednottobecarryingonatradeorbusinessinthisStateundersection235-6shallneverthelessbedeemedtobeawholesalerandshallbesubjecttothetaximposedbythischapter.[L1935,c141,ptof§1;RL1945,§5446;RL1955,§117-5;amL1957,c34,§11(a);amL1959,c257,§§1,2;amL1963,c70,§2;amimpL1965,c155,§2;amL1966,c28,§2;amL1967,c155,§1;HRS§237-4;amL1970,c180,§9;amL1971,c204,§2;amL1979,c105,§22;amL1982,c189,§1andc253,§2;amL1984,c73,§2;amL1990,c286,§2;amL1991,c286,§2;amL1992,c106,§5;gench1992;amL1999,c71,§4andc173,§1;amL2000,c198,§1andc271,§1;amL2001,c164,§2;amL2008,c16,§5andc89,§1;amL2015,c22,§2]
Cross Reference
TaxInformationReleaseNo.26-70,“ApplicationoftheGeneralExciseTaxtoCommercialJobPrinters” OBSOLETETax Information Release No. 39-72, “Application of the General Excise Tax on Sales to Persons Engaged in theAutomobile Painting
Business” OBSOLETETaxInformationReleaseNo.52-77,“GuidelinesRelatingtoSalesofTangiblePersonalPropertytoLicensedLeasingCompanies,Formstobe
Used”TaxInformationReleaseNo.88-5,“GeneralExciseTaxImposedonSalestoFastFoodRetailers” OBSOLETETaxInformationReleaseNo.95-5,“ApplicationoftheGeneralExcise(‘GE’)andUseTaxesonSalesofTangiblePersonalProperty(‘TPP’)by
anOut-of-StateSeller,IncludingDropShipments”TaxInformationReleaseNo.96-4,“TheGeneralExciseTaxRatesLeviedonSalesofPesticidestoPestControlOperators”TaxInformationReleaseNo.98-2,“ApplicationoftheGeneralExciseandUseTaxestoCertainLeasingTransactions”TaxInformationReleaseNo.98-8,“ApplicationofAct247,SessionLawsofHawaii1998(Act247),Relating to theGeneralExciseTax
ExemptionforTangiblePersonalPropertyImportedIntotheStateforResaleatWholesale”TaxInformationReleaseNo.2008-01,“RevocationofOutline,Act70,SLH1999andAct198,SLH2000,RevocationofOutline,Act71,SLH
1999andAct198,SLH2000”
Case Notes
PXandshipsstoresarenot“licensedmerchants”,or“wholesalers”.37H.314,aff’d174F.2d21.Licensedmeanslicensedunderthischapter.37H.314,aff’d174F.2d21;41H.615.
GENERAL EXCISE TAX LAW §237-6
CHAPTER237,Page9(UnofficialCompilation)
Salesofautomobilestoleasingcompanieswereatretailratherthanwholesale,whereagreementsbetweenleasingcompanyanditscustomerswereactuallyleasesandnotconditionalsales.53H.195,490P.2d902.
Salesofappliancepartstolicensedrepairpersonswhobilltheircustomersforlaborandmaterialsarewholesalesales.53H.450,497P.2d37.Par.(8):Carrentalcontractisa“lease”.“Depreciablelife”and“capitalgoods”construed.56H.644,547P.2d1343.“Wholesaler”v.“Servicebusinessorcalling”construed.63H.579,633P.2d535.Cited:45H.167,182,363P.2d990.
[§237-4.5] Marketplace facilitators. (a)Amarketplacefacilitatorshallbedeemedtheselleroftangiblepersonalproperty,intangibleproperty,orservicesandtheselleronwhosebehalfthesaleismadeshallbedeemedtobemakingasaleatwholesalepursuanttosection237-4.
(b) Forpurposesofsection237-3,amarketplacefacilitator’sgross incomeorgrossproceedsofsale includereceiptsfromsalesonbehalfofothersellersundersubsection(a).
(c) Anypersonother thanamarketplacefacilitatorwhoprovidesaforum,whetherphysicalorelectronic, inwhichsellerslistoradvertisetangiblepersonalproperty,intangibleproperty,orservicesforsaleandtakesorprocessessalesordersshall:
(1) Post a conspicuous notice on its forum that informspurchasers intending to purchase tangible personalproperty,intangibleproperty,orservicesfordeliverytooruseatalocationinthisStatethatthepurchaserisrequiredtopayusetaxifthesaleismadefromanunlicensedseller;
(2) Provideawrittennoticetoeachpurchaseratthetimeofeachsaleoftangiblepersonalproperty,intangibleproperty,orservicesfordeliverytooruseatalocationinthisStatethatthepurchasermayberequiredtoremitusetaxdirectlytothedepartmentandprovideinstructionsforobtainingadditionalinformationfromthedepartmentonwhetherandhowtoremitusetaxtothedepartment;and
(3) Nolaterthanthetwentiethdayofthefourthmonthfollowingthecloseofthetaxableyear,submitareporttothedepartmentthatincludes,withrespecttoeachpurchaseroftangiblepersonalproperty,intangibleproperty,orservicesdeliveredtoorusedatalocationinthisState,allofthefollowing:(A) Thepurchaser’sname,billingaddress,andmailingaddress;(B) Ifthesaleinvolvedthepurchaseoftangiblepersonalproperty,theaddressinthisStatetowhichthe
tangiblepersonalpropertywasdeliveredtothepurchaser;(C) Theaggregatedollaramountofthepurchaser’spurchasesfromtheseller;and(D) Thenameandaddressofthesellerthatmadethesaletothepurchaser;
providedthattheperson,inlieuofcomplyingwiththenoticeandreportingrequirementsinthissubsection,mayelecttobedeemedtheselleroftangiblepersonalproperty,intangibleproperty,orservicesasprovidedinsubsection(a).
(d) Anypersonwhofailstocomplywithsubsection(c)andhasnotelectedtobedeemedtheselleroftangiblepersonalproperty,intangibleproperty,orservicesunlessitisshownthatthefailureisduetoreasonablecauseandnotduetoneglect,shallbeassessedapenaltyof$1,000ifthefailureisfornotmorethanonemonth,withanadditional$1,000foreachadditionalmonthorfractionthereofduringwhichthefailurecontinues,notexceeding$12,000intheaggregate.[L2019,c2,§1]
Cross Reference
TaxInformationReleaseNo.2019-3,“GuidanceRegardingMarketplaceFacilitators,Act2,SessionLawsofHawaii2019”
§237-5 “Producer” defined. “Producer”meansanypersonengaged in thebusinessof raisingandproducingagriculturalproductsintheirnaturalstate,orinproducingnaturalresourceproducts,orengagedinthebusinessoffishingoraquaculture,forsale,orforshipmentortransportationoutoftheState,oftheagriculturaloraquacultureproductsintheirnaturalorprocessedstate,orbutcheredanddressed,orthenaturalresourceproducts,orfish.
Asusedinthissection“agriculturalproducts”includefloricultural,horticultural,viticultural,forestry,nut,coffee,dairy,livestock,poultry,bee,animal,andanyotherfarm,agronomic,orplantationproducts.[L1935,c141,ptof§1;RL1945,§5447;RL1955,§117-6;amL1957,c34,§11(b);HRS§237-5;amL1982,c253,§1;amL1984,c73,§3]
Cross Reference
TaxInformationReleaseNo.98-5,“GeneralExciseTaxExemptionforTangiblePersonalProperty,IncludingSouvenirsandGiftItems,ShippedOutoftheState”
Case Notes
Cited:41H.615,619.
§237-6 “Contractor”, “contracting”, “federal cost-plus contractor”, defined. “Contracting” means thebusinessactivitiesofacontractor.
“Contractor”includes,forpurposesofthischapter:(1) Everypersonengaging in thebusinessofcontracting toerect,construct, repair,or improvebuildingsor
structures,ofanykindordescription,includinganyportionthereof,ortomakeanyinstallationtherein,ortomake,construct,repair,orimproveanyhighway,road,street,sidewalk,ditch,excavation,fill,bridge,shaft,
§237-7 GENERAL EXCISE TAX LAW
CHAPTER237,Page10(UnofficialCompilation)
well,culvert,sewer,watersystem,drainagesystem,dredgingorharbor improvementproject,electricorsteamrail,lightingorpowersystem,transmissionline,tower,dock,wharf,orotherimprovements;
(2) Everypersonengaginginthepracticeofarchitecture,professionalengineering,landsurveying,andlandscapearchitecture,asdefinedinsection464-1;and
(3) Everypersonengagedinthepracticeofpestcontrolorfumigationasapestcontroloperatorasdefinedinsection460J-1.
“Federalcost-pluscontractor”meansacontractorhavingacontractwiththeUnitedStatesoraninstrumentalitythereof, excluding national banks, where, by the terms of the contract, the United States or such instrumentality,excludingnationalbanks,agreestoreimbursethecontractorforthecostofmaterial,plant,orequipmentusedintheperformanceofthecontractandfortaxeswhichthecontractormayberequiredtopaywithrespecttosuchmaterial,plant,orequipment,whetherthecontractor’sprofitiscomputedintheformofafixedfeeoronapercentagebasis;andalsomeansasubcontractorundersuchacontract,whoalsooperatesonacost-plusbasis.[L1935,c141,ptof§1;amL1941,c265,§1(b);amL1943,c81,§1(a);RL1945,§5448;RL1955,§117-7;amL1965,c201,§36;HRS§237-6;amL1971,c4,§1andc204,§3;amL1984,c60,§1;amL2000,c198,§2]
Cross Reference
TaxInformationReleaseNo.84-2,“SubcontractDeductionsClaimedbyGeneralContractorsforPaymentMadetoPestControlOperatorsUndertheGeneralExciseTaxLaw,Chapter237,HRS”
TaxInformationReleaseNo.2008-01,“RevocationofOutline,Act70,SLH1999andAct198,SLH2000,RevocationofOutline,Act71,SLH1999andAct198,SLH2000”
Case Notes
“Structures”doesnotincludeboatsandvessels,andtaxpayersengagedinrepairofmarinevesselsisnota“contractor”.55H.572,524P.2d890.
Cited:44H.584,587,358P.2d539.
§237-7 “Service business or calling”, defined. “Servicebusinessorcalling”includesallactivitiesengagedinforotherpersonsforaconsiderationwhichinvolvetherenderingofaservice,includingprofessionalandtransportationservices,asdistinguished from thesaleof tangiblepropertyor theproductionandsaleof tangibleproperty.“Servicebusinessorcalling”doesnotincludetheservicesrenderedbyanemployeetotheemployee’semployer.[L1935,c141,ptof§1;RL1945,§5449;amL1951,c165,§1;RL1955,§117-8;HRS§237-7;amL1983,c206,§3;amimpL1984,c90,§1;gench1985;amL1999,c71,§5;amLSp20013d,c9,§2]
Note
GrossincomereceivedonorafterOctober1,2001,bytransportationserviceprovidersshallbesubjecttothetaximposedunderchapter237.LSp20013d,c9,§6.
Cross Reference
TaxInformationReleaseNo.98-9,“ApplicationoftheGeneralExcisetotheGrossIncomeReceivedFromtheSaleofaServiceandContracting”SupersededbyTIR2009-02.
TaxInformationReleaseNo.2008-01,“RevocationofOutline,Act70,SLH1999andAct198,SLH2000,RevocationofOutline,Act71,SLH1999andAct198,SLH2000”
Case Notes
Servicesrenderedbyretailersinpromotingsalesofcommoditiesforwhichtheyreceivedpaymentfromthemanufacturersandsellersofthecommoditiesconstitutednon-professionalactivitieswithinmeaningofsection.51H.281,458P.2d664.
Taxpayermaybesubjecttoboththeservicebusinessandretailingclassificationstoextenteachisapplicabletoparticularitemsofgrossincome.53H.450,497P.2d37.
§237-8 Administration and enforcement by department. The administration of this chapter is vested inandshallbeexercisedbythedepartmentoftaxation,whichshallprescribeformsandreasonablerulesofprocedureinconformitywiththischapterforthemakingofreturnsandfortheascertainment,assessment,andcollectionofthetaxesimposedhereunder.Suchformsandrules,whenprescribedbythedepartmentandprintedandpublishedinthemannerprovidedbylawshallhavetheforceandeffectoflaw.TheenforcementofthischapterinanyofthecourtsoftheStateisundertheexclusivejurisdictionofthedepartment,whichshallrequiretheassistanceoftheattorneygeneraloftheState,therespectivecountyattorneysandtheprosecutingattorneyofthecountieswheresuitisbrought;buttheseattorneysshallreceivenofeesorcompensationforservicesrenderedinenforcingthischapterinadditiontotherespectivesalariespaidbylawtothem.
Thedepartmentshallhave,inadditiontoallofthedutiesandpowershereinprescribedorgranted,allthedutiesandpowersprescribedorgrantedbytheexistingorfuturetaxlawsoftheStatesofarasthesamemaybeapplicabletotheadministrationofthischapterandarenotcontrarytotheexpressprovisionshereof.[L1935,c141,§20;RL1945,§5450;RL1955,§117-9;amLSp19592d,c1,§16;HRS§237-8]
GENERAL EXCISE TAX LAW §237-8.6
CHAPTER237,Page11(UnofficialCompilation)
Case Notes
Sectionmakesapplicabletothischapteralltheprovisionsofthestatetaxlaws.44H.584,595,358P.2d539.Economyinadministrationisaproperfactorforconsiderationinassessmentoftaxes.56H.321,536P.2d91.Construeexcisetaxlawinrelationtoincometaxlaw.56H.644,547P.2d1343.
§237-8.5 REPEALED. L2003,c135,§10.
§237-8.6 County surcharge on state tax; administration. [Section repealed December 31, 2030. L Sp 2017, c 1, §6.] (a)Thecounty surchargeon state tax,upon the adoptionof countyordinances and in accordancewith therequirementsofsection46-16.8,shallbelevied,assessed,andcollectedasprovidedinthissectiononallgrossproceedsandgrossincometaxableunderthischapter.Nocountyshallsetthesurchargeonstatetaxatarategreaterthanone-halfpercentofallgrossproceedsandgrossincometaxableunderthischapter.Allprovisionsofthischaptershallapplytothecountysurchargeonstatetax.Withrespecttothesurcharge,thedirectoroftaxationshallhavealltherightsandpowersprovidedunderthischapter.Inaddition,thedirectoroftaxationshallhavetheexclusiverightsandpowertodeterminethecountyorcountiesinwhichapersonisengagedinbusinessand,inthecaseofapersonengagedinbusinessinmorethanonecounty,thedirectorshalldetermine,throughapportionmentorothermeans,thatportionofthesurchargeonstatetaxattributabletobusinessconductedineachcounty.
(b) Eachcountysurchargeonstate taxthatmaybeadoptedorextendedpursuant tosection46-16.8shallbeleviedbeginninginataxableyearaftertheadoptionoftherelevantcountyordinance;providedthatnosurchargeonstatetaxmaybelevied:
(1) Priorto:(A) January1,2007,ifthecountysurchargeonstatetaxwasestablishedbyanordinanceadoptedpriorto
December31,2005;(B) January1,2019,ifthecountysurchargeonstatetaxwasestablishedbytheadoptionofanordinance
afterJune30,2015,butpriortoJune30,2018;or(C) January1,2020,ifthecountysurchargeonstatetaxwasestablishedbytheadoptionofanordinance
onorafterJune30,2018,butpriortoMarch31,2019;and(2) AfterDecember31,2030.
(c) Thecountysurchargeonstatetax,ifadopted,shallbeimposedonthegrossproceedsorgrossincomeofallwrittencontractsthatrequirethepassingonofthetaxesimposedunderthischapter;providedthatif thegrossproceedsorgrossincomearereceivedaspaymentsbeginninginthetaxableyearinwhichthetaxesbecomeeffective,oncontractsenteredintobeforeJune30oftheyearpriortothetaxableyearinwhichthetaxesbecomeeffective,andthewrittencontractsdonotprovideforthepassingonofincreasedratesoftaxes,thecountysurchargeonstatetaxshallnotbeimposedonthegrossproceedsorgrossincomecoveredunderthewrittencontracts.ThecountysurchargeonstatetaxshallbeimposedonthegrossproceedsorgrossincomefromallcontractsenteredintoonorafterJune30oftheyearpriortothetaxableyearinwhichthetaxesbecomeeffective,regardlessofwhetherthecontractallowsforthepassingonofanytaxoranytaxincreases.
(d) Nocountysurchargeonstatetaxshallbeestablishedonany:(1) Grossincomeorgrossproceedstaxableunderthischapterattheone-halfpercenttaxrate;(2) Grossincomeorgrossproceedstaxableunderthischapteratthe0.15percenttaxrate;or(3) Transactions,amounts,persons,grossincome,orgrossproceedsexemptfromtaxunderthischapter.
(e) The director of taxation shall revise the general excise tax forms to provide for the clear and separatedesignationoftheimpositionandpaymentofthecountysurchargeonstatetax.
(f) Thetaxpayershalldesignatethetaxationdistricttowhichthecountysurchargeonstatetaxisassignedinaccordancewithrulesadoptedbythedirectoroftaxationunderchapter91.Thetaxpayershallfileaschedulewiththetaxpayer’speriodicandannualgeneralexcisetaxreturnssummarizingtheamountoftaxesassignedtoeachtaxationdistrict.
(g) Thepenaltiesprovidedbysection231-39forfailuretofileataxreturnshallbeimposedontheamountofsurchargedueonthereturnbeingfiledforthefailuretofiletheschedulerequiredtoaccompanythereturn.Inaddition,thereshallbeaddedtothetaxanamountequaltotenpercentoftheamountofthesurchargeandtaxdueonthereturnbeingfiledforthefailuretofilethescheduleorthefailuretocorrectlyreporttheassignmentofthegeneralexcisetaxbytaxationdistrictontheschedulerequiredunderthissubsection.
(h) AlltaxpayerswhofileonafiscalyearbasiswhosefiscalyearendsafterDecember31oftheyearpriortothetaxableyearinwhichthetaxesbecomeeffective,shallfileashortperiodannualreturnfortheperiodprecedingJanuary1ofthetaxableyearinwhichthetaxesbecomeeffective.EachfiscalyeartaxpayershallalsofileashortperiodannualreturnfortheperiodstartingonJanuary1ofthetaxableyearinwhichthetaxesbecomeeffective,andendingbeforeJanuary1ofthefollowingyear.[L2005,c247,§3;amL2015,c240,§§5,7,amLSp2017,c1§3;amL2018,c11,§2]
18-237-8.6-01 to
18-237-8.6-10
§237-9 GENERAL EXCISE TAX LAW
CHAPTER237,Page12(UnofficialCompilation)
Cross Reference
Tax Information Release 2007-01, “Relating to theApplication of the County Surcharge Sourcing Rules to Real PropertyManagementCompanies”
LICENSES; TAX; EXEMPTIONS
Cross Reference
Tax InformationReleaseNo.2010-05,“Act155,SessionLawsofHawaii2010,Relating toGeneralExciseTax;TheGeneralExciseTaxProtectionAct”
§237-9 Licenses; penalty. (a)Exceptasprovidedinthissection,anypersonwhohasagrossincomeorgrossproceedsofsalesorvalueofproductsuponwhichaprivilegetaxisimposedbythischapter,asaconditionprecedenttoengagingorcontinuinginsuchbusiness,shallinwritingapplyforandobtainfromthedepartmentoftaxation,uponaone-timepaymentofthesumof$20,alicensetoengageinandtoconductsuchbusiness,uponconditionthatthepersonshallpaythetaxesaccruingtotheStateunderthischapter,andthepersonshalltherebybedulylicensedtoengageinandconductthebusiness.Thelicenseshallnotbetransferableandshallbevalidonlyforthepersoninwhosenameitisissuedandforthetransactionofbusinessattheplacedesignatedtherein.Thelicensemaybeinspectedandexamined,andshallatalltimesbeconspicuouslydisplayedattheplaceforwhichitisissued.
(b) Licensesandapplicationsthereforshallbeinsuchformasthedepartmentshallprescribe,exceptthatwherethelicenseeisengagedintwoormoreformsofbusinessofdifferentclassification,thelicenseshallsostateonitsface.Thelicenseprovidedforbythissectionshallbeeffectiveuntilcanceledinwriting.AnyapplicationforthereissuanceofapreviouslycanceledlicenseidentificationnumberafterDecember31,1989,shallberegardedasanewlicenseapplicationandsubject to thepaymentof theone-timelicensefeeof$20.Thedirectormayrevokeorcancelanylicenseissuedunderthischapterforcauseasprovidedbyrulesadoptedpursuanttochapter91.
(c) Anypersonwhoreceivesgross incomeorgrossproceedsofsalesorvalueofproductsfromengaginginbusinessintheStateandwhofailstoobtainalicenseorreceivesgrossincomeorgrossproceedsofsalesorvalueofproducts fromengaging inbusiness in theStatewithouta licenserequiredunder thissectionmaybefinednotmorethan$500;providedthatacash-basedbusinessmaybefinednotlessthan$500andnotmorethan$2,000,asdeterminedbythedirectororthedirector’sdesignee.Thepenaltyunderthissubsectionshallbeinadditiontoanyotherpenaltyprovidedunderlawandmaybewaivedorcanceleduponashowingofgoodcause.
(d) Ifthelicensefeeispaid,thedepartmentshallnotrefusetoissuealicenseorrevokeorcancelalicensefortheexerciseofaprivilegeprotectedbytheFirstAmendmentoftheConstitutionoftheUnitedStates,orforthecarryingonofinterstateorforeigncommerce,orforanyprivilegetheexerciseofwhich,undertheConstitutionandlawsoftheUnitedStates,cannotberestrainedonaccountofnonpaymentoftaxes,norshallsection237-46beinvokedtorestraintheexerciseofsuchaprivilege,orthecarryingonofsuchcommerce.
(e) Thedirectormaypermitapersonengaged innetworkmarketing,multi-levelmarketing,orother similarbusinesstoobtainthelicenserequiredunderthissectionforpurposesofbecomingataxcollectionagentonbehalfofitsdirectsellers.Thetaxcollectionagentshallreport,collect,andpayoverthetaxesdueunderthischapterandchapter238onbehalfofitsdirectsellerswhoarecoveredbythetaxcollectionagreement.Thetaxcollectionagent’sdirectsellersshallbedeemedtobelicensedunderthischapter;providedthatthelicensureshallapplysolelytothebusinessactivityconducteddirectlythroughthemarketingarrangement.Underthissection,ataxcollectionagentshall:
(1) NotifyallofitsdirectsellersmakingsalesintheStatethatithasbeendesignatedtocollect,report,andpayover the tax imposedby thischapterandchapter238on theirbehalfon thebusinessactivityconductedthroughthemarketingarrangement;
(2) If required by the director as a condition of obtaining the license, furnishwith the annual return, a list(includingidentificationnumbers)ofalldirectsellersforthetaxableyearwhohavebeenprovided(bythetaxcollectionagent) information returns requiredunder section6041Aof the InternalRevenueCodeof1986,asamended,andanyotherinformationthatisrelevanttoensureproperpaymentoftaxesdueunderthissection;and
(3) Bepersonallyliableforthetaxesdueandcollectedunderthetaxcollectionagreementiftaxesarecollected,butnotreportedorpaid,togetherwithpenaltiesandinterestasprovidedbylaw.
(f) Forthepurposesofthissection:“Cash-basedbusiness”hasthesamemeaningasinsection231-93.“Consumerproduct”shallincludetangibleconsumerproductsandintangibleconsumerservices.“Directseller”meansanypersonwhoisengagedinthetradeorbusinessofselling(orsolicitingthesaleof)consumer
products:(1) Toanybuyeronabuy-sellbasis,adeposit-commissionbasis,oranysimilarbasis,thatthedirectorprescribes
byruleadoptedpursuanttochapter91,forresaleotherthaninapermanentretailestablishment;(2) Otherthaninapermanentretailestablishment;providedthat:
GENERAL EXCISE TAX LAW [§237-9.5]
CHAPTER237,Page13(UnofficialCompilation)
(A) Substantiallyalltheremuneration(whetherornotpaidincash)forthesaleofconsumerproductsisdirectlyrelatedtosalesorotheroutputratherthantothenumberofhoursworked;and
(B) Thesalesofconsumerproductsbythepersonareperformedpursuanttoawrittencontractthatprovidesthatthepersonwillnotbetreatedasanemployeewithrespecttothosesalesforfederalorstatetaxpurposes.
“Directseller”includesindividualswhorealizeremunerationdependentontheproductivityofotherindividualsinthemarketingarrangement.
“Networkmarketing”or“multi-levelmarketing”meansamarketingarrangementinwhichconsumerproductsaredistributedandsoldtoorthroughdirectsellers.[L1935,c141,§21;RL1945,§5451;amL1951,c165,§2;RL1955,§117-10;amL1957,c34,§11(c);amLSp1957,c1,§3(c);amLSp19592d,c1,§16;HRS§237-9;amimpL1984,c90,§1;gench1985;amL1989,c6,§1;amL1995,c92,§12;amL1998,c143,§1;amL2009,c134,§6;amL2013,c58,§1]
Cross Reference
TaxInformationReleaseNo.2001-1,“TheApplicationofCertainHawaiiTaxestoQualifiedSubchapterSSubsidiaryCorporations,QualifiedSubchapterSTrusts,andElectingSmallBusinessTrusts”
TaxInformationReleaseNo.2008-02,“AdvancedNoticeofProposedAdministrativeRulesRelatingtotheTaxationoftheMotionPictureandTelevisionFilmProductionIndustry”
TaxInformationReleaseNo.2009-05,“AdvancedNoticeofProposedAdministrativeRulesRelatingtotheTaxationoftheMotionPictureandTelevisionFilmProductionIndustry”
Case Notes
Licensedmeans,licensedunderthischapter.37H.314,aff’d174F.2d21.Cited:40H.121,132;216F.2d700;41H.615,621.
§237-9.3 General excise tax benefits; denial of tax benefits for failure to properly claim. (a)Notwithstandinganyotherlawtothecontrary,apersonshallnotbeentitledtoanygeneralexcisetaxbenefitunderthischapterunlessthepersonclaimingthegeneralexcisetaxbenefit:
(1) Obtainsalicensetoengageinandconductbusinessasrequiredundersection237-9;and(2) Filestheannualgeneralexcisetaxreconciliationtaxreturnasprovidedunderthischapterorchapter231not
laterthantwelvemonthsfromtheduedateprescribedforthereturn.(b) Thedirectormayrequireanytaxpayertofurnishinformationtodeterminethevalidityofanygeneralexcisetax
benefitandmayadoptrulespursuanttochapter91necessarytoeffectuatethepurposesofthissection.(c) Thedirectormaywaivethedenialofthegeneralexcisetaxbenefitundersubsection(a)ifthefailuretocomply
isduetoreasonablecauseandnottothewilfulneglectofthetaxpayer.(d) Thedirectorshallfirstgivewrittennoticetoanonprofitorganizationtocomplywiththerequirementsofthis
sectionbeforeimposingadenialofanygeneralexcisetaxbenefitunderthischapter,andtheorganizationshallhaveninetydaysfromthedateofthereceiptofthenoticetocomplywiththerequirements.
(e) Forpurposesofthissection:“Generalexcisetaxbenefit”meansanytaxexemption,exclusionofataxableamount,areductionfromthemeasure
ofataximposed,ataxdeduction,ataxcredit,alowerrateoftax,asegregationordivisionoftaxableamountsbetweenmultipletaxpayersinvolvedinthesametransaction,oranyincomesplittingallowedunderthischapter.
“Nonprofitorganization”meansacorporateentity,association,orotherdulycharteredentitythatisregisteredwiththeStateandisexemptfromtheapplicationofthischapterpursuanttosection237-23(a)(3),(4),(5),(6),or(7).[L2010,c155,§2,amL2012,c219,§1;amL2013,c52,§1]
Cross Reference
Tax InformationReleaseNo.2010-05,“Act155,SessionLawsofHawaii2010,Relating toGeneralExciseTax;TheGeneralExciseTaxProtectionAct”
TaxInformationReleaseNo.2011-04,“GeneralExciseTaxReportingRequirementsforNonprofitOrganizations”
[§237-9.5] No separate licensing, filing, or liability for certain revocable trusts. Inthecaseofanytrustthat,forstateandfederalincometaxreportingpurposes:
(1) Hasnoregistrationorfilingrequirementsseparateandapartfromitsgrantororgrantors;(2) Issubjecttotherequirementthatallitemsofincome,deduction,andcreditaretobereportedbytheindividual
grantororgrantors;and(3) Isrevocablebythegrantororgrantors;
nolicensing,registration,orfilingrequirementsunderthischaptershallapply;providedthattheindividualgrantororgrantorsmustbelicensedunderthischapterandpaytheappropriategeneralexcisetaxontrustincome,ifthetrustincomeisfromengaginginbusiness.[L1994,c12,§2]
Cross Reference
TaxInformationReleaseNo.94-5,“LicensingRequirementsforCertainTrustsUnderHawaii’sGeneralExciseTaxLaw”
§237-10 GENERAL EXCISE TAX LAW
CHAPTER237,Page14(UnofficialCompilation)
TaxInformationReleaseNo.2001-1,“TheApplicationofCertainHawaiiTaxestoQualifiedSubchapterSSubsidiaryCorporations,QualifiedSubchapterSTrusts,andElectingSmallBusinessTrusts”
§237-10 REPEALED. L1989,c6,§6.
[§237-10.5] Reporting requirement for contractors on federal construction projects. All personswho do notpossessavalidlicenseunderthischapteratthetimeofthecontractawardandwhocontractwiththefederalgovernmentforanyconstructionprojectlocatedintheStateshallreporttothedepartment,onformsprescribedbythedepartment,itsestimatedgrossreceiptsoranyotherinformationrequestedbythedepartmentontheprescribedform,fromtheconstructionprojectwithinthirtydaysofthecontractbeingawarded.Failuretoreportasprovidedinthissectionshallresultinapenaltyof$1,000permonth,orfractionthereof,foreachmonththatafailuretoreportexists;providedthatthemaximumpenaltyallowedunderthissectionintheaggregateshallnotbemorethan$6,000.[L2009,c134,§3;amL2013,c58,§1]
§237-11 Tax year. Theassessmentof taxeshereinmadeandthereturnsrequired thereforshallbefor theyearendingonDecember31.Ifthetaxpayer,inexercisingaprivilegetaxableunderthischapter,keepsthetaxpayer’sbooksreflectingthesameonabasisotherthanthecalendaryear,thetaxpayermay,withtheassentofthedepartmentoftaxation,anduponthedirectionofthedepartmentshall,makethetaxpayer’sannualreturnsandpaytaxesfortheyearcoveringthetaxpayer’saccountingperiodasshownbythemethodofkeepingthetaxpayer’sbooks.[L1935,c141,§10;RL1945,§5452;RL1955,§117-12;amL1957,c34,§4;amLSp19592d,c1,§16;HRS§237-11;amimpL1984,c90,§1;gench1985]
§237-12 Tax cumulative; extent of license. (a)Thetaximposedbythischaptershallbeinadditiontothelicensefeeimposedundersection237-9andallothertaxesleviedbylawasaconditionprecedenttoengaginginanybusiness,trade,orcalling.Apersonexercisingaprivilege taxableunder thischapter, subject to thepaymentof the license feeimposedundersection237-9,whichisaconditionprecedenttoexercisingtheprivilegetaxed,mayexercisetheprivilegeupontheconditionthatthepersonshallpaythetaxaccruingunderthischapter.
(b) Inthecaseofanypersonentitledtotheprotectionofsection237-9(d),thetaxshallbecollectedonlythroughordinarymeans.[L1935,c141,§11;RL1945,§5453;RL1955,§117-13;amL1959,c277,§1;HRS§237-12;amimpL1984,c90,§1;gench1985;amL1989,c6,§2;amL2009,c134,§7;amL2013,c58,§1]
§237-13 Imposition of tax. ThereisherebyleviedandshallbeassessedandcollectedannuallyprivilegetaxesagainstpersonsonaccountoftheirbusinessandotheractivitiesintheStatemeasuredbytheapplicationofratesagainstvaluesofproducts,grossproceedsofsales,orgrossincome,whicheverisspecified,asfollows:
(1) Taxonmanufacturers.(A) UponeverypersonengagingorcontinuingwithintheStateinthebusinessofmanufacturing,including
compounding, canning, preserving, packing, printing, publishing,milling, processing, refining, orpreparingforsale,profit,orcommercialuse,eitherdirectlyorthroughtheactivityofothers,inwholeorinpart,anyarticleorarticles,substanceorsubstances,commodityorcommodities,theamountofthetaxtobeequaltothevalueofthearticles,substances,orcommodities,manufactured,compounded,canned,preserved,packed,printed,milled,processed,refined,orprepared,forsale,asshownbythegrossproceedsderivedfromthesalethereofbythemanufacturerorpersoncompounding,preparing,orprintingthem,multipliedbyone-halfofonepercent.
(B) Themeasureofthetaxonmanufacturersisthevalueoftheentireproductforsale.(2) Taxonbusinessofsellingtangiblepersonalproperty;producing.
(A) Uponeverypersonengagingorcontinuinginthebusinessofsellinganytangiblepersonalpropertywhatsoever,thereislikewiseherebylevied,andshallbeassessedandcollected,ataxequivalenttofourpercentofthegrossproceedsofsalesofthebusiness;providedthat,inthecaseofawholesaler,thetaxshallbeequaltoone-halfofonepercentofthegrossproceedsofsalesofthebusiness;andprovidedfurtherthatinsofarasthesaleoftangiblepersonalpropertyisawholesalesaleundersection237-4(a)(8)(B),thetaxshallbeone-halfofonepercentofthegrossproceeds.UponeverypersonengagingorcontinuingwithinthisStateinthebusinessofaproducer,thetaxshallbeequaltoone-halfofonepercentofthegrossproceedsofsalesofthebusiness,orthevalueoftheproducts,forsale.
(B) Grossproceedsofsalesoftangiblepropertyininterstateandforeigncommerceshallconstituteapartofthemeasureofthetaximposedonpersonsinthebusinessofsellingtangiblepersonalproperty,totheextent,undertheconditions,andinaccordancewiththeprovisionsoftheConstitutionoftheUnitedStatesandtheActsoftheCongressoftheUnitedStateswhichmaybenowinforceormaybehereafteradopted,andwheneverthereoccursintheStateanactivitytowhich,undertheConstitutionandActsofCongress,theremaybeattributedgrossproceedsofsales,thegrossproceedsshallbesoattributed.
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CHAPTER237,Page15(UnofficialCompilation)
(C) Nomanufacturerorproducer,engagedinsuchbusinessintheStateandsellingthemanufacturer’sorproducer’sproductsfordeliveryoutsideoftheState(forexample,consignedtoamainlandpurchaserviacommoncarrierf.o.b.Honolulu),shallberequiredtopaythetaximposedinthischapterfortheprivilegeofsosellingtheproducts,andthevalueorgrossproceedsofsalesoftheproductsshallbeincludedonlyindeterminingthemeasureofthetaximposeduponthemanufacturerorproducer.
(D) Amanufacturerorproducer,engagedinsuchbusinessintheState,shallpaythetaximposedinthischapterfortheprivilegeofsellingitsproductsintheState,andthevalueorgrossproceedsofsalesoftheproducts,thussubjectedtotax,maybedeductedinsofarasduplicatedastothesameproductsbythemeasureofthetaxuponthemanufacturerorproducerfortheprivilegeofmanufacturingorproducingintheState;providedthatnoproducerofagriculturalproductswhosellstheproductstoapurchaserwhowillprocesstheproductsoutsidetheStateshallberequiredtopaythetaximposedinthischapterfortheprivilegeofproducingorsellingthoseproducts.
(E) Ataxpayersellingtoafederalcost-pluscontractormaymaketheelectionprovidedforbyparagraph(3)(C),andinthatcasethetaxshallbecomputedpursuanttotheelection,notwithstandingthisparagraphorparagraph(1)tothecontrary.
(F) Thedepartment,byrule,mayrequirethatasellertakefromthepurchaseroftangiblepersonalpropertyacertificate,inaformprescribedbythedepartment,certifyingthatthesaleisasaleatwholesale;providedthat:
(i)Anypurchaserwhofurnishesacertificateshallbeobligatedtopaytotheseller,upondemand,theamountoftheadditionaltaxthatisimposeduponthesellerwheneverthesaleinfactisnotatwholesale;and
(ii)The absenceof a certificate in itself shall give rise to thepresumption that the sale is not atwholesaleunlessthesalesofthebusinessareexclusivelyatwholesale.
(3) Taxuponcontractors.(A) UponeverypersonengagingorcontinuingwithintheStateinthebusinessofcontracting,thetaxshall
beequaltofourpercentofthegrossincomeofthebusiness.(B) Incomputingthetaxleviedunderthisparagraph,thereshallbedeductedfromthegrossincomeofthe
taxpayersomuchthereofashasbeenincludedinthemeasureofthetaxleviedundersubparagraph(A),onanothertaxpayerwhoisacontractor,asdefinedinsection237-6;providedthatanypersonclaimingadeductionunderthisparagraphshallberequiredtoshowintheperson’sreturnthenameandgeneralexcisenumberofthepersonpayingthetaxontheamountdeductedbytheperson.
(C) Incomputingthetaxleviedunderthisparagraphagainstanyfederalcost-pluscontractor,thereshallbeexcludedfromthegrossincomeofthecontractorsomuchthereofasfulfillsthefollowingrequirements:
(i)Thegrossincomeexemptedshallconstitutereimbursementofcostsincurredformaterials,plant,orequipmentpurchased froma taxpayer licensedunder thischapter,notexceeding thegrossproceedsofsaleofthetaxpayeronaccountofthetransaction;and
(ii)Thetaxpayermakingthesaleshallhavecertifiedtothedepartmentthatthetaxpayeristaxablewithrespecttothegrossproceedsofthesale,andthatthetaxpayerelectstohavethetaxongrossincomecomputedthesameasuponasaletothestategovernment.
(D) Apersonwho,asabusinessorasapartofabusinessinwhichthepersonisengaged,erects,constructs,orimprovesanybuildingorstructure,ofanykindordescription,ormakes,constructs,orimprovesanyroad,street,sidewalk,sewer,orwatersystem,orotherimprovementsonlandheldbytheperson(whetherheldasaleasehold,feesimple,orotherwise),uponthesaleorotherdispositionofthelandorimprovements,eveniftheworkwasnotdonepursuanttoacontract,shallbeliabletothesametaxasifengagedinthebusinessofcontracting,unlessthepersonshowsthatatthetimethepersonwasengagedinmakingtheimprovementsthepersonintended,andfortheperiodofatleastoneyearaftercompletionofthebuilding,structure,orotherimprovements,thepersoncontinuedtointendtoholdandnotsellorotherwisedisposeofthelandorimprovements.Thetaxinrespectoftheimprovementsshallbemeasuredbytheamountoftheproceedsofthesaleorotherdispositionthatisattributabletotheerection,construction,orimprovementofsuchbuildingorstructure,orthemaking,constructing,or improving of the road, street, sidewalk, sewer, or water system, or other improvements. Themeasureoftaxinrespectoftheimprovementsshallnotexceedtheamountwhichwouldhavebeentaxablehadtheworkbeenperformedbyanother,subjectasinothercasestothedeductionsallowedbysubparagraph(B).Upontheelectionofthetaxpayer,thisparagraphmaybeappliednotwithstandingthattheimprovementswerenotmadebythetaxpayer,orwerenotmadeasabusinessorasapartofabusiness,orweremadewiththeintentionofholdingthesame.However,thisparagraphshallnotapplyinrespectofanyproceedsthatconstituteorareinthenatureofrent,whichshallbetaxableunderparagraph(9);providedthatinsofarasthebusinessofrentingorleasingrealpropertyunderaleaseistaxedundersection237-16.5,thetaxshallbeleviedbysection237-16.5.
(4) Taxupontheaters,amusements,radiobroadcastingstations,etc.
18-237-13-03
§237-13 GENERAL EXCISE TAX LAW
CHAPTER237,Page16(UnofficialCompilation)
(A) UponeverypersonengagingorcontinuingwithintheStateinthebusinessofoperatingatheater,operahouse,movingpictureshow,vaudeville,amusementpark,dancehall,skatingrink,radiobroadcastingstation,oranyotherplaceatwhichamusementsareofferedtothepublic,thetaxshallbeequaltofourpercentofthegrossincomeofthebusiness,andinthecaseofasaleofanamusementatwholesaleundersection237-4(a)(13),thetaxshallbeone-halfofonepercentofthegrossincome.
(B) The departmentmay require that the person rendering an amusement atwholesale take from thelicensedselleracertificate,inaformprescribedbythedepartment,certifyingthatthesaleisasaleatwholesale;providedthat:
(i)Anylicensedsellerwhofurnishesacertificateshallbeobligatedtopaytothepersonrenderingthe amusement, upon demand, the amount of additional tax that is imposed upon the sellerwheneverthesaleisnotatwholesale;and
(ii)The absenceof a certificate in itself shall give rise to thepresumption that the sale is not atwholesale unless the person rendering the sale is exclusively rendering the amusement atwholesale.
(5) Taxuponsalesrepresentatives,etc.Uponeverypersonclassifiedasarepresentativeorpurchasingagentunder section237-1, engagingor continuingwithin theState in thebusinessofperforming services foranother,otherthanasanemployee,thereislikewiseherebyleviedandshallbeassessedandcollectedataxequaltofourpercentofthecommissionsandothercompensationattributabletotheservicessorenderedbytheperson.
(6) Taxonservicebusiness.(A) UponeverypersonengagingorcontinuingwithintheStateinanyservicebusinessorcallingincluding
professionalservicesnototherwisespecificallytaxedunderthischapter,thereislikewiseherebyleviedandshallbeassessedandcollectedataxequaltofourpercentofthegrossincomeofthebusiness,andinthecaseofawholesalerundersection237-4(a)(10),thetaxshallbeequaltoone-halfofonepercentofthegrossincomeofthebusiness.
(B) Thedepartmentmayrequirethatthepersonrenderingaserviceatwholesaletakefromthelicensedselleracertificate,inaformprescribedbythedepartment,certifyingthatthesaleisasaleatwholesale;providedthat:
(i)Anylicensedsellerwhofurnishesacertificateshallbeobligatedtopaytothepersonrenderingtheservice,upondemand,theamountofadditionaltaxthatisimposeduponthesellerwheneverthesaleisnotatwholesale;and
(ii)The absenceof a certificate in itself shall give rise to thepresumption that the sale is not atwholesaleunlessthepersonrenderingthesaleisexclusivelyrenderingservicesatwholesale.
(C) Where any person is engaged in the business of selling interstate or foreign common carriertelecommunicationserviceswithinandwithouttheState,otherthanasahomeserviceprovider,thetax shall be imposedon thatportionofgross income receivedbyaperson fromservicewhich isoriginatedorterminatedinthisStateandischargedtoatelephonenumber,customer,oraccountinthisStatenotwithstandinganyotherstatelaw(exceptfortheexemptionundersection237-23(a)(1))tothecontrary.If,undertheConstitutionandlawsoftheUnitedStates,theentiregrossincomeasdeterminedunder thisparagraphofabusinessselling interstateor foreigncommoncarrier telecommunicationservicescannotbeincludedinthemeasureofthetax,thegrossincomeshallbeapportionedasprovidedinsection237-21;providedthattheapportionmentfactorandformulashallbethesameforallpersonsprovidingthoseservicesintheState.
(D) Whereanypersonisengagedinthebusinessofahomeserviceprovider,thetaxshallbeimposedonthegrossincomereceivedorderivedfromprovidinginterstateorforeignmobiletelecommunicationsservicestoacustomerwithaplaceofprimaryuseinthisStatewhentheservicesoriginateinonestateandterminateinanotherstate,territory,orforeigncountry;providedthatallchargesformobiletelecommunicationsserviceswhicharebilledbyorforthehomeserviceprovideraredeemedtobeprovidedbythehomeserviceprovideratthecustomer’splaceofprimaryuse,regardlessofwherethemobile telecommunicationsoriginate, terminate,orpass through;provided further that the incomefromchargesspecificallyderivedfrominterstateorforeignmobiletelecommunicationsservices,asdeterminedbybooksandrecordsthatarekeptintheregularcourseofbusinessbythehomeserviceproviderinaccordancewithsection239-24,shallbeapportionedunderanyapportionmentfactororformulaadoptedundersubparagraph(C).Grossincomeshallnotinclude:
(i)GrossreceiptsfrommobiletelecommunicationsservicesprovidedtoacustomerwithaplaceofprimaryuseoutsidethisState;
(ii)Grossreceiptsfrommobiletelecommunicationsservicesthataresubjecttothetaximposedbychapter239;
(iii)Grossreceiptsfrommobiletelecommunicationsservicestaxedundersection237-13.8;and
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GENERAL EXCISE TAX LAW §237-13
CHAPTER237,Page17(UnofficialCompilation)
(iv)Gross receipts of a home service provider acting as a serving carrier providing mobiletelecommunicationsservicestoanotherhomeserviceprovider’scustomer.
Forthepurposesofthisparagraph,“chargesformobiletelecommunicationsservices”,“customer”,“homeserviceprovider”,“mobiletelecommunicationsservices”,“placeofprimaryuse”,and“servingcarrier”havethesamemeaningasinsection239-22.
(7) Taxoninsuranceproducers.Uponeverypersonengagedasalicensedproducerpursuanttochapter431,thereisherebyleviedandshallbeassessedandcollectedataxequalto0.15percentofthecommissionsduetothatactivity.
(8) Taxonreceiptsofsugarbenefitpayments.UpontheamountsreceivedfromtheUnitedStatesgovernmentbyanyproducerofsugar(ortheproducer’slegalrepresentativeorheirs),asdefinedunderandbyvirtueoftheSugarActof1948,asamended,orotherActsoftheCongressoftheUnitedStatesrelatingthereto,thereisherebyleviedataxofone-halfofonepercentofthegrossamountreceived;providedthatthetaxleviedhereunderonanyamountsoreceivedandactuallydisbursedtoanotherbyaproducerintheformofabenefitpaymentshallbepaidbythepersonorpersonstowhomtheamountisactuallydisbursed,andtheproduceractuallymakingabenefitpaymenttoanothershallbeentitledtoclaimontheproducer’sreturnadeductionfromthegrossamounttaxablehereunderinthesumoftheamountsodisbursed.Theamountstaxedunderthisparagraphshallnotbetaxableunderanyotherparagraph,subsection,orsectionofthischapter.
(9) Taxonotherbusiness.UponeverypersonengagingorcontinuingwithintheStateinanybusiness,trade,activity, occupation, or calling not included in the preceding paragraphs or any other provisions of thischapter,thereislikewiseherebyleviedandshallbeassessedandcollected,ataxequaltofourpercentofthegross incomethereof.Inaddition, therateprescribedbythisparagraphshallapplytoabusiness taxableunderoneormoreoftheprecedingparagraphsorotherprovisionsofthischapter,astoanygrossincomethereofnottaxedthereunderasgrossincomeorgrossproceedsofsalesorbytaxinganequivalentvalueofproducts,unlessspecificallyexempted.[L1935,c141,§2I;amL1939,c252,§§1,2;amL1943,c81,ptof§1;RL1945,§5455;amL1945,c100,§3andc253,§2;amL1947,c111,§9andc113,§7;amL1953,c183,§3;RL1955,§117-14;amL1957,c34,§§5,11(d)to(g);amLSp1957,c1,§3(e)to(s);amLSp19592d,c1,§16;amL1960,c4,§§2,3,4andc24,§1;amL1962,c27,§1;amL1965,c155,§14(a)to(h);amL1966,c28,§3;HRS§237-13;amL1969,c137,§1;amL1970,c180,§10;amL1971,c204,§§5,6;amL1977,c160,§1;amL1978,c144,§2;amL1982,c204,§8;amL1986,c324,§1;amL1991,c21,§1;amL1992,c106,§6;amL1993,c188,§1;amL1994,c141,§1;amL1997,c353,§3;amL1998,c169,§§1,3;amL1999,c71,§6andc173,§2;amL2000,c198,§3;amL2002,c209,§3;amL2003,c135,§3andc212,§3;amL2008,c16,§6;amL2014,c42,§2;amL2015,c22,§3;amL2018,c166,§2]
Note
L2002,c209,§6provides:“SECTION6.NotwithstandinganyprovisionsofthisActtothecontrary,nothinginthisActshallaffectorshallbeconstruedtoaffectthe
taxationofprepaidtelephonecallingserviceundersection237-13.8,HawaiiRevisedStatutes.”
Cross Reference
TaxInformationReleaseNo.26-70,“ApplicationoftheGeneralExciseTaxtoCommercialJobPrinters” OBSOLETETaxInformationReleaseNo.42-74,“ApplicationoftheGeneralExciseTaxtoInterestIncome”Tax Information ReleaseNo. 47-75, “Guidelines for Establishing Status of Individual Insurance Solicitors as Employees or Independent
Contractors”TaxInformationReleaseNo.54-78,“TaxationofNewspaperPrintingandPublishingCompanies”TaxInformationReleaseNo.81-2,“GeneralExciseTaxLicensingandReportingRequirementsofPersonsTransferringRentalRealProperty
toaLandTrust”TaxInformationReleaseNo.84-2,“SubcontractDeductionsClaimedbyGeneralContractorsforPaymentMadetoPestControlOperators
UndertheGeneralExciseTaxLaw,Chapter237,HRS”TaxInformationReleaseNo.90-13,“GeneralExciseTaxImposedUponaPersonReceivingGrossIncomefromtheRentalofResidentialReal
Property”TaxInformationReleaseNo.91-9,“GeneralExciseTaxontheGrossIncomeofaTrusteeinBankruptcy”TaxInformationReleaseNo.92-5,“ApplicationoftheGeneralExciseTaxontheRecoveryofRealPropertyTaxesfromLesseesandSublessees”TaxInformationReleaseNo.93-5,“UseinHawaiioftheUniformSalesandUseTaxCertificate(Multijurisdiction)IssuedbytheMultistate
TaxCommission”TaxInformationReleaseNo.94-6,“ResaleCertificates”TaxInformationReleaseNo.95-5,“ApplicationoftheGeneralExcise(‘GE’)andUseTaxesonSalesofTangiblePersonalProperty(‘TPP’)by
anOut-of-StateSeller,IncludingDropShipments”TaxInformationReleaseNo.96-1,“ComputerCompany’sProvisionofIn-StateRepairServicesCreatesNexus”TaxInformationReleaseNo.96-2,“ApplicationoftheOriginalPackageDoctrinetotheGeneralExciseandUseTaxes”TaxInformationReleaseNo.98-2,“ApplicationoftheGeneralExciseandUseTaxestoCertainLeasingTransaction”TaxInformationReleaseNo.98-5,“GeneralExciseTaxExemptionforTangiblePersonalProperty,IncludingSouvenirsandGiftItems,Shipped
OutoftheState”TaxInformationReleaseNo.98-9,“ApplicationoftheGeneralExcisetotheGrossIncomeReceivedFromtheSaleofaServiceandContracting”
SupersededbyTIR2009-02.
18-237-13-08
18-237-13-10
§237-13 GENERAL EXCISE TAX LAW
CHAPTER237,Page18(UnofficialCompilation)
TaxInformationReleaseNo.2000-1,“ImpositionoftheGeneralExciseTaxonRetailingActivitiesUnderHawaiiRevisedStatutes(HRS)§§237-16and237-13”
TaxInformationReleaseNo.2001-3,“UnitedStatesGovernmentCreditCardsIssuedUnderthe‘GSASmartPay’Program”TaxInformationReleaseNo.2005-02,“TaxationofIncomefromMerchantDiscount”TaxInformationReleaseNo.2006-03,“TaxationofIncomefromMerchantDiscount”TaxInformationReleaseNo.2008-01,“RevocationofOutline,Act70,SLH1999andAct198,SLH2000,RevocationofOutline,Act71,SLH
1999andAct198,SLH2000”TaxInformationReleaseNo.2008-02,“AdvancedNoticeofProposedAdministrativeRulesRelatingtotheTaxationoftheMotionPictureand
TelevisionFilmProductionIndustry”TaxInformationReleaseNo.2009-05,“AdvancedNoticeofProposedAdministrativeRulesRelatingtotheTaxationoftheMotionPictureand
TelevisionFilmProductionIndustry”TaxInformationReleaseNo.2011-02,“GeneralExciseTaxationofSalesofTangiblePersonalPropertytotheFederalGovernmentandthe
GrandfatheringRulesUnderAct105,SLH2011”TaxInformationReleaseNo.2011-03,“EffectofAct105,SLH2011,onGeneralExciseTaxLiabilityofMobileTelecommunicationsService
Providers”TaxInformationReleaseNo.2018-01,“GeneralExciseTaxObligationsofTransportationNetworkCompaniesandDrivers”
Attorney General Opinions
Generalexciseandusetaxesmaybeappliedtoimportedgoods,nolongerintransit,regardlessofwhetherimportedgoodsareintheiroriginalpackages.Att.Gen.Op.94-2.
Law Journals and Reviews
RuleofStrictConstructioninTaxCases,aQuestionofClassificationorExemption,ArthurB.Reinwald,11HBJ98.
Case Notes
Professionsdefined.34H.245(1937).Taxonpersonssellingtopostexchangesandship’sstoresallowed.Notunconstitutional.37H.314,aff’d174F.2d21(1949).Radiostations.40H.121(1953),aff’d216F.2d700(1954).Applicabilityoftaxonsellingtosalesbymanufacturer.41H.615(1957).Abusinessprintingandpublishingadailynewspaper,etc.isnota“manufacturer”.43H.154.See279F.2d636,aff’g43H.154.(1959)“Canning”underpriorlawconstrued;packingfrozenpineapplesinhermeticallysealedcansisnot“canning”.45H.167,363P.2d990(1961).Doubtintaxstatuteistoberesolvedinfavoroftaxpayer.45H.167,363P.2d990(1961).Taxonforeignmanufacturer’srepresentative,noviolationofcommerceclause.46H.269,379P.2d336(1963).Arrangementbetweenmilkproducersanddistributorcreatedagency,ratherthansalesrelationship,andproducerswerenotsubjecttotaxat
producingrate.46H.292,380P.2d156(1963).Thetaxontruckingbusiness’grossreceiptsforservicesrenderedwhollywithintheStateinvolvingthroughbillsofladingdoesnotviolatethe
commerceclause.48H.486,405P.2d382(1965).Applicablerulesofconstructionintaxcases.50H.603,446P.2d171(1968).Ratesapplicabletoadvertisingrevenuesofaprintingandpublishingfirm.50H.603,446P.2d171(1968).Individualearninglivelihoodastrusteeinbankruptcyiscoveredbyeitherparagraph(6)or(10)orboth.52H.56,469P.2d814(1970).Commissionsreceivedbytravelagenciesaresubjecttotax;applicationoftaxdoesnotcontravenethecommerceortheimport-exportclauses.
53H.419,495P.2d1172(1972).Failuretocollecttaxfromsomewhofallwithinstatutecannotexcuseothersfrompayingwhattheyowe.53H.419,495P.2d1172(1972).Catchallparagraph(10)broadenoughtocoverparagraphs(6)and(8).53H.435,496P.2d1(1972).Feesreceivedastrustee,executor,andcorporatedirectorwereheldsubjecttotax.53H.435,496P.2d1(1972).“Intermediary”withinmeaningofparagraph(6)definedasonewhomerelyactsasaconduitfortheservicesrenderedbetweenthetaxpayer
renderingtheserviceandthecustomerreceivingtheservices.53H.518,497P.2d908(1972).Exemptionsfromtaxationconstruedstrictlyagainsttaxpayer.55H.572,524P.2d890(1974).Statutesimposingtaxesarestrictlyconstruedinfavoroftaxpayer.56H.321,536P.2d91(1975).Grossincomeearnedbyout-of-statelessoroffilmprintsandtelecastrightstobeusedinHawaiiistaxableunderthissection57H.175,554
P.2d242(1976).InterestincomeearnedbyNondomiciliarycorporationfrominstallmentsalesofHawaiianlandissubjecttotax.57H.436,559P.2d264(1977).“Servicebusinessorcalling”inparagraph(6)v.“wholesaler”construed.63H.579,633P.2d535(1981).Taxonvalueof services renderedonbehalfofor furnished towhollyownedsubsidiarycorporationsand intereston fundsborrowedand
disbursedontheiraccountupheld.65H.240,649P.2d1155(1982).Slaughterhouseoperator,hograisers,andporkmerchantsarenot“manufacturers”.69H.125,735P.2d935(1987).Taxpayer’sphotoprocessingactivitiesconstituted“manufacturing,”whichwastaxableatrateof0.5%,ratherthana“service,”whichwouldbe
taxableatrateof4%. 79H.503,904P.2d517(1995).FederalAviationAct preempts theState’s ability to assess general excise taxes on revenues derived from the sale of “air transportation”;
however,theStatemayassessgeneralexcisetaxesunder§237-21andparagraph(6)onthatportionofthegrossreceiptsthatafreightforwarderreceivesforgroundtransportationandothernon-airservicesitprovides.89H.51,968P.2d653(1998).
Delawarecorporationcamewithinthepurviewofparagraph(2)whereitsoldbookstothestatelibraryforeconomicgain,itsactivitiestookplaceintheState,andthroughitsbusinessactivityinHawaii,obtainedopportunities,protections,andbenefitsaffordedbytheState.103H.359,82P.3d804(2004).
Wheretaxpayergainedoreconomicallybenefitedfromsubleasingtransactions,thedirector’sassessmentandimpositionofthegeneralexcisetaxfortaxpayer’ssubleasingactivitieswasproper.110H.25,129P.3d528(2006).
WheremanagementcompanyforforeigninsurerauthorizedtodobusinessinHawaiididnotholdageneralagent,subagent,orsolicitorlicenseunderchapter431,article9(1993),itcouldnothavebeenlegallyappointedaseitherageneralagent,subagent,orsolicitorofinsurer;thusitdidnotqualifyasa“generalagent”,“subagent”,or“solicitor”asdefinedbychapter431(1993),didnotfallwithintheparametersofthecategorydescribedbyparagraph(7)andwasthussubjecttoageneralexcisetaxrateoffourpercentpursuanttoparagraph(6).115H.180,166P.3d353(2007).
ThereweresufficientbusinessandotheractivitiesintheStatetoimposethegeneralexcisetaxongrossincomeofonlinetravelcompanies,wherethecompaniesreceivedincomeunderagreementswithtransientstoprovideaccommodationsinHawaiihotelrooms,thecompaniesgained
GENERAL EXCISE TAX LAW §237-14.5
CHAPTER237,Page19(UnofficialCompilation)
andeconomicallybenefitedfromthetransactions,thetransientswereHawaiiconsumerswhentheypurchasedaHawaiihotelroomfromacompany,thecompaniesactivelysolicitedcustomersforHawaiihotelrooms,theoccupancyrightsthatthecompaniessoldtotransientswereonlyconsumableinHawaii,andthecompaniesconstructivelybenefitedthroughthetransients’accesstopolice,fire,lifeguard,andotherstateservices.135H.88,346P.3d157(2015).
ThefederalMarineTransportationSecurityActof2002,codifiedat33U.S.C.§5(b),didnotpreempttheassessmentofHawaiigeneralexcisetaxunderparagraph(6)(A)on thecharterfishingrevenueofplaintiffHawaiibusinessesas thegeneralexcise taxwasa taxassessedongrossbusinessreceiptsfortheprivilegeofdoingbusinessinHawaii,andwasnotataxonplaintiffs’vesselsorpassengers.123H.494(App.),236P.3d1230(2010).
Cited:39H.157,158(1951);40H.722,728(1955);43H.131,144(1959);44H.584,587,358P.2d539(1961).
§237-13.3 REPEALED. L2015,c22,§8.
§237-13.5 Assessment on generated electricity. Anyotherprovisionofthelawtothecontrarynotwithstanding,thelevyandassessmentofthegeneralexcisetaxonthegrossproceedsfromthesaleofelectricpowertoapublicutilitycompanyforresaletothepublic,shallbemadeonlyasataxonthebusinessofaproducer,attherateassessedproducers,undersection237-13(2)(A).[L1980,c78,§2;amL1981,c103,§1;amL1985,c211,§1]
[§237-13.8] Sales of telecommunications services through prepaid telephone calling service. (a)Forthepurposesofthissection,“prepaidtelephonecallingservice”meanstherighttoexclusivelypurchasetelecommunicationservices,paidforinadvance,thatenablestheoriginationofcallsusinganaccessnumberorauthorizationcode,whethermanuallyorelectronicallydialed.
(b) If thesaleorrechargeofaprepaid telephonecallingservicedoesnot takeplaceat thevendor’splaceofbusiness,itshallbeconclusivelydeterminedtotakeplaceatthecustomer’sshippingaddress;orifthereisnoitemshipped,thenitshallbethecustomer’sbillingaddress.
(c) When a person licensed under this chapter sells prepaid telephone calling services to a licensed retailmerchant, jobber,orother licensedseller forpurposesof resale, thepersonshallbe taxedasawholesaler sellingtangiblepersonalproperty.Allothersalesofprepaidtelephonecallingservicesshallbetaxedasretailsalesoftangiblepersonalproperty.
(d) Forpurposesofprepaidtelephonecallingservicesonly,allsuchservicesshallbetaxedunderthissectionandshallbeinlieuoftaxationunderchapter239.[L2000,c27,§1]
Note
AppliestogrossincomeandgrossproceedsafterAugust31,2000.L2000,c27,§4.
§237-14 Segregation of gross income, etc., on records and in returns. Theimpositionoftaxesandtheapplicationoftaxratesdonotdependuponthebusinessinwhichthetaxpayerisprimarilyengaged.Onebusinessmaybesubjecttotwoormoretaxrates.Ifabusinessiswithinthepurviewoftwoormoreoftheparagraphsofsection237-13orotherprovisionsofthischapterallofthemapply,eachprovisionbeingapplicabletotheappropriateitemofgrossincome,grossproceedsofsales,orvalueofproducts.However,anypersonengagingorcontinuinginabusinesshavinggrossincome,grossproceedsofsales,andvalueofproducts,oranyoftheseasthecasemaybe,taxableatdifferentrates,shallbesubjecttotaxationupontheaggregateamountofthegrossincome,grossproceedsofsales,andvalueofproductsofthebusinessatthehighestrateapplicabletoanypartoftheaggregate,unlessthepersonshallsegregatethepartstaxableatdifferentratesupontheperson’srecordsandintheperson’sreturns,andshallsustaintheburdenofprovingthatthesegregationwascorrectlymade.[L1957,c34,§11(h);Supp,§117-14.1;HRS§237-14;amimpL1984,c90,§1;gench1985]
Cross Reference
TaxInformationReleaseNo.98-9,“ApplicationoftheGeneralExcisetotheGrossIncomeReceivedFromtheSaleofaServiceandContracting”SupersededbyTIR2009-02.
TaxInformationReleaseNo.2000-1,“ImpositionoftheGeneralExciseTaxonRetailingActivitiesUnderHawaiiRevisedStatutes(HRS)§§237-16and237-13”
Case Notes
Taxpayermaybesubjecttoboththeservicebusinessandretailingclassificationstoextenteachisapplicabletoparticularitemsofgrossincome.53H.450,497P.2d37.
§237-14.5 Segregation of gross income, etc., on records and in returns of telecommunications businesses. (a)Notwithstanding section 237-14, any person engaged in the business of selling interstate or foreign common carriertelecommunicationsservicestaxableundersection237-13(6)(C),oranypublicutilitydefinedinsection269-1havinggrossincomefromtheconveyanceortransmissionoftelephoneortelegraphmessages,orfromthefurnishingoffacilitiesforthetransmissionofintelligencebyelectricity,mayreasonablysegregateintheperson’sreturns,basedonitsbooksandrecordsthatarekeptinthenormalcourseofbusiness:
(1) Thepartsofitsgrossincome,grossproceedsofsales,andvalueofproductssubjecttotaxationunderthischapterfromthepartssubjecttotaxationunderchapter239;and
§237-15 GENERAL EXCISE TAX LAW
CHAPTER237,Page20(UnofficialCompilation)
(2) Thepartsofitsgrossincome,grossproceedsofsales,andvalueofproductssubjecttotaxationunderoneprovisionofthischapterfromthepartssubjecttotaxationunderanyotherprovisionofthischapter.
(b) Thesegregationshallbedeemedvalid so longas themethodof segregationdoesnotconflictwith rulessubsequentlyadoptedbythedepartmentpursuanttothissection.[L2002,c236,§1;amL2008,c16,§7]
Note
Sectionappliestogrossincome,grossproceedsofsales,andvalueofproductsafterJuly1,2002.L2002,c236,§4.
§237-15 Technicians. Whentechnicianssupplydentistsorphysicianswithdentures,orthodonticdevices,braces,andsimilaritemswhichhavebeenpreparedbythetechnicianinaccordancewithspecificationsfurnishedbythedentistorphysician,andsuchitemsaretobeusedbythedentistorphysicianinthedentist’sorphysician’sprofessionalpracticeforaparticularpatientwhoistopaythedentistorphysicianforthesameasapartofthedentist’sorphysician’sprofessionalservices,thetechnicianshallbetaxedasthoughthetechnicianwereamanufacturersellingaproducttoalicensedretailer,ratherthanattherateoffourpercentwhichisgenerallyappliedtoprofessionsandservices.[L1955,c217,§1;RL1955,§117-14.5;amLSp1957,c1,§3(t);amL1965,c155,§14(i);HRS§237-15;amimpL1984,c90,§1;gench1985]
§237-16 REPEALED. L2003,c135,§11.Cross References
Qualifiedimprovementtaxcredit,seechapter235D.
Attorney General Opinions
Legislationprohibitingvisiblepass-ontaxfromsellertobuyermightdeprivebuyerofrighttosalestaxdeductiononfederalincometaxreturn.Att.Gen.Op.65-13.
Case Notes
Automobileleasingagreementsconstituteconditionalsales,when.53H.195,490P.2d902.Salesofpainttooneinautomobilepaintingbusiness,whoconsumespaint,areretailsales.53H.450,497P.2d37.Cited:56H.644,547P.2d1343.
§237-16.5 Tax on written real property leases; deduction allowed. [Section effective until December 31, 2018. For section effective January 1, 2019, see below.](a)Thissectionrelatestotheleasingofrealpropertybyalessortoalessee.Thereisherebylevied,andshallbeassessedandcollectedannually,aprivilegetaxagainstpersonsengagingorcontinuingwithintheStateinthebusinessofleasingrealpropertytoanother,equaltofourpercentofthegrossproceedsorgrossincomereceivedorderivedfromtheleasing;providedthatwhererealpropertyissubleasedbyalesseetoasublessee,thelessee,asprovidedinthissection,shallbeallowedadeductionfromtheamountofgrossproceedsorgrossincomereceivedfromitssubleaseoftherealproperty.Thedeductionshallbeintheamountallowedunderthissection.
Alldeductionsunderthissectionandthenameandgeneralexcisetaxnumberofthelessee’slessorshallbereportedonthegeneralexcisetaxreturn.Anydeductionallowedunderthissectionshallonlybeallowedwithrespecttoleasesandsubleasesinwritingandrelatingtothesamerealproperty.
(b) Thelesseeshallobtainfromitslessoracertificate,intheformasthedepartmentshallprescribe,certifyingthatthelessorissubjecttotaxunderthischapteronthegrossproceedsorgrossincomereceivedfromthelessee.Theabsenceofthecertificateinitselfshallgiverisetothepresumptionthatthelesseeisnotallowedthedeductionunderthissection.
(c) Ifvariousrealpropertyorspaceleasedtothelesseehavedifferentrentalvalues,thenthetotalmonetarygrossproceedsorgrossincomepaidtoalessorforallrealpropertyorspaceshallfirstbeallocatedtothefairrentalvalueforeachrealpropertyorspace.Ifthelesseeleaseslessthanonehundredpercentofrealpropertyorspacethatwasleasedfromthelessortoasublessee,thenthetotalmonetarygrossproceedsorgrossincomepaidbythelesseeforthatrealpropertyorspacetoitslessorshallbeallocated.Thepercentageofrealpropertyorspacesubleasedshallbemultipliedbythemonetarygrossproceedsorgrossincomepaidfortherealpropertyorspacebythelesseetoitslessor.Theproductoftheprecedingmultiplicationshallbedeductedfromthemonetarygrossproceedsorgrossincomereceivedforrealpropertyorspacebythelessee.
Oncetheallocationsaremade,theappropriatedeductionundersubsection(g)shallbemade.(d) Thelessorshallmakeallocationsunderthissectionatthetimethesubleaseisenteredintoandtheallocations
shallnotbechangedduringthetermofthesublease.Thereshallbeareasonablebasisfortheallocations,takingintoconsiderationthesize,quality,andlocationoftherealpropertyorspacesubleased.Innoeventshallthetotalamountallocatedtoallsubleasesexceedthetotalmonetarygrossproceedspaidbythelesseetoitslessor.Thedirectormayredetermine theamountof thedeductionunder thissection if thedirectorfinds that thebasis forallocation isnotreasonableorthatredeterminationisnecessarytopreventtheavoidanceoftaxes.
(e) Asusedinthissection:
18-237-16
18-237-16.5
GENERAL EXCISE TAX LAW §237-16.5
CHAPTER237,Page21(UnofficialCompilation)
“Lease”meanstherentalofrealpropertyunderaninstrumentinwritingbywhichoneconveysrealpropertyforaspecifiedtermandforaspecifiedconsideration,andincludesthewrittenextensionorrenegotiationofalease,andanyholdovertenancy.
“Lessee”meansonewhoholdsrealpropertyunderlease,andincludesasublessee.“Lessor”meansonewhoconveysrealpropertybylease,andincludesasublessor.“Realpropertyorspace”meanstheareaactuallyrentedandusedbythelessee,andincludescommonelementsas
definedinsection514A-3or514B-3.“Sublease”includestherentalofrealpropertywhichisheldunderaleaseandismadeinawrittendocumentby
whichoneconveysrealpropertyforaspecifiedtermandforaspecifiedconsideration.Asubleaseincludesthewrittenextensionorrenegotiationofasubleaseandanyholdovertenancyunderthewrittensublease.
“Sublessee”meansonewhoholdsrealpropertyunderasublease.“Sublessor”meansonewhoconveysrealpropertybysublease.(f) Thissectionshallnotcausethetaxuponalessor,withrespecttoanyitemofthelessor’sgrossproceedsor
grossincome,toexceedfourpercent.(g) Afterallocationundersubsection(c),ifnecessary,thedeductionunderthissectionshallbeallowedfromthe
grossproceedsorgrossincomeofthelesseereceivedfromitssubleaseinanamountcalculatedbymultiplyingthegrossproceedsorgrossincomepaidbythelesseetoitslessorfortheleaseoftherealpropertyby.875.
Theamount calculated shallbedeductedby the lessee from the lessee’s total reportedgrossproceedsorgrossincome.Thedeductionallowedbythissubsectionmaybetakenbythefiscalandcalendaryearlessees.[L1997,c353,§2;amL2008,c28,§4,amL2015,c22,§4]
§237-16.5 Tax on written real property leases; deduction allowed. [Section effective January 1, 2019. For section effective until December 31, 2018, see above.](a)Thissectionrelatestotheleasingofrealpropertybyalessortoalessee.Thereisherebylevied,andshallbeassessedandcollectedannually,aprivilegetaxagainstpersonsengagingorcontinuingwithintheStateinthebusinessofleasingrealpropertytoanother,equaltofourpercentofthegrossproceedsorgrossincomereceivedorderivedfromtheleasing;providedthatwhererealpropertyissubleasedbyalesseetoasublessee,thelessee,asprovidedinthissection,shallbeallowedadeductionfromtheamountofgrossproceedsorgrossincomereceivedfromitssubleaseoftherealproperty.Thedeductionshallbeintheamountallowedunderthissection.
Alldeductionsunderthissectionandthenameandgeneralexcisetaxnumberofthelessee’slessorshallbereportedonthegeneralexcisetaxreturn.Anydeductionallowedunderthissectionshallonlybeallowedwithrespecttoleasesandsubleasesinwritingandrelatingtothesamerealproperty.
(b) Thelesseeshallobtainfromitslessoracertificate,intheformasthedepartmentshallprescribe,certifyingthatthelessorissubjecttotaxunderthischapteronthegrossproceedsorgrossincomereceivedfromthelessee.Theabsenceofthecertificateinitselfshallgiverisetothepresumptionthatthelesseeisnotallowedthedeductionunderthissection.
(c) Ifvariousrealpropertyorspaceleasedtothelesseehavedifferentrentalvalues,thenthetotalmonetarygrossproceedsorgrossincomepaidtoalessorforallrealpropertyorspaceshallfirstbeallocatedtothefairrentalvalueforeachrealpropertyorspace.Ifthelesseeleaseslessthanonehundredpercentofrealpropertyorspacethatwasleasedfromthelessortoasublessee,thenthetotalmonetarygrossproceedsorgrossincomepaidbythelesseeforthatrealpropertyorspacetoitslessorshallbeallocated.Thepercentageofrealpropertyorspacesubleasedshallbemultipliedbythemonetarygrossproceedsorgrossincomepaidfortherealpropertyorspacebythelesseetoitslessor.Theproductoftheprecedingmultiplicationshallbedeductedfromthemonetarygrossproceedsorgrossincomereceivedforrealpropertyorspacebythelessee.
Oncetheallocationsaremade,theappropriatedeductionundersubsection(g)shallbemade.(d) Thelessorshallmakeallocationsunderthissectionatthetimethesubleaseisenteredintoandtheallocations
shallnotbechangedduringthetermofthesublease.Thereshallbeareasonablebasisfortheallocations,takingintoconsiderationthesize,quality,andlocationoftherealpropertyorspacesubleased.Innoeventshallthetotalamountallocatedtoallsubleasesexceedthetotalmonetarygrossproceedspaidbythelesseetoitslessor.Thedirectormayredetermine theamountof thedeductionunder thissection if thedirectorfinds that thebasis forallocation isnotreasonableorthatredeterminationisnecessarytopreventtheavoidanceoftaxes.
(e) Asusedinthissection:“Lease”meanstherentalofrealpropertyunderaninstrumentinwritingbywhichoneconveysrealpropertyfora
specifiedtermandforaspecifiedconsideration,andincludesthewrittenextensionorrenegotiationofalease,andanyholdovertenancy.
“Lessee”meansonewhoholdsrealpropertyunderlease,andincludesasublessee.“Lessor”meansonewhoconveysrealpropertybylease,andincludesasublessor.“Realpropertyorspace”meanstheareaactuallyrentedandusedbythelessee,andincludescommonelementsas
definedinsection514B-3.
18-237-16.5
[§237-16.8] GENERAL EXCISE TAX LAW
CHAPTER237,Page22(UnofficialCompilation)
“Sublease”includestherentalofrealpropertywhichisheldunderaleaseandismadeinawrittendocumentbywhichoneconveysrealpropertyforaspecifiedtermandforaspecifiedconsideration.Asubleaseincludesthewrittenextensionorrenegotiationofasubleaseandanyholdovertenancyunderthewrittensublease.
“Sublessee”meansonewhoholdsrealpropertyunderasublease.“Sublessor”meansonewhoconveysrealpropertybysublease.(f) Thissectionshallnotcausethetaxuponalessor,withrespecttoanyitemofthelessor’sgrossproceedsor
grossincome,toexceedfourpercent.(g) Afterallocationundersubsection(c),ifnecessary,thedeductionunderthissectionshallbeallowedfromthe
grossproceedsorgrossincomeofthelesseereceivedfromitssubleaseinanamountcalculatedbymultiplyingthegrossproceedsorgrossincomepaidbythelesseetoitslessorfortheleaseoftherealpropertyby.875.
Theamount calculated shallbedeductedby the lessee from the lessee’s total reportedgrossproceedsorgrossincome.Thedeductionallowedbythissubsectionmaybetakenbythefiscalandcalendaryearlessees.[L1997,c353,§2;amL2008,c28,§4,amL2015,c22,§4;amL2017,c181,§9]
Note
The2017amendmentshalltakeeffectonJanuary1,2019.L2017,c181,§47.
[§237-16.8] Exemption of certain convention, conference, and trade show fees. Inadditiontoanyotherapplicableexemptionprovidedunderthischapter,thereshallbeexemptedfromthemeasureoftaxesimposedbythischapterallofthevalueorgrossincomederivedbyafraternalbenefit,religious,charitable,scientific,educational,orothernonprofitorganizationundersection501(c)oftheInternalRevenueCodeof1986,asamended,fromfeesforconvention,conference,ortradeshowexhibitordisplayspaces;providedthatthegrossproceedsofsalesbyavendorthroughtheuseofexhibitordisplayspaceataconference,convention,ortradeshowshallbesubjecttotheimpositionofthegeneralexcisetaxundersection237-13.[L2004,c214,§1]
Cross Reference
TaxInformationReleaseNo.2011-01,“GeneralExciseTaxationofConventionandConferenceFees”
§237-17 Persons with impaired sight, hearing, or who are totally disabled. Anythinginsection237-13tothecontrarynotwithstanding,theprivilegetaxlevied,assessed,andcollectedonaccountofthebusinessorotheractivitiesofindividualswhoareblind,deaf,ortotallydisabled,corporationsallofwhoseoutstandingsharesareownedbyindividualswhoareblind,deaf,ortotallydisabled,general,limited,orlimitedliabilitypartnerships,allofwhosepartnersareblind,deaf,ortotallydisabled,orlimitedliabilitycompanies,allofwhosemembersareblind,deaf,ortotallydisabled,shallnotexceedone-halfofonepercentoftheproceeds,sales,income,orotherreceiptssubjecttotax.Forthepurposeofthischapter“blind”,“deaf”,or“totallydisabled”isdefinedasinsection235-1.Theimpairmentofsightorhearing,orthedisability,shallbecertifiedtoasprovidedinsection235-1.[L1947,c213,§8;amL1953,c139,§4;RL1955,§117-15;amL1959,c246,§12;amLSp19592d,c1,§19;amL1960,c4,§5;amL1961,c177,§2;amL1966,c28,§7;HRS§237-17;amL1973,c91,§2;amL1988,c81,§2;amL2002,c110,§2]
Note
The2002amendmentappliestogrossincomeandgrossproceedsreceivedafterJune30,2002.L2002,c110,§5.
Cross Reference
Tax InformationReleaseNo. 89-3, “StateTaxBenefitsAvailable toPersonsWith ImpairedSight, ImpairedHearing, orWhoAreTotallyDisabled”
TaxInformationReleaseNo.94-2,“StateTaxBenefitsAvailabletoPersonsTotallyDisabled”TaxInformationReleaseNo.94-5,“LicensingRequirementsforCertainTrustsUnderHawaii’sGeneralExciseTaxLaw”
§237-18 Further provisions as to application of tax. (a)Whereacoinoperateddeviceproducesgrossincomewhichisdividedbetweentheowneroroperatorofthedevice,ontheonehand,andtheowneroroperatorofthepremiseswherethedeviceislocated,ontheotherhand,thetaximposedbythischaptershallapplytoeachsuchpersonwithrespecttotheperson’sportionoftheproceeds,andnomore.
(b) Wheregate receipts or other admissions are dividedbetween the person furnishingor producing a play,concert,lecture,athleticevent,orsimilarspectacle(includinganymotionpictureshowing)ontheonehand,andapromoter(includinganyproprietororotheroperatorofamotionpicturehouse)offeringthespectacletothepublic,ontheotherhand,thetaximposedbythischapter,ifthepromoterissubjecttothetaximposedbythischapter,shallapplyonlytothepromotermeasuredbythewholeoftheproceeds,andthepromotershallbeauthorizedtodeductandwithholdfromtheportionoftheproceedspayabletothepersonfurnishingorproducingthespectacletheamountofthetaxpayablebythepersonuponsuchportion.Notaxshallapplytoapromoterwithrespecttosuchportionoftheproceedsasispayabletoapersonfurnishingorproducingthespectacle,whoisexemptedbysection237-23fromtaxationuponsuchactivity.
GENERAL EXCISE TAX LAW §237-18
CHAPTER237,Page23(UnofficialCompilation)
(c) Where,throughtheactivityofapersontaxableundersection237-13(6),aproducthasbeenmilled,processed,orotherwisemanufacturedupontheorderofanothertaxpayerwhoisamanufacturertaxableuponthevalueoftheentiremanufacturedproducts,whichconsistsinpartofthevalueoftheservicestaxableundersection237-13(6),somuchgrossincomeasisderivedfromtherenderingoftheservicesshallbesubjectedtotaxonthepersonrenderingtheservicesattherateofone-halfofonepercent,andthevalueoftheentireproductshallbeincludedinthemeasureofthetaximposedontheothertaxpayeraselsewhereprovided.
(d) Where,throughtheactivityofapersontaxableundersection237-13(6),therehavebeenrenderedtoacaneplanterservicesconsistingintheharvestingorhaulingofthecane,orconsistinginroadmaintenance,underacontractbetweenthepersonrenderingtheservicesandthecaneplanter,coveringtheservicesandalsothemillingofthesugar,theservicesofharvestingandhaulingthecaneandroadmaintenanceshallbetreatedthesameastheserviceofmillingthecane,asprovidedbysubsection(c),andthevalueoftheentireproduct,manufacturedorsoldforthecaneplanterunderthecontract,shallbeincludedinthemeasureofthetaximposedonthepersonaselsewhereprovided.
(e) Whereinsuranceagents,includinggeneralagents,subagents,orsolicitors,whoarenotemployeesandarelicensed pursuant to chapter 431, or real estate brokers or salespersons,who are not employees and are licensedpursuanttochapter467,producecommissionswhicharedividedbetweensuchgeneralagents,subagents,orsolicitors,orbetweensuchrealestatebrokersorsalespersons,asthecasemaybe,thetaxleviedundersection237-13(6)astorealestatebrokersorsalespersons,orundersection237-13(7)astoinsurancegeneralagents,subagents,orsolicitorsshallapplytoeachsuchpersonwithrespecttotheperson’sportionofthecommissions,andnomore.
(f) Wheretourismrelatedservicesarefurnishedthrougharrangementsmadebyatravelagencyortourpackagerand thegross income isdividedbetween theproviderof the servicesand the travel agencyor tourpackager, thetaximposedbythischaptershallapplytoeachsuchpersonwithrespecttosuchperson’srespectiveportionoftheproceeds,andnomore.
As used in this subsection “tourism related services”means catamaran cruises, canoe rides, dinner cruises, leigreetings,transportationincludedinatourpackage,sightseeingtoursnotsubjecttochapter239,admissionstoluaus,dinnershows,extravaganzas,culturalandeducationalfacilities,andotherservicesrendereddirectlytothecustomerortourist,butonlyiftheprovidersoftheservicesotherthanairtransportationaresubjecttoafourpercenttaxunderthischapterorchapter239.
(g) Where transient accommodations are furnished through arrangements made by a travel agency or tourpackager at noncommissioned negotiated contract rates and the gross income is divided between the operator oftransientaccommodationsontheonehandandthetravelagencyortourpackagerontheotherhand,thetaximposedbythischaptershallapplytoeachsuchpersonwithrespecttosuchperson’srespectiveportionoftheproceeds,andnomore.
Asused in this subsection, thewords “transient accommodations”and“operator” shall bedefined in the samemannerastheyaredefinedinsection237D-1.
(h) Where the transportation of passengers or property is furnished through arrangements between motorcarriers,andthegrossincomeisdividedbetweenthemotorcarriers,anytaximposedbythischaptershallapplytoeachmotorcarrierwithrespecttoeachmotorcarriers’respectiveportionoftheproceeds.
Asusedinthissubsection:“Carrier”meansapersonwhoengagesintransportation,anddoesnotincludeapersonsuchasafreightforwarder
ortourpackagerwhoprovidestransportationbycontractingwithothers,excepttotheextentthatsuchpersononeselfengagesintransportation.
“Contractcarrier”meansapersonotherthanapublicutilityasdefinedundersection239-2ortaxicab,whichundercontractsoragreements,engagesinthetransportationofpersonsorpropertyforcompensation,byland,water,orair.
“Motorcarrier”meansacommoncarrierorcontractcarriertransportingpersonsorpropertyforcompensationonthepublichighways,otherthanapublicutilityasdefinedundersection239-2ortaxicab.
“Publichighways”hasthemeaningdefinedbysection264-1includingbothstateandcountyhighways,butoperationuponrailsshallnotbedeemedtransportationonthepublichighways.[L1949,c252,§1;amL1951,c165,§4;amL1953,c68,§1;RL1955,§117-16;amL1957,c34,§6;amLSp1957,c1,§3(v),(w),(x);amL1959,c257,§3;amL1960,c4,§6;amL1963,c87,§1;amL1965,c155,§14(1);HRS§237-18;amL1970,c180,§11;amL1977,c198,§1;amL1978,c144,§3;amimpL1984,c90,§1;gench1985;amL1986,c340,§7;amL1988,c167,§1;amL1991,c287,§1;gench1992;amLSp20013d,c9,§3;amL2003,c135,§4]
Note
GrossincomereceivedonorafterOctober1,2001,bytransportationserviceprovidersshallbesubjecttothetaximposedunderchapter237.LSp20013d,c9,§6.
Cross Reference
TaxInformationReleaseNo.91-8,“ExpansionoftheDefinitionof‘TourismRelatedServices’forGeneralExciseTaxPurposes”TaxInformationReleaseNo.2008-01,“RevocationofOutline,Act70,SLH1999andAct198,SLH2000,RevocationofOutline,Act71,SLH
1999andAct198,SLH2000”
§237-19 GENERAL EXCISE TAX LAW
CHAPTER237,Page24(UnofficialCompilation)
TaxInformationReleaseNo.2008-02,“AdvancedNoticeofProposedAdministrativeRulesRelatingtotheTaxationoftheMotionPictureandTelevisionFilmProductionIndustry”
TaxInformationReleaseNo.2009-05,“AdvancedNoticeofProposedAdministrativeRulesRelatingtotheTaxationoftheMotionPictureandTelevisionFilmProductionIndustry”
TaxInformationReleaseNo.2016-01,“AmendmenttoGeneralInstructionsforFilingtheGeneralExcise/UseTaxReturns(FormsG-45andG-49)RelatingtoTransientAccommodationsRentals”
Attorney General Opinions
Haulingcontractorrenderingservicesonbehalfofanintermediarymustreportincomeatretailrate.Att.Gen.Op.64-9.
Case Notes
Slaughterhouseoperator,whosecustomersarewholesalersandproducers,isnota“manufacturer”.69H.125,735P.2d935.
§237-19 REPEALED. L2002,c153,§5.Cross Reference
Forsimilarprovision,see§231-3.1.
§237-20 Principles applicable in certain situations. Apersonorcompanyhavingshareholdersormembers(acorporation,association,group,trust,partnership,jointadventure,orotherperson)istaxableuponitsbusinesswiththem,andtheyaretaxableupontheirbusinesswithit.Apersonorcompany,whetherornotcalledacooperative,throughwhichshareholdersormembersarepursuingacommonobjective(forexample,theobtainingofpropertyorservicesfortheirindividualbusinessesoruse,orthemarketingoftheirindividualproducts)isataxableperson,andsuchfactsdonotgiverisetoanytaxexemptionortaxbenefitexceptasspecificallyprovided.Eventhoughabusinesshassomeoftheaspectsofagencyitshallnotbesoregardedunlessitisatrueagency.Thereimbursementofcostsoradvancesmadefororonbehalfofonepersonbyanothershallnotconstitutegrossincomeofthelatter,unlessthepersonreceivingsuchreimbursementalsoreceivesadditionalmonetaryconsiderationformakingsuchcostsoradvances.[L1957,c34,§11(i);amL1965,c201,§24;Supp,§117-17.1;amL1967,c297,§2;HRS§237-20;amL1985,c303,§1;amL1986,c340,§8]
Law Journals and Reviews
RuleofStrictConstructioninTaxCases,aQuestionofClassificationorExemption,ArthurB.Reinwald,11HBJ98.
Case Notes
Amountsreceivedfrommanufacturerbytaxpayerforwarrantyserviceworkconstituted,notreimbursement,buttaxablegrossincome.56H.321,536P.2d91.
“Cost”meansmonetaryamountpaidoutbytaxpayerforpropertyorservicefurnishedbyathirdparty.56H.321,536P.2d91.Paymentsbyjointventuretomemberforservicesrenderedjointventureweresubjecttogeneralexcisetaxation.59H.307,582P.2d703.Taxpayerpartnership’sprovisionofmedicalequipmentandancillaryservicestoitsjointventureconstituted“business”under§237-2andwas
thusmadesubjecttothegeneralexcisetaxbythissection.93H.267(App.),999P.2d865.Thereimbursementprovisionof thissectiondidnotapply to taxpayerwhere taxpayerdidnotpayanycostsormadeanyadvances to the
landlordsandtherecorddidnotindicatethatthetaxpayerreceivedareimbursementofacostoradvance.110H.25,129P.3d528(2006).
Hawaii Legal Reporter Citations
Agencyrelationshipnotrequired.80-2HLR800927.Reimbursementofcostsoradvances.80-2HLR800927.
§237-21 Apportionment. If anyperson, other thanpersons liable to the tax onmanufacturers as providedbysection237-13(1),isengagedinbusinessbothwithinandwithouttheStateorinsellinggoodsfordeliveryoutsidetheState,andifundertheConstitutionorlawsoftheUnitedStatesorsection237-29.5theentiregrossincomeofsuchpersoncannotbeincludedinthemeasureofthistax,thereshallbeapportionedtotheStateandincludedinthemeasureofthetaxthatportionofthegrossincomewhichisderivedfromactivitieswithintheState,totheextentthattheapportionmentisrequiredbytheConstitutionorlawsoftheUnitedStatesorsection237-29.5.InthecaseofataxupontheproductionofpropertyintheStatetheapportionmentshallbedeterminedasinthecaseofthetaxonmanufacturers.Inothercases,ifandtotheextentthattheapportionmentcannotbeaccuratelymadebyseparateaccountingmethods,thereshallbeapportionedtotheStateandincludedinthemeasureofthistaxthatproportionofthetotalgrossincome,sorequiringapportionment,whichthecostofdoingbusinesswithintheState,applicabletothegrossincome,bearstothecostofdoingbusinessbothwithinandwithouttheState,applicabletothegrossincome.[L1941,c115,§1;RL1945,§5457;RL1955,§117-18;amL1959,c277,§2;HRS§237-21;amL1987,c239,§5;amL1999,c70,§3]
Cross Reference
TaxInformationReleaseNo.95-5,“ApplicationoftheGeneralExcise(`GE’)andUseTaxesonSalesofTangiblePersonalProperty(`TPP’)byanOut-of-StateSeller,IncludingDropShipments”
TaxInformationReleaseNo.98-9,“ApplicationoftheGeneralExcisetotheGrossIncomeReceivedFromtheSaleofaServiceandContracting”SupersededbyTIR2009-02.
TaxInformationReleaseNo.2008-01,“RevocationofOutline,Act70,SLH1999andAct198,SLH2000,RevocationofOutline,Act71,SLH1999andAct198,SLH2000”
18-237-20
GENERAL EXCISE TAX LAW §237-23
CHAPTER237,Page25(UnofficialCompilation)
Attorney General Opinions
Branchofficeofmainlandtravelagencysubjecttotaxoncertainportionofearnings.Att.Gen.Op.65-6.
Case Notes
Taxontruckingbusiness’grossreceiptsforservicesrenderedwhollywithintheStatenotsubjecttoapportionment.48H.486,405P.2d382.ApportionmentfoundunnecessarywheretaxableincomeconsistedofinterestincomederivedfromsalesoflandlocatedinHawaii.57H.436,
559P.2d264.FederalAviationAct preempts theState’s ability to assess general excise taxes on revenues derived from the sale of “air transportation”;
however,theStatemayassessgeneralexcisetaxesunder§237-13(6)andthissectiononthatportionofthegrossreceiptsthatafreightforwarderreceivesforgroundtransportationandothernon-airservicesitprovides.89H.51,968P.2d653.
§237-22 Conformity to Constitution, etc. (a)Incomputingtheamountsofanytaximposedunderthischapter,thereshallbeexceptedordeductedfromthevalues,grossproceedsofsales,orgrossincomesomuchthereofas,undertheConstitutionandlawsoftheUnitedStates,theStateisprohibitedfromtaxing,butonlysolongasandonlytotheextentthattheStateissoprohibited.
(b) To the extent that any deduction, allocation, or other method to determine tax liability is necessary tocomplywithsubsection(a),eachtaxpayerliableforthetaximposedbythischaptershallbeentitledtofulloffsetfortheamountoflegallyimposedsales,grossreceipts,orusetaxespaidbythetaxpayerwithrespecttotheimportedproperty,service,orcontractingtoanotherstateandanysubdivisionthereof;providedthatsuchoffsetshallnotexceedtheamountofgeneralexcisetaximposedunderthischapteruponthegrossproceedsofsalesorgrossincomefromthesaleandsubsequentsaleoftheimportedproperty,service,orcontracting.Theamountoflegallyimposedsales,grossreceipts,orusetaxespaidbythetaxpayerwithrespecttotheimportshallbefirstappliedagainstanyusetax,aspermittedundersection238-3(i),andanyremainingamountmaybeappliedunderthissectionforthesameimportedproperty,service,orcontracting.
Thedirectoroftaxationshallhavetheauthoritytoimplementthisoffsetbyprescribingtaxformsandinstructionsthatrequiretaxreportingandpaymentbydeduction,allocation,oranyothermethodtodeterminetaxliabilitytotheextentnecessarytocomplywiththeforegoing.
Thedirector of taxationmay require the taxpayer to produce the necessary receipts or vouchers indicating thepaymentofthesales,grossreceipts,orusetaxestoanotherstateorsubdivisionasaconditionfortheallowanceofthisoffset.[L1935,c141,§3;RL1945,§5458;RL1955,§117-19;amL1957,c34,§11(j);HRS§237-22;amL2002,c98,§2]
Note
The2002amendmentappliestoallopentaxyearsandfortaxyearsthatarependingappealatthetimeofapproval.L2002,c98,§4.
Cross Reference
TaxInformationReleaseNo.81-6,“GeneralExciseTaxUponGrossReceiptsfromtheSaleofLiquorandOtherBeveragesDuringFlightsBetweentheIslands”
TaxInformationReleaseNo.89-10,“TaxabilityofGrossReceiptsDerivedbyHelicopterTourOperators”TaxInformationReleaseNo.95-5,“ApplicationoftheGeneralExcise(‘GE’)andUseTaxesonSalesofTangiblePersonalProperty(‘TPP’)by
anOut-of-StateSeller,IncludingDropShipments”TaxInformationReleaseNo.96-1,“ComputerCompany’sProvisionofIn-StateRepairServicesCreatesNexus”TaxInformationReleaseNo.96-2,“ApplicationoftheOriginalPackageDoctrinetotheGeneralExciseandUseTaxes”TaxInformationReleaseNo.2002-4,“Act98,SessionLawsofHawaii2002,RelatingtotheConformityoftheStateTaxLawstotheUnited
StatesConstitution(Act98)”
Case Notes
Radiostations.40H.121,aff’d216F.2d700.Taxonforeignmanufacturer’srepresentativeheldnotinviolationofcommerceclause.46H.269,379P.2d336.Cited:48H.486,503,405P.2d382.
§237-23 Exemptions, persons exempt, applications for exemption. (a) This chapter shall not apply to thefollowingpersons:
(1) Publicservicecompaniesasthattermisdefinedinsection239-2,withrespecttothegrossincome,eitheractual gross incomeor gross income estimated and adjusted, that is included in themeasure of the taximposedbychapter239;
(2) PublicutilitiesownedandoperatedbytheStateoranycounty,orotherpoliticalsubdivisionthereof;(3) Fraternalbenefitsocieties,orders,orassociations,operatingunderthelodgesystem,orfortheexclusive
benefit of themembers of the fraternity itself, operating under the lodge system, and providing for thepaymentofdeath,sick,accident,alegalserviceplan,orotherbenefitstothemembersofthesocieties,orders,orassociations,andtotheirdependents;
(4) Corporations,associations,trusts,orsocietiesorganizedandoperatedexclusivelyforreligious,charitable,scientific,oreducationalpurposes,aswellasthatofoperatingseniorcitizenshousingfacilitiesqualifyingfora loanunder the lawsof theUnitedStatesasauthorizedbysection202of theHousingActof1959,as
§237-23 GENERAL EXCISE TAX LAW
CHAPTER237,Page26(UnofficialCompilation)
amended,aswellasthatofoperatingalegalserviceplan,aswellasthatofoperatingormanagingahomelessfacility,oranyotherprogramforthehomelessauthorizedunderpartXVIIofchapter346;
(5) Business leagues, chambers of commerce, boards of trade, civic leagues, agricultural and horticulturalorganizations,andorganizationsoperatedexclusivelyforthebenefitofthecommunityandforthepromotionofsocialwelfarethatshallincludetheoperationofalegalserviceplan,andfromwhichnoprofitinurestothebenefitofanyprivatestockholderorindividual;
(6) Hospitals,infirmaries,andsanitaria;(7) Companiesthatprovidepotablewatertoresidentialcommunitiesthatlackanyaccesstopublicutilitywater
servicesandaretaxexemptundersection501(c)(12)oftheInternalRevenueCodeof1986,asamended;(8) Cooperativeassociationsincorporatedunderchapter421orCodesection521cooperativeswhichfullymeet
therequirementsofsection421-23,exceptCodesection521cooperativesneednotbeorganizedinHawaii;providedthat:(A) The exemption shall apply only to the gross income derived from activities that are pursuant to
purposesandpowersauthorizedbychapter421,except thoseprovisionspertainingtoorrequiringcorporateorganizationinHawaiidonotapplytoCodesection521cooperatives;
(B) Theexemptionshallnotrelieveanypersonwhoreceivesanyproceedsofsalefromtheassociationofthedutyofreturningandpayingthetaxonthetotalgrossproceedsofthesalesonaccountofwhichthepaymentwasmade,inthesameamountandatthesamerateaswouldapplytheretohadthesalesbeenmadedirectlybytheperson,andallthosepersonsshallbesotaxable;and
(C) As used in this paragraph, “Code section 521 cooperatives” mean associations that qualify as acooperativeundersection521(withrespecttoexemptionoffarmers’cooperativesfromtax)oftheInternalRevenueCodeof1986,asamended;
(9) PersonsaffectedwithHansen’sdiseaseandkokuas,withrespecttobusinesswithinthecountyofKalawao;(10)Corporations,companies,associations,ortrustsorganizedfortheestablishmentandconductofcemeteries
nopartofthenetearningsofwhichinurestothefinancialbenefitofanyprivatestockholderorindividual;providedthattheexemptionshallapplyonlytotheactivitiesofthosepersonsintheconductofcemeteriesandshallnotapply toanyactivity theprimarypurposeofwhichis toproduceincome,eventhoughtheincomeistobeusedfororinthefurtheranceoftheexemptactivitiesofthosepersons;and
(11)Nonprofit shippers associations operating under part 296 of the Civil Aeronautics Board EconomicRegulations.
(b) Theexemptionsenumeratedinsubsection(a)(3)to(7)shallapplyonly:(1) Tothosepersonswhoshallhaveregisteredwiththedepartmentoftaxationbyfilingawrittenapplicationfor
registrationinsuchformasthedepartmentshallprescribe,shallhavepaidtheregistrationfeeof$20,andshallhavehadtheexemptionallowedbythedepartmentorbyacourtortribunalofcompetentjurisdictionuponappealfromanyassessmentresultingfromdisallowanceoftheexemptionbythedepartment;
(2) Toactivitiesfromwhichnoprofitinurestothebenefitofanyprivatestockholderorindividual,exceptfordeathorotherbenefitstothemembersoffraternalsocieties;and
(3) Tothefraternal,religious,charitable,scientific,educational,communal,orsocialwelfareactivitiesofsuchpersons,ortotheactivitiesofhospitals,infirmaries,sanitaria,andpotablewatercompanies,assuch,andnottoanyactivitytheprimarypurposeofwhichistoproduceincomeeventhoughtheincomeistobeusedfororinfurtheranceoftheexemptactivitiesofsuchpersons.
(c) Toobtainallowanceofanexemption:(1) Apersonundersubsection(a)(3)to(7),whohasreceivedorappliedforrecognitionoftaxexemptstatus
undersection501(c)(3),(4),(6),(8),or(12)oftheInternalRevenueCodeof1986,asamended,orwhoisasubordinatepersonofapersonwhohasreceivedagroupexemptionletterundersection501(c)(3),(4),(6),(8),or(12)oftheInternalRevenueCodeof1986,asamended,shallregisterwiththedepartmentbyfilingastatementattachingacopyoftheexemptionorapplicationforrecognitionofexemptstatusandanyparticularfactsthatthedepartmentmayrequire;and
(2) Allotherpersonsundersubsection(a)(3)to(7)shallfileanapplicationforexemptionintheformofanaffidavitoraffidavitssettingforthingeneralallfactsaffectingtherighttotheexemptionandanyparticularfactsthatthedepartmentmayrequire,towhichshallbeattachedanyrecords,papers,andotherinformationasthedepartmentmayprescribe.
(d) Forallpersons,thestatementregisteringthepersonwiththedepartmentorapplicationforexemptionshallbefiledonorbeforeMarch31ofthefirstyearofregistrationorwithinthreemonthsafterthecommencementofbusiness.Intheeventofallowanceoftheexemption,nofurtherstatementorapplicationthereforneedbefiledunlessthereisamaterialchangeinthefacts.Intheeventofdisallowanceoftheexemption,alicensemaybeobtaineduponpaymentoftherequiredfeeasprovidedbysection237-9,lessthe$20alreadypaidunderthissection,whichshallbecreditedthereon.Intheeventtheregistranthasalicenseunderthischapter,nofurtherfeeshallberequiredforregistrationunderthissection.
GENERAL EXCISE TAX LAW §237-23.5
CHAPTER237,Page27(UnofficialCompilation)
(e) Thedepartmentforgoodcausemayextendthetimeforregistrationorthetimeforfilinganapplicationforexemption.[L1935,c141,§4(1);amL1941,c265,§2;RL1945,§5459;amL1945,c158,§1andc253,§3;amL1949,c234,§3;RL1955,§117-20;amLSp1957,c1,§3(y),(z);amL1959,c252,§39andc277,§3;amLSp19592d,c1,§16;amL1963,c147,§1;amL1965,c201,§38andc224,§3;amL1967,c39,§1andc159,§1;HRS§237-23;amL1969,c152,§1;amL1970,c180,§12;amL1971,c4,§3;amL1976,c156,§10andc203,§5;amL1979,c105,§23;amL1980,c213,§1;amL1982,c92,§5;amL1987,c39,§4;amL1988,c173,§2;amL1989,c6,§4andc266,§3;amL1990,c109,§1;amL1991,c212,§4andc286,§3;amL1992,c106,§7;amLSp1995,c20,§5;amL1997,c350,§17;amL1998,c212,§3;amL2001,c125,§1;amL2007,c249,§17;amL2010,c89,§4;amL2012,c34,§21andc184,§3;amL2015,c18,§1]
Note
The2015amendmentshalltakeeffectretroactivelytotaxableyearsbeginningafterDecember31,2011.L2015,c18,§3.
Cross Reference
TaxInformationReleaseNo.21-69,“GeneralExciseTaxandRealPropertyTaxExemptionsasApplicabletoPre-SchoolsorDay-CareCentersOperatedbyChurches”
TaxInformationReleaseNo.89-6,“GeneralExciseTaxontheFund-RaisingActivitiesofPublicSchoolSponsoredGroups”TaxInformationReleaseNo.89-13,“ApplicationforExemptionfromthePaymentofGeneralExciseTaxesforNon-ProfitOrganizations”TaxInformationReleaseNo.91-2,“TaxabilityofGrossProceedsReceivedbyaNonprofitOrganizationFromtheSaleofDonatedServicesor
TangiblePersonalProperty”TaxInformationReleaseNo.91-4,“HawaiiTaxObligationsofNonprofitOrganizations”TaxInformationReleaseNo.2011-01,“GeneralExciseTaxationofConventionandConferenceFees”TaxInformationReleaseNo.2011-04,“GeneralExciseTaxReportingRequirementsforNonprofitOrganizations”
Attorney General Opinions
Exemptionofcorporationoperatinganonprofitmedicalandhospitalserviceprogramundercontractwithindividualsandgroups.Att.Gen.Op.64-6.
Law Journals and Reviews
RuleofStrictConstructioninTaxCases,aQuestionofClassificationorExemption,ArthurB.Reinwald,11HBJ98.The“AlohaCorporation:”InfusingtheCultureofHawai‘itoBroadenthePerspectiveofBusinessandReturntoCommunity.34UHL.Rev.
221(2012).
Case Notes
CharitabletrustdoingbusinesswithinTerritoryliableforexcisetax.33H.171.Whereprimarypurposeofrentalactivitywasnotproductionofincome,rentalincomewasexemptfromtaxundersubs.(b)(3).53H.1,486
P.2d396.Statutesgrantingexemptionsarestrictlyconstruedagainsttaxpayer.56H.321,536P.2d91.Derogationfromcommonrateisanexemptionandstrictlyconstrued.56H.644,547P.2d1343.Maintenanceofanonprofitretirementresidentsfortheelderlyasacharitablepurpose.63H.199,624P.2d1346.Incometoexemptorganizationfromworkperformedbyresidentbeneficiarieshadprimarypurposeofproducingincome.65H.199,649P.2d
1126.Interestpaymentsreceivedfromsaleofrealpropertynotexempt.65H.199,649P.2d1126.“Rental”incomefromresidentsandstaffdidnothaveprimarypurposeorproducingincome.65H.199,649P.2d1126.Operationofaparkinggarageandphysician’sofficebuildingarenothospitalactivities“assuch”thatexemptstheincomederivedfromtaxation.
66H.318,661P.2d1201.Cited:41H.615,617.
§237-23.5 Related entities; common paymaster; certain exempt transactions. (a)Thischaptershallnotapplytoamountsreceived,charged,orattributabletoservicesfurnishedbyonerelatedentitytoanotherrelatedentityortoimputedorstatedinterestattributabletoloans,advances,oruseofcapitalbetweenrelatedentities.
Asusedinthissubsection:“Relatedentities”means:(1) Anaffiliatedgroupof corporationswithin themeaningof section1504 (with respect to affiliatedgroup
defined)ofthefederalInternalRevenueCodeof1986,asamended;(2) A controlled groupof corporationswithin themeaningof section 1563 (with respect to definitions and
specialrules)ofthefederalInternalRevenueCodeof1986,asamended;(3) Thoseentitiesconnectedthroughownershipofatleasteightypercentofthetotalvalueandatleasteighty
per cent of the total voting power of each such entity (or combination thereof), including partnerships,associations,trusts,Scorporations,nonprofitcorporations,limitedliabilitypartnerships,orlimitedliabilitycompanies;and
(4) Anygroup or combination of the entities described in paragraph (3) constituting a unitary business forincometaxpurposes;
whetherornottheentityislocatedwithinorwithouttheStateorlicensedunderthischapter.“Services”meanslegalandaccountingservices,theuseofcomputersoftwareandhardware,informationtechnology
services,databasemanagement,andthosemanagerialandadministrativeservicesperformedbyanemployee,officer,
§237-24 GENERAL EXCISE TAX LAW
CHAPTER237,Page28(UnofficialCompilation)
partner,trustee,soleproprietor,member,ormanagerintheperson’scapacityasanemployee,officer,partner,trustee,soleproprietor,member,ormanagerofoneoftherelatedentitiesandshallincludeoverheadcostsattributabletothoseservices.
(b) Thischaptershallnotapplytoamountsreceivedbycommonpaymasterswhicharedisbursedasremunerationtoemployeesoftwoormorerelatedcorporationswherethecommonpaymasterismakingsuchremunerationsonbehalfofsuchcorporations.Suchamountsreceivedordisbursedbythecommonpaymastershallincludepaymentsofpayrolltaxesandemployeebenefitswhichthecommonpaymasterismakingonbehalfofrelatedcorporationsandwhichpaymentsarerelatedto theemployeesbeingremunerated.Thedefinitionsofrelatedcorporations,commonpaymaster,multiplecommonpaymasters,andconcurrentemploymentcontainedin26CodeofFederalRegulations,section31.3121(s)-1(b)areincorporatedandmadeapartofthissubsection.
Totheextentnotcoveredbysubsection(a),theexemptionallowedbythissubsectionshallnotapplytothecostofservices,orreimbursementsofsuchcostbyonecorporationtoanothercorporation,ofanemployeedisbursingtheamountsexemptedunder this subsection.Each relatedcorporationusingacommonpaymasterormultiplecommonpaymastershallkeepseparatepayrollrecordsandotherdocumentationrequiredtoprovetheexistenceofconcurrentemployment.Suchrecordsanddocumentsshallbeavailableforinspectionbythedirectoroftaxationduringnormalbusinesshours.[L1988,c175,§1;amL1997,c178,§4;amL1999,c165,§1;amL2001,c221,§12]
Cross Reference
TaxInformationReleaseNo.2008-01,“RevocationofOutline,Act70,SLH1999andAct198,SLH2000,RevocationofOutline,Act71,SLH1999andAct198,SLH2000”
§237-24 Amounts not taxable. Thischaptershallnotapplytothefollowingamounts:(1) Amountsreceivedunderlifeinsurancepoliciesandcontractspaidbyreasonofthedeathoftheinsured;(2) Amounts received (other than amounts paid by reason of death of the insured) under life insurance,
endowment,orannuitycontracts,eitherduringthetermoratmaturityoruponsurrenderofthecontract;(3) Amountsreceivedunderanyaccidentinsuranceorhealthinsurancepolicyorcontractorunderworkers’
compensationactsoremployers’ liabilityacts,ascompensation forpersonal injuries,death,or sickness,includingalsotheamountofanydamagesorothercompensationreceived,whetherasaresultofactionorbyprivateagreementbetweenthepartiesonaccountofthepersonalinjuries,death,orsickness;
(4) Thevalueofallpropertyofeverykindandsortacquiredbygift,bequest,ordevise,andthevalueofallpropertyacquiredbydescentorinheritance;
(5) Amountsreceivedbyanypersonascompensatorydamagesforanytortinjurytotheperson,ortotheperson’scharacterreputation,orreceivedascompensatorydamagesforanytortinjurytoordestructionofproperty,whetherastheresultofactionorbyprivateagreementbetweentheparties(providedthatamountsreceivedaspunitivedamagesfortortinjuryorbreachofcontractinjuryshallbeincludedingrossincome);
(6) Amountsreceivedassalariesorwagesforservicesrenderedbyanemployeetoanemployer;(7) Amountsreceivedasalimonyandothersimilarpaymentsandsettlements;(8) Amountscollectedbydistributorsasfueltaxeson“liquidfuel”imposedbychapter243,andtheamounts
collectedbysuchdistributorsasafueltaximposedbyanyActoftheCongressoftheUnitedStates;(9) Taxesonliquorimposedbychapter244Dondealersholdingpermitsunderthatchapter;(10)Theamountsoftaxesoncigarettesandtobaccoproductsimposedbychapter245onwholesalersordealers
holdinglicensesunderthatchapterandsellingtheproductsatwholesale;(11)Federalexcisetaxesimposedonarticlessoldatretailandcollectedfromthepurchasersthereofandpaidto
thefederalgovernmentbytheretailer;(12)The amounts of federal taxes under chapter 37 of the InternalRevenueCode, or similar federal taxes,
imposedonsugarmanufacturedintheState,paidbythemanufacturertothefederalgovernment;(13)Anamountupto,butnotinexcessof,$2,000ayearofgrossincomereceivedbyanyblind,deaf,ortotally
disabledpersonengaging,orcontinuing,inanybusiness,trade,activity,occupation,orcallingwithintheState;acorporationallofwhoseoutstandingsharesareownedbyanindividualorindividualswhoareblind,deaf,ortotallydisabled;ageneral,limited,orlimitedliabilitypartnership,allofwhosepartnersareblind,deaf,or totallydisabled;ora limited liabilitycompany,allofwhosemembersareblind,deaf,or totallydisabled;
(14)[Repeal and reenactment on December 31, 2018. L 2013, c 164, §2.]Amountsreceivedbyaproducerofsugarcanefromthemanufacturertowhomtheproducersellsthesugarcane,where:(A) Theproducerisanindependentcanefarmer,soclassedbytheSecretaryofAgricultureundertheSugar
Actof1948(61Stat.922,Chapter519)astheActmaybeamendedorsupplemented;(B) The value or gross proceeds of the sale of the sugar, and other productsmanufactured from the
sugarcane,areincludedinthemeasureofthetaxleviedonthemanufacturerundersection237-13(1)or(2);
GENERAL EXCISE TAX LAW §237-24
CHAPTER237,Page29(UnofficialCompilation)
(C) Theproducer’sgrossproceedsofsalesaredependentupontheactualvalueoftheproductsmanufacturedtherefromortheaveragevalueofallsimilarproductsmanufacturedbythemanufacturer;and
(D) Theproducer’sgrossproceedsofsalesarereducedbyreasonofthetaxonthevalueorsaleofthemanufacturedproducts;
(15)[Repeal and reenactment on December 31, 2018. L 2013, c 164, §2.] MoneypaidbytheStateoreleemosynarychild-placingorganizationstofosterparentsfortheircareofchildreninfosterhomes;
(16)[Repeal and reenactment on December 31, 2018. L 2013, c 164, §2.] Amountsreceivedbyacooperativehousingcorporationfromitsshareholdersinreimbursementoffundspaidbythecorporationforleaserental,realpropertytaxes,andotherexpensesofoperatingandmaintainingthecooperativelandandimprovements;providedthatthecooperativecorporationisacorporation:(A) Havingoneandonlyoneclassofstockoutstanding;(B) Eachofthestockholdersofwhichisentitledsolelybyreasonofthestockholder’sownershipofstock
inthecorporation,tooccupyfordwellingpurposesahouse,oranapartmentinabuildingownedorleasedbythecorporation;and
(C) Nostockholderofwhichisentitled(eitherconditionallyorunconditionally)toreceiveanydistributionnotoutofearningsandprofitsofthecorporationexceptinacompleteorpartial liquidationofthecorporation;
(17)[Repeal and reenactment on December 31, 2018. L 2013, c 164, §2.] AmountsreceivedbyamanagedcaresupportcontractoroftheTRICAREprogramthatisestablishedunderTitle10UnitedStatesCodeChapter55,asamended,fortheactualcostoradvancementtothirdpartyhealthcareproviderspursuanttoacontractwiththeUnitedStates;and
(18)AmountsreceivedbyacontractorofthePatient-CenteredCommunityCareprogramthatisestablishedbytheUnitedStatesDepartmentofVeteransAffairspursuanttotitle38UnitedStatesCodesection8153,asamended,fortheactualcostsoradvancementstothirdpartyhealthcareproviderspursuanttoacontractwiththeUnitedStates.[L1935,c141,§4(2);amL1939,c47,§1;amL1943,c81,§2;RL1945,§5460;amL1945,c253,§4;amL1947,c213,§1;amL1949,c343,§11;amL1953,c229,§1;amL1955,c246,§5;RL1955,§117-21;amL1957,c34,§11(k);amL1959,c277,§4(a);amLSp19592d,c1,§16;amL1964,c5,§2;amL1965,c201,§§3,25;amL1966,c28,§4;amL1967,c297,§§3,4;HRS§237-24;amL1968,c26,§2;amL1971,c204,§7;amL1973,c91,§3;amL1975,c41,§1;amL1979,c74,§1andc105,§24;amL1985,c16,§7andc88,§1;gench1985;amL1986,c86,§1,c306,§2andc340,§9;amL1987,c7,§1,c15,§1,c39,§5,andc292,§1;amL1988,c65,§2;amL1989,c8,§1;amL1992,c107,§1;amL1993,c43,§1andc220,ptof§2;amL1994,c141,§2;amL2002,c110,§3;amL2009,c70,§2;amL2013,c164,§2;amL2014,c143,§2]
Note
Formerparagraphs(17)to(25)arenowpartof§237-24.3.The2014amendmentisexemptfromtheDecember31,2018repealandreenactmentconditionbyL2009,c70,§4,asamendedbyL2013,c
164,§2.L2014,c143,§4.
Cross Reference
Tax InformationReleaseNo. 23-69, “Sales ofLiquor andTobaccoProducts fromBondedWarehouses to ForeignFishingVessels and toCommonCarriers”
TaxInformationReleaseNo.65-79,“StateTaxationofHomeownersAssociationsforIncome,GeneralExciseandUseTaxes”TaxInformationReleaseNo.86-3,“ExemptionFromtheGeneralExciseTaxforAmountsReceivedonPurchasesMadeWithU.S.Department
ofAgricultureFoodCoupons”TaxInformationReleaseNo.86-4,“ExemptionFromtheGeneralExciseTaxforAmountsReceivedfortheSaleofPrescriptionDrugsand
ProstheticDevices”TaxInformationReleaseNo.87-3,“ExemptionFromtheGeneralExciseTaxforAmountsReceivedonPurchasesMadeWithU.S.Department
ofAgricultureWICFoodVouchers”Tax InformationReleaseNo. 89-3, “StateTaxBenefitsAvailable toPersonsWith ImpairedSight, ImpairedHearing, orWhoAreTotally
Disabled”TaxInformationReleaseNo.91-1,“GeneralExciseTaxTreatmentofFederalLuxuryTaxesCollected”TaxInformationReleaseNo.94-2,“StateTaxBenefitsAvailabletoPersonsTotallyDisabled”TaxInformationReleaseNo.94-5,“LicensingRequirementsforCertainTrustsUnderHawaii’sGeneralExciseTaxLaw”TaxInformationReleaseNo.2018-02,“GeneralExciseTaxExemptionforTRICARE”
Attorney General Opinions
Subsection(p)exemptscertainreimbursementfundsofcooperativehousingcorporationsfromthegeneralexcisetax.Att.Gen.Op.68-2.Pars.(18),(21):EffectofresolutionofHouserelatingtoenforcementofprovisions.Att.Gen.Op.68-6.
Case Notes
Paragraph(6).Feespaidtodirectorofcorporationarenotexemptassalaryorwagespaidtoemployee.53H.435,496P.2d1.
Decisions under prior law.
§237-24.3 GENERAL EXCISE TAX LAW
CHAPTER237,Page30(UnofficialCompilation)
Remedyavailabletotaxpayerthatpaidgeneralexcisetaxonout-of-stateproductswheredirectoroftaxationadmittedthat§237-24(18)(C)(1992)wasunconstitutionalonitsface,discussed.76H.1,868P.2d419.
§237-24.3 Additional amounts not taxable. [Section effective until December 31, 2018. For section effective January 1, 2019, see below.]Inadditiontotheamountsnottaxableundersection237-24,thischaptershallnotapplyto:
(1) Amountsreceivedfromtheloading,transportation,andunloadingofagriculturalcommoditiesshippedforaproducerorproducedealerononeislandofthisStatetoaperson,firm,ororganizationonanotherislandofthisState.Theterms“agriculturalcommodity”,“producer”,and“producedealer”shallbedefinedinthesamemannerastheyaredefinedinsection147-1;providedthatagriculturalcommoditiesneednothavebeenproducedintheState;
(2) Amountsreceivedbythemanager,submanager,orboardofdirectorsof:(A) Anassociationofownersofacondominiumpropertyregimeestablishedinaccordancewithchapter
514Aor514B;or(B) Anonprofithomeownersorcommunityassociationincorporatedinaccordancewithchapter414Dor
anypredecessortheretoandexistingpursuanttocovenantsrunningwiththeland, inreimbursementofsumspaidforcommonexpenses;(3) Amountsreceivedoraccruedfrom:
(A) Theloadingorunloadingofcargofromships,barges,vessels,oraircraft,whetherornottheships,barges,vessels,oraircrafttravelbetweentheStateandotherstatesorcountriesorbetweentheislandsoftheState;
(B) TugboatservicesincludingpilotagefeesperformedwithintheState,andthetowageofships,barges,orvesselsinandoutofstateharbors,orfromonepiertoanother;and
(C) Thetransportationofpilotsorgovernmentalofficialstoships,barges,orvesselsoffshore;rigginggear;checking freightandsimilar services; standbycharges;anduseofmooringsand runningmooringlines;
(4) Amounts received by an employee benefit plan byway of contributions, dividends, interest, and otherincome;andamountsreceivedbyanonprofitorganizationoroffice,aspaymentsforcostsandexpensesincurredfortheadministrationofanemployeebenefitplan;providedthatthisexemptionshallnotapplytoanygrossrentalincomeorgrossrentalproceedsreceivedafterJune30,1994,asincomefrominvestmentsinrealpropertyinthisState;andprovidedfurtherthatgrossrentalincomeorgrossrentalproceedsfrominvestmentsinrealpropertyreceivedbyanemployeebenefitplanafterJune30,1994,underwrittencontractsexecutedpriortoJuly1,1994,shallnotbetaxeduntilthecontractsarerenegotiated,renewed,orextended,oruntilafterDecember31,1998,whicheverisearlier.Forthepurposesofthisparagraph,“employeebenefitplan”meansanyplanasdefinedinsection1002(3)oftitle29oftheUnitedStatesCode,asamended;
(5) AmountsreceivedforpurchasesmadewithUnitedStatesDepartmentofAgriculturefoodcouponsunderthefederalfoodstampprogram,andamountsreceivedforpurchasesmadewithUnitedStatesDepartmentofAgriculturefoodvouchersundertheSpecialSupplementalFoodsProgramforWomen,InfantsandChildren;
(6) Amountsreceivedbyahospital,infirmary,medicalclinic,healthcarefacility,pharmacy,orapractitionerlicensedtoadminister thedrugtoanindividualforsellingprescriptiondrugsorprostheticdevices toanindividual;providedthatthisparagraphshallnotapplytoanyamountsreceivedforservicesprovidedinsellingprescriptiondrugsorprostheticdevices.Asusedinthisparagraph:
“Prescription drugs” are those drugs defined under section 328-1 and dispensed byfilling or refilling awrittenororalprescriptionbyapractitionerlicensedunderlawtoadministerthedrugandsoldbyalicensedpharmacistundersection328-16orpractitionerslicensedtoadministerdrugs;providedthat“prescriptiondrugs”shallnotincludecannabisormanufacturedcannabisproductsauthorizedpursuanttochapters329and329D.
“Prostheticdevice”meansanyartificialdeviceorappliance,instrument,apparatus,orcontrivance,includingtheir components, parts, accessories, and replacements thereof, used to replace a missing or surgicallyremovedpartofthehumanbody,whichisprescribedbyalicensedpractitionerofmedicine,osteopathy,orpodiatryandthatissoldbythepractitionerorthatisdispensedandsoldbyadealerofprostheticdevices;provided that “prosthetic device” shall not mean any auditory, ophthalmic, dental, or ocular device orappliance,instrument,apparatus,orcontrivance;
(7) Taxeson transientaccommodations imposedbychapter237Dandpassedonandcollectedbyoperatorsholdingcertificatesofregistrationunderthatchapter;
(8) Amountsreceivedasduesbyanunincorporatedmerchantsassociationfromitsmembershipforadvertisingmedia,promotional,andadvertisingcostsforthepromotionoftheassociationforthebenefitofitsmembersas a whole and not for the benefit of an individualmember or group ofmembers less than the entiremembership;
(9) Amountsreceivedbyalabororganizationforrealpropertyleasedto:(A) Alabororganization;or
GENERAL EXCISE TAX LAW §237-24.3
CHAPTER237,Page31(UnofficialCompilation)
(B) Atrustfundestablishedbyalabororganizationforthebenefitofitsmembers,families,anddependentsformedicalorhospitalcare,pensionsonretirementordeathofemployees,apprenticeshipandtraining,andothermembershipserviceprograms.
Asusedinthisparagraph,“labororganization”meansalabororganizationexemptfromfederalincometaxundersection501(c)(5)oftheInternalRevenueCode,asamended;
(10)AmountsreceivedfromforeigndiplomatsandconsularofficialswhoareholdingcardsissuedorauthorizedbytheUnitedStatesDepartmentofStategrantingthemanexemptionfromstatetaxes;and
(11)Amountsreceivedasrentfortherentalorleasingofaircraftoraircraftenginesusedbythelesseesorrentersforinterstateair transportationofpassengersandgoods.Forpurposesofthisparagraph,paymentsmadepursuanttoaleaseshallbeconsideredrentregardlessofwhethertheleaseisanoperatingleaseorafinancinglease.Thedefinitionof“interstateairtransportation”isthesameasin49U.S.C.section40102.[L1993,c220,ptof§2andamc43,§1;amL1994,c116,§1;amL2000,c38,§1;amL2001,c210,§2;amL2002,c40,§7;amL2003,c135,§5;amL2007,c239,§§1,4;amL2008,c28,§26;amL2009,c196,§5;amL2010,c91,§1;amL2013,c160,§§2,4andc163,§1;amL2016,c230,§5;amL2017,c170,§2]
Note
Chapter415Breferredtoinparagraph(3)(B)isrepealed.ForprovisionseffectiveJuly1,2002,seechapter414D.
Cross Reference
TaxInformationReleaseNo.93-4,“ApplicationofSection237-24.3(1)(C),HawaiiRevisedStatutes(HRS)(FormerlySection237-24(18)(C),HRS)(Note:thereferencetosection237-24.3(1)(C)shouldbetosection237-24.3(2)(C))”
TaxInformationReleaseNo.98-5,“GeneralExciseTaxExemptionforTangiblePersonalProperty,IncludingSouvenirsandGiftItems,ShippedOutoftheState”
Case Notes
Decisions under prior law.Optionsavailable todirectorof taxation to remedyconstitutionaldefect in§237-24(18)(C) (1992)andappellant’s entitlement to refund if
directorchoserefundasaremedy,discussed.76H.1,868P.2d419.
§237-24.3 Additional amounts not taxable. [Section effective January 1, 2019. For section effective until December 31, 2018, see above.]Inadditiontotheamountsnottaxableundersection237-24,thischaptershallnotapplyto:
(1) Amountsreceivedfromtheloading,transportation,andunloadingofagriculturalcommoditiesshippedforaproducerorproducedealerononeislandofthisStatetoaperson,firm,ororganizationonanotherislandofthisState.Theterms“agriculturalcommodity”,“producer”,and“producedealer”shallbedefinedinthesamemannerastheyaredefinedinsection147-1;providedthatagriculturalcommoditiesneednothavebeenproducedintheState;
(2) Amountsreceivedbythemanager,submanager,orboardofdirectorsof:(A) Anassociationofacondominiumpropertyregimeestablishedinaccordancewithchapter514Borany
predecessorthereto;or(B) Anonprofithomeownersorcommunityassociationincorporatedinaccordancewithchapter414Dor
anypredecessortheretoandexistingpursuanttocovenantsrunningwiththeland, inreimbursementofsumspaidforcommonexpenses;(3) Amountsreceivedoraccruedfrom:
(A) Theloadingorunloadingofcargofromships,barges,vessels,oraircraft,whetherornottheships,barges,vessels,oraircrafttravelbetweentheStateandotherstatesorcountriesorbetweentheislandsoftheState;
(B) TugboatservicesincludingpilotagefeesperformedwithintheState,andthetowageofships,barges,orvesselsinandoutofstateharbors,orfromonepiertoanother;and
(C) Thetransportationofpilotsorgovernmentalofficialstoships,barges,orvesselsoffshore;rigginggear;checking freightandsimilar services; standbycharges;anduseofmooringsand runningmooringlines;
(4) Amounts received by an employee benefit plan byway of contributions, dividends, interest, and otherincome;andamountsreceivedbyanonprofitorganizationoroffice,aspaymentsforcostsandexpensesincurredfortheadministrationofanemployeebenefitplan;providedthatthisexemptionshallnotapplytoanygrossrentalincomeorgrossrentalproceedsreceivedafterJune30,1994,asincomefrominvestmentsinrealpropertyinthisState;andprovidedfurtherthatgrossrentalincomeorgrossrentalproceedsfrominvestmentsinrealpropertyreceivedbyanemployeebenefitplanafterJune30,1994,underwrittencontractsexecutedpriortoJuly1,1994,shallnotbetaxeduntilthecontractsarerenegotiated,renewed,orextended,oruntilafterDecember31,1998,whicheverisearlier.Forthepurposesofthisparagraph,“employeebenefitplan”meansanyplanasdefinedintitle29UnitedStatesCodesection1002(3),asamended;
§237-24.5 GENERAL EXCISE TAX LAW
CHAPTER237,Page32(UnofficialCompilation)
(5) AmountsreceivedforpurchasesmadewithUnitedStatesDepartmentofAgriculturefoodcouponsunderthefederalfoodstampprogram,andamountsreceivedforpurchasesmadewithUnitedStatesDepartmentofAgriculturefoodvouchersundertheSpecialSupplementalFoodsProgramforWomen,InfantsandChildren;
(6) Amountsreceivedbyahospital,infirmary,medicalclinic,healthcarefacility,pharmacy,orapractitionerlicensedtoadminister thedrugtoanindividualforsellingprescriptiondrugsorprostheticdevices toanindividual;providedthatthisparagraphshallnotapplytoanyamountsreceivedforservicesprovidedinsellingprescriptiondrugsorprostheticdevices.Asusedinthisparagraph:
“Prescription drugs” are those drugs defined under section 328-1 and dispensed byfilling or refilling awrittenororalprescriptionbyapractitionerlicensedunderlawtoadministerthedrugandsoldbyalicensedpharmacistundersection328-16orpractitionerslicensedtoadministerdrugs;providedthat“prescriptiondrugs”shallnotincludecannabisormanufacturedcannabisproductsauthorizedpursuanttochapters329and329D.
“Prostheticdevice”meansanyartificialdeviceorappliance,instrument,apparatus,orcontrivance,includingtheir components, parts, accessories, and replacements thereof, used to replace a missing or surgicallyremovedpartofthehumanbody,whichisprescribedbyalicensedpractitionerofmedicine,osteopathy,orpodiatryandthatissoldbythepractitionerorthatisdispensedandsoldbyadealerofprostheticdevices;provided that “prosthetic device” shall not mean any auditory, ophthalmic, dental, or ocular device orappliance,instrument,apparatus,orcontrivance;
(7) Taxeson transientaccommodations imposedbychapter237Dandpassedonandcollectedbyoperatorsholdingcertificatesofregistrationunderthatchapter;
(8) Amountsreceivedasduesbyanunincorporatedmerchantsassociationfromitsmembershipforadvertisingmedia,promotional,andadvertisingcostsforthepromotionoftheassociationforthebenefitofitsmembersas a whole and not for the benefit of an individualmember or group ofmembers less than the entiremembership;
(9) Amountsreceivedbyalabororganizationforrealpropertyleasedto:(A) Alabororganization;or(B) Atrustfundestablishedbyalabororganizationforthebenefitofitsmembers,families,anddependents
formedicalorhospitalcare,pensionsonretirementordeathofemployees,apprenticeshipandtraining,andothermembershipserviceprograms.
Asusedinthisparagraph,“labororganization”meansalabororganizationexemptfromfederalincometaxundersection501(c)(5)oftheInternalRevenueCode,asamended;
(10)AmountsreceivedfromforeigndiplomatsandconsularofficialswhoareholdingcardsissuedorauthorizedbytheUnitedStatesDepartmentofStategrantingthemanexemptionfromstatetaxes;and
(11)Amountsreceivedasrentfortherentalorleasingofaircraftoraircraftenginesusedbythelesseesorrentersforinterstateair transportationofpassengersandgoods.Forpurposesofthisparagraph,paymentsmadepursuanttoaleaseshallbeconsideredrentregardlessofwhethertheleaseisanoperatingleaseorafinancinglease.Thedefinitionof“interstateairtransportation”isthesameasin49U.S.C.section40102.[L1993,c220,ptof§2andamc43,§1;amL1994,c116,§1;amL2000,c38,§1;amL2001,c210,§2;amL2002,c40,§7;amL2003,c135,§5;amL2007,c239,§§1,4;amL2008,c28,§26;amL2009,c196,§5;amL2010,c91,§1;amL2013,c160,§§2,4andc163,§1;amL2016,c230,§5;amL2017,c170,§2andc181,§10]
Note
Chapter415Breferredtoinparagraph(3)(B)isrepealed.ForprovisionseffectiveJuly1,2002,seechapter414D.The2017amendmentshalltakeeffectonJanuary1,2019.L2017,c181,§47.
Cross Reference
TaxInformationReleaseNo.93-4,“ApplicationofSection237-24.3(1)(C),HawaiiRevisedStatutes(HRS)(FormerlySection237-24(18)(C),HRS)(Note:thereferencetosection237-24.3(1)(C)shouldbetosection237-24.3(2)(C))”
TaxInformationReleaseNo.98-5,“GeneralExciseTaxExemptionforTangiblePersonalProperty,IncludingSouvenirsandGiftItems,ShippedOutoftheState”
Case Notes
Decisions under prior law.Optionsavailable todirectorof taxation to remedyconstitutionaldefect in§237-24(18)(C) (1992)andappellant’s entitlement to refund if
directorchoserefundasaremedy,discussed.76H.1,868P.2d419.
§237-24.5 Additional exemptions. (a)Inadditiontotheamountsexemptundersection237-24,thischaptershallnotapplytoamountsreceivedby:
(1) Anexchangefrom:(A) Transactionfeeschargedexchangemembersbytheexchangefor:
GENERAL EXCISE TAX LAW §237-24.7
CHAPTER237,Page33(UnofficialCompilation)
(i)Thesaleorpurchaseofsecuritiesorproducts,orboth,boughtorsoldonanexchangebyexchangemembersfor theirownaccountoranaccountforwhichtheyhaveresponsibilityasanagent,broker,orfiduciary;
(ii)Orderbookexecutionsmadeforpurposesofeffectingtransactions;and (iii)Tradeprocessingperformedbyanexchangeinmatchingtrades,keypunching,recordkeeping,
postcashiering,andnotarization;(B) Membershipdues,fees,charges,assessments,andfinesfromindividualsorfirms,includingcharges
forfirmsymbols(memberidentification),applicationprocessing,registration,initiation,membershiptransfers,floororpostprivileges,transactiontimeextensions,expeditingtransactions,crossovertrades(tradingoutofassignedfunctions)andruleinfractions;
(C) Servicefeeschargedtomembersincludingfeesforcommunications,badges,forms,documents,andreports;
(D) Listingfeesandlistingmaintenancefeeschargedtocompaniesthatwishtobelistedandhavetheirsecuritiesorproductstradedontheexchange;and
(E) Participation in the communication network consortium operated collectively by United StatesexchangesorothermarketsrecognizedbytheSecuritiesandExchangeCommission,theCommoditiesFuturesTradingCommission,orsimilarregulatoryauthoritiesoutsidetheUnitedStatesthatprovideslastsaleandquotesecuritiesinformationtosubscribersorthatconnectssuchmarketsorexchangesforpurposesofdatatransmission;
(2) Exchangemembersbyreasonofexecutingasecuritiesorproducttransactiononanexchange;providedthatthisexemptionshallapplyonlytoamountsreceivedbyexchangemembersfrombrokersordealersregisteredwiththeSecuritiesandExchangeCommission,fromfuturescommissionmerchants,brokers,orassociatesregisteredwiththeCommoditiesFuturesTradingCommission,orfromsimilarindividualsorfirmsregisteredwithsimilarregulatoryauthoritiesoutsidetheUnitedStates;and
(3) Exchangemembersasproceedsfromthesaleoftheirexchangememberships.(b) Asusedinthissection:“Exchange”meansanexchangeorboardoftradeasdefinedin15UnitedStatesCodesection78c(a)(1)orin7
UnitedStatesCodesection7,respectively,whichissubjecttoregulationbytheSecuritiesandExchangeCommissionortheCommoditiesFuturesTradingCommissionoranorganizationsubjecttosimilarregulationunderthelawsofajurisdictionoutsidetheUnitedStates.
“Exchangemember”meansanindividualorfirmthatisqualifiedbyanexchangeasamemberandpaysmembershipduestoanexchangeinordertotradesecuritiesorproductsonanexchange.
“Securities”meanssecuritiesasdefinedin15UnitedStatesCodesection78cand“products”meanscontractsofsaleofcommoditiesforfuturedelivery,futurescontracts,options,calls,puts,andsimilarrightsasdefinedin7UnitedStatesCodesection2,whichsecuritiesorproductsarepermittedtobetradedonanexchange.[L1988,c295,§1;amL1989,c118,§§2,3;amL1990,c108,§1;amL1997,c107,§5]
§237-24.7 Additional amounts not taxable. [Repeal and reenactment on December 31, 2014. L 2010, c 91, §1.] In additiontotheamountsnottaxableundersection237-24,thischaptershallnotapplyto:
(1) Amountsreceivedbytheoperatorofahotelfromtheownerofthehotelorfromatimeshareassociation,andamountsreceivedbythesuboperatorofahotelfromtheownerofthehotel,fromatimeshareassociation,orfromtheoperatorofthehotel,inamountsequaltoandwhicharedisbursedbytheoperatororsuboperatorforemployeewages,salaries,payrolltaxes,insurancepremiums,andbenefits,includingretirement,vacation,sickpay,andhealthbenefits.Asusedinthisparagraph:
“Employee”meansemployeesdirectlyengagedintheday-to-dayoperationofthehotelandemployedbytheoperatororsuboperator.
“Hotel”meansanoperationasdefinedinsection445-90oratimeshareplanasdefinedinsection514E-1.
“Operator” means any person who, pursuant to a written contract with the owner of a hotel ortimeshareassociation,operatesormanagesthehotelfortheownerortimeshareassociation.
“Owner”meansthefeeownerorlesseeunderarecordedleaseofahotel.“Suboperator”meansanypersonwho,pursuanttoawrittencontractwiththeoperator,operatesor
managesthehotelasasubcontractoroftheoperator.“Timeshareassociation”meansan“association”asthattermisdefinedinsection514E-1;
(2) Amountsreceivedbytheoperatorofacountytransportationsystemoperatedunderanoperatingcontractwithapoliticalsubdivision,wherethepoliticalsubdivisionistheownerofthecountytransportationsystem.Asusedinthisparagraph:
“Countytransportationsystem”meansamasstransitsystemofmotorizedbusesprovidingregularlyscheduledtransportationwithinacounty.
“Operatingcontract”or“contract”meansacontracttooperateandmanageapoliticalsubdivision’s
§237-24.7 GENERAL EXCISE TAX LAW
CHAPTER237,Page34(UnofficialCompilation)
countytransportationsystem,whichprovidesthat:(A) Thepoliticalsubdivisionshallexercisesubstantialcontroloverallaspectsoftheoperator’soperation;(B) Thepoliticalsubdivisioncontrolsthedevelopmentoftransitpolicy,serviceplanning,routes,andfares;
and(C) Theoperatordevelopsinadvanceadraftbudgetinthesameformatasprescribedforagenciesofthe
politicalsubdivision.Thebudgetmustbesubjecttothesameconstraintsandcontrolsregardingthelawfulexpenditureofpublicfundsasanypublicsectoragency,anddeviationsfromthebudgetmustbesubjecttoapprovalbytheappropriatepoliticalsubdivisionofficialsinvolvedinthebudgetaryprocess.“Operator”meansanypersonwho,pursuant toanoperatingcontractwithapoliticalsubdivision,
operatesormanagesacountytransportationsystem.“Owner”meansapoliticalsubdivisionthatownsoristhelesseeofallthepropertiesandfacilitiesof
thecountytransportationsystem(includingbuses,realestate,parkinggarages,fuelpumps,maintenanceequipment,officesupplies,etc.),andthatownsallrevenuesderivedtherefrom;
(3) Surchargetaxesonrentalmotorvehiclesimposedbychapter251andpassedonandcollectedbypersonsholdingcertificatesofregistrationunderthatchapter;
(4) Amountsreceivedbytheoperatoroforchardpropertiesfromtheowneroftheorchardpropertyinamountsequal toandwhicharedisbursedby theoperator foremployeewages, salaries,payroll taxes, insurancepremiums, and benefits, including retirement, vacation, sick pay, and health benefits. As used in thisparagraph:
“Employee” means an employee directly engaged in the day-to-day operations of the orchardpropertiesandemployedbytheoperator.
“Operator”means a producerwho, pursuant to awritten contractwith the owner of the orchardproperty,operatesormanages theorchardpropertyfor theownerwhere thepropertycontainsanareasufficienttomaketheundertakingeconomicallyfeasible.
“Orchardproperty”meansanyrealpropertythatisusedtoraisetreeswithaproductionlifecycleoffifteenyearsormoreproducingfruitsornutshavinganormalperiodofdevelopmentfromtheinitialplantingtothefirstcommerciallysaleableharvestofnotlessthanthreeyears.
“Owner”meansafeeownerorlesseeunderarecordedleaseoforchardproperty;(5) Taxesonnursingfacilityincomeimposedbychapter346Eandpassedonandcollectedbyoperatorsof
nursingfacilities;(6) Amountsreceivedunderpropertyandcasualtyinsurancepoliciesfordamageorlossofinventoryusedin
theconductofatradeorbusinesslocatedwithintheStateoraportionthereofthatisdeclaredanaturaldisasterareabythegovernorpursuanttosection209-2;
(7) Amountsreceivedascompensationbycommunityorganizations,schoolboosterclubs,andnonprofitorganizationsunderacontractwiththechiefelectionofficerfortheprovisionandcompensationofprecinctofficialsandotherelection-relatedpersonnel,services,andactivities,pursuanttosection11-5;
(8) InterestreceivedbyapersondomiciledoutsidetheStatefromatrustcompany(asdefinedinsection412:8-101)actingaspaymentagentortrusteeonbehalfoftheissuerorpayeesofaninterestbearinginstrumentorobligation,iftheinterestwouldnothavebeensubjecttotaxunderthischapterifpaiddirectlytothepersondomiciledoutsidetheStatewithouttheuseofapayingagentortrustee;providedthatiftheinterestwouldotherwisebetaxableunderthischapterifpaiddirectlytothepersondomiciledoutsidetheState,itshallnotbeexemptsolelybecauseoftheuseofaHawaiitrustcompanyasapayingagentortrustee.
(9) Amountsreceivedbyamanagementcompanyfromrelatedentitiesengagedinthebusinessofsellinginterstateorforeigncommoncarriertelecommunicationsservicesinamountsequaltoandwhicharedisbursedbythemanagementcompanyforemployeewages,salaries,payrolltaxes,insurancepremiums,andbenefits,includingretirement,vacation,sickpay,andhealthbenefits.Asusedinthisparagraph:
“Employee” means employees directly engaged in the day-to-day operation of related entitiesengagedinthebusinessofsellinginterstateorforeigncommoncarriertelecommunicationsservicesandemployedbythemanagementcompany.
“Managementcompany”meansanypersonwho,pursuanttoawrittencontractwitharelatedentityengaged in the business of selling interstate or foreign common carrier telecommunications services,providesmanagerialoroperationalservicestothatentity.
“Relatedentities”means:(A) Anaffiliatedgroupofcorporationswithinthemeaningofsection1504(withrespecttoaffiliatedgroup
defined)ofthefederalInternalRevenueCodeof1986,asamended;(B) Acontrolledgroupofcorporationswithinthemeaningofsection1563(withrespecttodefinitionsand
specialrules)ofthefederalInternalRevenueCodeof1986,asamended;(C) Thoseentitiesconnectedthroughownershipofatleasteightypercentofthetotalvalueandatleast
eighty per cent of the total voting power of each such entity (or combination thereof), including
GENERAL EXCISE TAX LAW §237-24.8
CHAPTER237,Page35(UnofficialCompilation)
partnerships,associations,trusts,Scorporations,nonprofitcorporations,limitedliabilitypartnerships,orlimitedliabilitycompanies;and
(D) Anygrouporcombinationoftheentitiesdescribedinparagraph(C)constitutingaunitarybusinessforincometaxpurposes;
whetherornottheentityislocatedwithinorwithouttheStateorlicensedunderthischapter;and(10)Amountsreceivedasgrantsundersection206M-15.[L1989,c351,§1;amL1991,c229,§1andc263,§10;
amL1992,c252,§1;amL1993,c129,§§2,4andc315,§2;amL1994,c230,§§2,4;amL1995,c11,§16,c71,§4,andc133,§1;amL1998,c214,§2andc245,§2;amL1999,c165,§2;amL2001,c35,§3;amL2007,c239,§§2,4]
Revision Note
Paragraph(6)redesignatedpursuantto§23G-15(1).Paragraph(8)redesignatedpursuantto§23G-15(1).Paragraph(10)redesignatedpursuantto§23G-15(1).
Note
Effectandapplicationofparagraphs(5)and(6).L1993,c129,§4;L1994,c230,§4;andL1995,c11,§24.TheL1995,c133amendmentappliestotaxableyearsbeginningafterDecember31,1994.L1995,c133,§3.AmendmentmadebyL1998,c214appliestogrossincomeorgrossproceedsreceivedafterJune30,1998.L1998,c214,§4.L1998,c245,§3provides:“SECTION3.Anyrefundsthatmaybedueshallbepaidaccordingtosection231-23,HawaiiRevisedStatutes,andthethree-yearlimitation
periodsetoutinsection237-40,HawaiiRevisedStatutes,shallnotapplyforthepurposesofgeneralexcisetaxpaymentsonamountsreceivedasgrantsundersection206M-15,HawaiiRevisedStatutes.AllclaimsfortaxrefundsunderthisAct,includinganyamendedclaims,mustbefiledonorbeforeDecember31,1999.Failuretocomplywiththeforegoingsectionshallconstituteawaiveroftherighttoclaimtherefund.”
The1999amendmentappliestogrossincomeorgrossproceedsreceivedafterJune30,1999.L1999,c165,§5.TheaggregatetaxexemptionfromtheL2007,c239amendmentshallnotexceed$400,000pertaxableyearendingonorbetweenJanuary1,
2010andJanuary1,2011.L2009,c196,§6.Theaggregateamountoftaxexemptedbytheamendmenttosection237-24.7(1)insection2ofAct239,SessionLawsofHawaii2007,shall
notexceed$400,000percalendaryear.L2010,c91,§2.
Cross Reference
Qualifiedimprovementtaxcredit,seechapter235D.TaxInformationReleaseNo.2010-08,“Act91,SessionLawsofHawaii2010,RelatingtoGeneralExciseTax”
§237-24.75 Additional exemptions. Inadditiontotheamountsexemptundersection237-24,thischaptershallnotapplyto:
(1) Amountsreceivedasabeveragecontainerdepositcollectedunderchapter342G,partVIII;and(2) AmountsreceivedbytheoperatoroftheHawaiiconventioncenterforreimbursementofcostsoradvances
madepursuanttoacontractwiththeHawaiitourismauthorityundersection201B-7;and(3) Amountsreceivedbyaprofessionalemployerorganizationthatisregisteredwiththedepartmentoflabor
andindustrialrelationspursuanttochapter373L,fromaclientcompanyequaltoamountsthataredisbursedbytheprofessionalemployerorganizationforemployeewages,salaries,payrolltaxes,insurancepremiums,andbenefits,includingretirement,vacation,sickleave,healthbenefits,andsimilaremploymentbenefitswithrespecttocoveredemployeesataclientcompany;providedthatthisexemptionshallnotapplytoamountsreceivedbyaprofessionalemployerorganizationafter:(A) Notification from the department of labor and industrial relations that the professional employer
organizationhasnotfulfilledormaintainedtheregistrationrequirementsunderthischapter;or(B) A determination by the department that the professional employer organization has failed to pay
anytaxwithholdingforcoveredemployeesoranyfederalorstatetaxesforwhichtheprofessionalemployerorganizationisresponsible.
Asusedinthisparagraph,“professionalemployerorganization”,“clientcompany”,and“coveredemployee”shallhavethemeaningsprovidedinsection373L-1.[L2002,c176,§3;amL2007,c173,§2andc225,§3;amL2013,c174,§3.]
Note
The2007amendmentappliestogrossincomeorgrossproceedsreceivedafterJune13,2007. L2007,c173,§4.The2007amendmentappliestogrossincomeorgrossproceedsreceivedafterJune30,2007.L2007,c225,§5.
§237-24.8 Amounts not taxable for financial institutions. (a)Inadditiontotheamountsnottaxableundersection237-24,thischaptershallnotapplytoamountsreceivedby:
(1) Financialinstitutionsfrom:(A) Interest,discount,points,commitmentfees,loanfees,loanoriginationcharges,andfinancecharges
whicharepartofthecomputedannualpercentagerateofinterestandwhicharecontractedandreceivedfortheuseofmoney;
§237-24.8 GENERAL EXCISE TAX LAW
CHAPTER237,Page36(UnofficialCompilation)
(B) Leasingofpersonalproperty;(C) Feesorchargesrelatingtotheadministrationofdeposits;(D) Gainsresultingfromchangesinforeigncurrencyexchangeratesbutnotincludingcommissionsor
compensationderivedfromthepurchaseorsaleofforeigncurrencyornumismaticcurrencywhetherlegaltenderornot;
(E) Theservicingandsaleofloanscontractedforandreceivedbythefinancialinstitution;and(F) Interestreceivedfromtheinvestmentofdepositsreceivedbythefinancialinstitutionfromfinancialor
debtinstruments;(2) Trustcompaniesortrustdepartmentsoffinancialinstitutionsfrom:
(A) Trustagreementsandretirementplanswherethetrustcompaniesortrustdepartmentsareactingasfiduciaries;
(B) Custodialagreements;and(C) Activitiesrelatingtothegeneralservicingoffiduciary/custodialaccountsheldbythetrustcompanies
ortrustdepartments;and(3) Financialcorporationsactingasinterbankbrokersasdefinedbychapter241frombrokerageservices.
(b) Asusedinthissection:“Activitiesrelatingtothegeneralservicingoffiduciary/custodialaccounts”meansthoseactivitiesperformedby
trustcompanies thataredirectlyor indirectlyperformedwithin thefiduciary/custodial relationshipbetween the trustcompanyortrustdepartmentofafinancialinstitutionanditsclientandthatarenotofferedtoanypersonoutsideofthefiduciary/custodialrelationship.
“Annualpercentagerate”and“financecharge”havethesamemeaningsasdefinedinthefederalTruthinLendingAct(15U.S.C.Sections1605(a)to(c)and1606).
“Deposit”means:(1) Moneyoritsequivalentreceivedorheldbyafinancialinstitutionintheusualcourseofbusinessandfor
whichithasgivenorisobligatedtogivecreditto:(A) Acommercial(includingpublicdeposits),checking,savings,time,orthriftaccount;(B) Acheckordraftdrawnagainstadepositaccountandcertifiedbythefinancialinstitution;(C) Aletterofcredit;or(D) Atraveler’scheck,onwhichthefinancialinstitutionisprimarilyliable;
(2) Trustfundsreceivedorheldbyafinancialinstitution,whetherheldinthetrustdepartmentorheldordepositedinanyotherdepartmentofthefinancialinstitution;
(3) Moneyreceivedorheldbyafinancialinstitution,orthecreditgivenformoneyoritsequivalentreceivedorheldbyafinancialinstitutionintheusualcourseofbusinessforaspecialorspecificpurpose,regardlessofthelegalrelationshiptherebyestablished,includingwithoutbeinglimitedto,escrowfunds,fundsheldassecurityforanobligationduethefinancialinstitutionorothers(includingfundsheldasdealers’reserves)orforsecuritiesloanedbythefinancialinstitution,fundsdepositedbyadebtortomeetmaturingobligations,fundsdepositedasadvancepaymentonsubscriptionstoUnitedStatesgovernmentsecurities,fundsheldfordistributionorpurchaseofsecurities,fundsheldtomeetthefinancialinstitution’sacceptancesorlettersofcredit,andwithheldtaxes;
(4) Outstandingdrafts,cashier’schecks,moneyorders,orotherofficer’schecksissuedintheusualcourseofbusinessforanypurpose;or
(5) Moneyoritsequivalentheldasacreditbalancebyafinancialinstitutiononbehalfofitscustomerifthefinancialinstitutionisengagedinsolicitingandholdingthebalancesintheregularcourseofitsbusiness.
“Financialinstitution”meansbanks,buildingandloanassociations,developmentcompanies,financialcorporations,financialservicesloancompanies,smallbusinessinvestmentcompanies,financialholdingcompanies,andtrustcompaniesallasdefinedinchapter241,andmortgageloanoriginatorcompaniesasdefinedinchapter454F.
“Leasingofpersonalproperty”occursif:(1) Theleaseistoserveasthefunctionalequivalentofanextensionofcredittothelesseeoftheproperty;(2) Theproperty tobe leasedisacquiredspecificallyfor the leasingtransactionunderconsideration,orwas
acquiredspecificallyforanearlierleasingtransaction;(3) Theleaseisonanonoperatingbasis,i.e.,thefinancialinstitutionmaynot,directlyorindirectly:
(A) Provideforthemaintenance,repair,replacement,orservicingoftheleasedpropertyduringtheleaseterm;
(B) Purchasepartsandaccessoriesinbulkorforanindividualpropertyafterthelesseehastakendeliveryoftheproperty;or
(C) Purchaseinsuranceforthelessee;(4) Attheinceptionofthelease,theeffectofthetransactionwillyieldareturnthatwillcompensatethelessor
financialinstitutionfornotlessthanthelessor’sfullinvestmentinthepropertyplustheestimatedtotalcostoffinancingthepropertyoverthetermofthelease,from:(A) Rentals;
GENERAL EXCISE TAX LAW §237-25
CHAPTER237,Page37(UnofficialCompilation)
(B) Estimated tax benefits (capital goods excise tax credit, net economic gain from tax deferral fromaccelerateddepreciation,andothertaxbenefitswithasubstantiallysimilareffect);and
(C) Theestimatedresidualvalueofthepropertyattheexpirationoftheinitialtermofthelease;(5) Themaximumleasetermduringwhichthelessorfinancialinstitutionmustrecoverthelessor’sfullinvestment
intheproperty,plustheestimatedtotalcostoffinancingtheproperty,shallbefortyyears;and(6) Attheexpirationofthelease(includinganyrenewalsorextensionswiththesamelessee),allinterestinthe
propertyshallbeeitherliquidatedorleasedagainonanonoperatingbasisassoonaspracticable(innoeventlaterthantwoyearsfromtheexpirationofthelease),butinnocaseshallthelessorretainanyinterestinthepropertybeyondfiftyyearsafterthelessor’sacquisitionoftheproperty.[L1992,c106,§4;amL2011,c43,§6]
Cross Reference
TaxInformationReleaseNo.99-4.“ApplicationoftheFranchiseTax,GeneralExciseTax,andIncomeTaxtoMortgageLoanCompanies,IncludingMortgageLoanCompaniesOrganizedasPassthroughEntitiesandSoleProprietorships”
TaxInformationReleaseNo.2005-02,“TaxationofIncomefromMerchantDiscount”TaxInformationReleaseNo.2006-03,“TaxationofIncomefromMerchantDiscount”
§237-24.9 Aircraft service and maintenance facility. (a)ThischaptershallnotapplytoamountsreceivedfromtheservicingandmaintenanceofaircraftorfromtheconstructionofanaircraftserviceandmaintenancefacilityintheState.
(b) Asusedinthissection:“Aircraft”means any craft or artificial contrivance ofwhatever description engaged in intrastate, interstate, or
internationalscheduledcommercialuseasdefinedinchapter263,thatoperateswithtwoormorejetengines.“Aircraftserviceandmaintenance”meansallscheduledandunscheduledtasksperformedwithinanaircraftservice
andmaintenancefacilityfortheinspection,modification,maintenance,andrepairofaircraftandrelatedcomponentsincludingengines,hydraulicandelectricalsystems,andallothercomponentswhichareanintegralpartofanaircraft.
“Aircraftserviceandmaintenancefacility”meansafacilityforaircraftserviceandmaintenancethatisnotlessthanthirtythousandsquarefeetinarea,andwhichmayincludeancillaryspacewhichisintegraltothefacility,suchaspartsandinventorywarehousespace,toolrooms,andrelatedadministrativeandemployeespace.
“Constructionofanaircraftserviceandmaintenancefacility”meansalldesign,engineering,labor,andmaterialcostsassociatedwiththeconstructionoffacilitiestheprinciplepurposeofwhichistheprovisionoffacilitiesforaircraftserviceandmaintenance.
“Maintenance”meanstheupkeepofaircraftengines,hydraulicandelectricalsystems,andallothercomponentswhicharean integralpartofanaircraft,butdoesnot includerefueling, janitorialservicesorcleaning,restockingofaircraftandpassengersupplies,orloadingorunloadingofcargoandpassengerbaggage.[L1997,c107,§3;amL1998,c208,§1]
Cross Reference
TaxInformationReleaseNo.2008-01,“RevocationofOutline,Act70,SLH1999andAct198,SLH2000,RevocationofOutline,Act71,SLH1999andAct198,SLH2000”
§237-25 Exemptions of sales and gross proceeds of sales to federal government, and credit unions. (a)Anyprovisionoflawtothecontrarynotwithstanding,thereshallbeexemptedfrom,andexcludedfromthemeasuresof,thetaximposedbychapter237allsales,andthegrossproceedsofallsales,of:
(1) Intoxicatingliquor,asdefinedinchapter281,hereaftersoldbyanypersonlicensedunderchapter281totheUnitedStates(includinganyagencyorinstrumentalityoftheUnitedStatesthatiswhollyownedorotherwisesoconstitutedastobeimmunefromthelevyofataxunderchapter238or244Dbutnotincludingnationalbanks),ortoanyorganizationtowhichthatsaleispermittedbytheprovisoof“Class3”ofsection281-31,locatedonanyArmy,Navy,orAirForcereservation,but thepersonmaking thesaleshallnevertheless,withinthemeaningofchapters237,244D,and281bedeemedtobealicensedseller;
(2) Tobaccoproductsandcigarettes,asdefinedinchapter245,soldbyanypersonlicensedunderthechaptertotheUnitedStates(includinganyagencyor instrumentality thereof that iswhollyownedorotherwisesoconstitutedas tobe immunefromthe levyofa taxunderchapter238or245butnot includingnationalbanks),butthepersonmakingthesaleshallnevertheless,withinthemeaningofchapters237and245,bedeemedtobealicensedseller;
(3) OthertangiblepersonalpropertysoldbyanypersonlicensedunderthischaptertotheUnitedStates(includinganyagency, instrumentality,orfederalcreditunionthereofbutnot includingnationalbanks),andtoanystate-charteredcreditunion,butthepersonmakingsuchsaleshallnevertheless,withinthemeaningofthischapter,bedeemedalicensedseller;and
(4) When the amount of property soldby a licensee turns upon the amount of theproperty sold through avendingmachineor similardevice to thecustomerusing thedevice, there shallnotbedeemed tohaveoccurredanysalecoveredbyanexemptionunderparagraph(1),(2),or(3).
§237-26 GENERAL EXCISE TAX LAW
CHAPTER237,Page38(UnofficialCompilation)
(b) Nothinginthissectionshallbedeemedtoexemptanysalestoorbyafederalcost-pluscontractor,asdefinedinchapter237,orthegrossproceedsthereof;withrespecttoallsuchactivitiesandtransactions,taxesshallbelevied,returned,computed,andassessedthesameasifthissectionhadnotbeenenacted,andinthecaseofanelectionmadeunder sections237-13(2)(F) and237-13(3)(C)(ii), the tax shall be computed the sameasupona sale to the stategovernment.
(c) Nothinginthissectionshallbedeemedtoexemptanypersonengagingorcontinuinginaservicebusinessorcallingfromanypartofthetaximposeduponthepersonforsuchactivity,andthepersonshallnotbeentitledtodeductanyamountfortangiblepersonalpropertyfurnishedinconjunctiontherewitheventhoughthepersonseparatelybillsorotherwiseshowstheamountofthegrossincomeofthebusinessderivedfromthefurnishingoftheproperty.
(d) TheexemptiongrantedbythissectionshallapplytothesellerofproductssoldintheStateasprovidedinsubsection(a)inrespectoftheprivilegeofmanufacturingorproducing,aswellastheprivilegeofselling,andthevalueorgrossproceedsofsalesoftheproductssosoldshallbeexcludedfromthemeasureofthetaximposedbychapter237uponthesellerasamanufacturerorproducer.[L1951,c284,§§1,2;amL1953,c183,§§1,2;amL1955,c214,§1;RL1955,§117-21.5;amL1957,c34,§7;amLSp19592d,c1,§16;HRS§237-25;amL1968,c7,§2;amL1971,c4,§4;amL1985,c16,§8;gench1985;amL1986,c344,§11;amL1987,c239,§6;amL1989,c8,§2andc149,§1;amL1993,c220,§3;amL1994,c141,§3andc274,§1]
Cross Reference
TaxInformationReleaseNo.22-69,“SalesofTangiblePersonalPropertytotheAmericanNationalRedCross”TaxInformationReleaseNo.80-1,“FederalCreditUnions’ExemptionfromGeneralExciseTaxes”Tax InformationReleaseNo.91-3, “UnitedStatesGovernment InternationalMerchantPurchaseAuthorizationCard (IMPAC)VisaCredit
Cards” OBSOLETETaxInformationReleaseNo.98-4,“ApplicationoftheTransientAccommodationsTaxandGeneralExciseTaxtoanOperatorofTransient
Accommodations”TaxInformationReleaseNo.2000-1,“ImpositionoftheGeneralExciseTaxonRetailingActivitiesUnderHawaiiRevisedStatutes(HRS)§§
237-16and237-13”TaxInformationReleaseNo.2001-3,“UnitedStatesGovernmentCreditCardsIssuedUnderthe‘GSASmartPay’Program”TaxInformationReleaseNo.2005-01,“GeneralExciseTaxExemptionForSalesOfTangiblePersonalPropertyToCreditUnions”TaxInformationReleaseNo.2011-02,“GeneralExciseTaxationofSalesofTangiblePersonalPropertytotheFederalGovernmentandthe
GrandfatheringRulesUnderAct105,SLH2011”
Attorney General Opinions
SalesoftangiblepersonalpropertymadetoFederalCreditUnionsareexemptfromthestategeneralexcisetax.Att.Gen.Op.65-29.TheHawaiigeneralexcisetaxcannotbeimposeduponsellerswhoselltangiblepersonalpropertytoNationalBanks.Att.Gen.Op.66-16.
§237-26 Exemption of certain scientific contracts with the United States. (a)Anyprovisionoflawtothecontrarynotwithstanding,thereshallbeexemptedfromthemeasureofthetaxesimposedbychapter237,allofthegrossproceedsderivedbyacontractororsubcontractorarisingfromtheperformanceofanyscientificworkasdefinedinsubsection(b),underacontractorsubcontractenteredintowiththeUnitedStates(includinganyagencyorinstrumentalitythereofbutnotincludingnationalbanks),andallofthegrossproceedsderivedfromthesaleoftangiblepersonalpropertybyasellerofsuchtangiblepersonalpropertytosuchcontractororsubcontractor;providedtheexemptionhereinshallapplyonlytosuchtangiblepersonalpropertywhichistobeaffixedto,ortobecomeaphysical,integralpartofthescientificfacility,orwhichistobeentirelyconsumedduringtheperformanceoftheservicerequiredbythecontractorsubcontract.
(b) Forpurposesof thissection,“scientificwork” iswork involvingprimarily theresearchanddevelopmentfor,or thedesign,manufacture, instrumentation, installation,maintenance,oroperationofaerospace,agricultural,astronomical,biomedical,electronic,geophysical,oceanographic,testrange,orotherscientificfacilities.Maintenanceor operation, for purposes of this section, shall include housekeeping functions in providing certain nonscientificlogisticandsupportservices.[L1965,c201,§27;Supp,§117-21.6;HRS§237-26;amL1970,c180,§13;amL1971,c4,§5;amL1988,c163,§1]
Cross Reference
Exemptionfromusetax,seeL1965,c201,§28.TaxInformationReleaseNo.35-71,“Section237-26—ApplicationoftheGeneralExciseTaxtoCertain`ScientificContracts’and`Tangible
PersonalProperty’FurnishedinConnectionTherewith”
Case Notes
Construedasreadbefore1970amendment.57H.253,554P.2d238.
§237-27 Exemption of certain petroleum refiners. (a)Asusedinthissection:“Petroleum products” means petroleum; any distillate, fraction, or derivative of petroleum; natural gas or its
components;gasmanufacturedfromapetroleumproduct;andanyproductderivedfromthegasorfromthemanufacturethereof,suchasbenzene,xylene,toluene,acetylene,tars,componentsoftars,andammonia.
“Refiner”meansanypersonwho,intheState,engagesinthebusinessofrefiningpetroleumproductsandistaxableunderthischapter,uponthevalueorgrossproceedsofsalesofthepetroleumproductsresultantfromthebusiness.A
GENERAL EXCISE TAX LAW §237-27.6
CHAPTER237,Page39(UnofficialCompilation)
personwhoisengagedinbusinessasarefinerandalsoinotherbusinessshallbedeemedarefineronlyinrespectofthebusinessthatproducestheproductsincludedinthemeasureofthetaximposedbythischapter.
“Refining”means:(1) Anyprocessperformedbya refiner that includesachange in thecharacterorpropertiesofapetroleum
productthroughtheapplicationofheat;or(2) Thecompoundingbyarefinerofapetroleumproductwithaproductthathasbeenrefinedbytherefinerby
theprocessstatedinparagraph(1).(b) Thereshallbeexcludedfromthemeasureofthetaxonarefinersuchpartofthepetroleumproductsresultant
fromthe refiner’sbusinessas is tobe further refinedbyanother refiner, to theextent that thepetroleumproductsresultantfromsuchfurtherrefiningwillbe(orbutforthissubsectionwouldbe)includedinthemeasureofthetaxonsuchotherrefiner,andwherepetroleumproductsaretobeusedpartlyforsuchrefiningandpartlyforotherpurposes,theproportionusedforeachpurposeshallbedetermineduponthebasisofweightorBTUcontent.[L1953,c274,§3;RL1955,§117-22;HRS§237-27;amimpL1984,c90,§1;gench1985;amL2018,c18,§11]
§237-27.1 REPEALED. L2009,c11,§25
§237-27.5 Air pollution control facility. (a)Asusedinthissection,“airpollutioncontrolfacility”shallmeananewidentifiabletreatmentfacility,equipment,device,orthelike,whichisusedtoabateorcontrolatmosphericpollutionorcontaminationbyremoving,reducing,orrenderinglessnoxiousaircontaminantsemittedintotheatmospherefromapointimmediatelyprecedingthepointofsuchremoval,reduction,orrenderingtothepointofdischargeofair,meetingemissionstandardsasestablishedbythedepartmentofhealth,excludingairconditioner,fan,orothersimilarfacilityforthecomfortofpersonsataplaceofbusiness.
(b) Any provision of law to the contrary notwithstanding, and upon receipt of the certification required bysubsection(c),thereshallbeexemptedfrom,andexcludedfromthemeasureof,thetaxesimposedbythischapter,allofthegrossproceedsarisingfrom,andalloftheamountoftangiblepersonalpropertyfurnishedinconjunctionwith,theconstruction,reconstruction,erection,operation,use,ormaintenanceofanairpollutioncontrolfacility.
(c) Applicationfortheexemptionprovidedbythissectionshallfirstbemadewiththedirectorofhealthwho,ifsatisfiedthatthefacilitymeetsthepollutionemissioncriteriaestablishedbythedepartmentofhealth,shallcertifytothatfact.Anewcertificateshallbeobtainedfromthedirectorofhealthandfiledwiththedirectoroftaxationeveryfiveyearscertifyingthatthepollutioncontrolfacilitycomplieswiththepollutantemissioncriteriaestablishedbythedepartmentofhealth.[L1970,c134,§1;amL1989,c14,§15]
§237-27.6 Solid waste processing, disposal, and electric generating facility; certain amounts exempt. (a)Anyprovisionsofthelawtothecontrarynotwithstanding,thereshallbeexemptedfrom,andexcludedfromthemeasureof,thetaxesimposedbythischapteralloftheamountsenumeratedinsubsection(b)arisingfromatransactioninvolvingasaleandleasebackofasolidwasteprocessing,disposal,andelectricgeneratingfacilityenteredintobyapoliticalsubdivisionoftheStateundersection46-19.1wherethefacilityisownedorunderconstructionbythesubdivisionbeforeMay10,1988.
(b) Amountsareexemptedorexcludedfromtaxationunderthischapteronlytotheextentthatthey:(1) Arereceivedbyanoperatorofafacilityunderanoperatingcontractwithapoliticalsubdivision,wherethe:
(A) Operator,oritssuccessor,enteredintoanoperatingcontractpriortoMay10,1988;(B) Operatorentersintoaleaseofthefacilityfromtheowneratatimethatcoincideswiththetimethe
ownerandthepoliticalsubdivisionenteringintoasaleandleasebacktransaction;and(C) Amountsareusedbytheoperatortomakerentalpaymentstotheowner;
(2) Arereceivedasrentalpaymentsbytheownerofthefacilityfromtheoperatorofthefacility;(3) Donotexceedthepaymentsmadebytheownerofthefacilityunderthesaleandleasebacktransactiontothe
politicalsubdivision;and(4) Innocaseexceeddebtservicecostsincurredbythepoliticalsubdivisionfortheconstructionofthefacility.
(c) Forthepurposesofthissection:“Debtservicecosts”meanspaymentsofprincipalandinterestongeneralobligationbondsissuedatanytimebya
politicalsubdivisionfortheconstructionofthefacility.“Saleandleaseback”meansatransactioninwhichafacilityissoldbyapoliticalsubdivisiontoaprivateentityfor
cash,underaninstallmentsale,afinancinglease,orsimilararrangement,oranycombinationthereof,wherethepoliticalsubdivisionhastherighttorepurchasethefacilityatalaterdate,andwherethefacilityisleasedtoanoperatorofthefacility.
“Solidwasteprocessing,disposal,andelectricgeneratingfacility”or“facility”meansafacilityfortheprocessinganddisposalofsolidwasteorthegenerationofelectricenergy,orboth,theconstructionofwhichhasbeenfinancedpursuanttosection47-4andconstitutesanundertakingasdefinedinsection49-1.
“Operator”meansaprivateentitywhoentersintoanagreementorotherarrangementwiththeownerofasolidwasteprocessing,disposal,andelectricgeneratingfacilityforthepurposeofoperatingsuchfacilityforapoliticalsubdivisionoftheState.
§237-28 GENERAL EXCISE TAX LAW
CHAPTER237,Page40(UnofficialCompilation)
“Owner”meansanypersonwhopurchasesasolidwasteprocessing,disposal,andelectricgeneratingfacilityundersection46-19.1.[L1988,c57,§2;amL1990,c34,§6]
Revision Note
“May10,1988”substitutedforthe“effectivedateofthissection”.
§237-28 REPEALED. L1987,c39,§8.
[§237-28.1] Exemption of certain shipbuilding and ship repair business. There shall be exempted from, andexcludedfromthemeasureof,thetaxesimposedbythischapterallofthegrossproceedsarisingfromshipbuildingandshiprepairsrenderedtosurfacevesselsfederallyownedorengagedininterstateorinternationaltrade.[L1971,c204,§1]
§237-28.2 REPEALED. L2003,c135,§12.
§237-29 Exemptions for certified or approved housing projects. (a)Allgrossincomereceivedbyanyqualifiedpersonorfirmfortheplanning,design,financing,construction,sale,orleaseintheStateofahousingprojectthathasbeencertifiedorapprovedundersection201H-36shallbeexemptfromgeneralexcisetaxes.
(b) Allgrossincomereceivedbyanonprofitoralimiteddistributionmortgagorforalow-andmoderate-incomehousingprojectcertifiedorapprovedundersection201H-36shallbeexemptfromgeneralexcisetaxes.
(c) ThedirectoroftaxationandthehousingandcommunitydevelopmentcorporationofHawaiishalladoptrulespursuanttochapter91forthepurposeofthissection,includinganytimelimitationfortheexemptions.[L1967,c140,§§1,2;HRS§237-29;amL1969,c132,§1;amL1983,c228,§1;amL1985,c77,§1;amL1987,c337,§11;amL1988,c153,§3;amL1989,c237,§2;amL1990,c68,§2;amL1997,c350,§§14to16;amL2007,c249,§18]
Notes
EffectiveJuly1,2006,“housingandcommunitydevelopmentcorporationofHawaii”changedto“Hawaiihousingfinanceanddevelopmentadministration”.L2005,c196,§26(b).
§237-29.5 Exemption for sales of tangible personal property shipped out of the State. (a)Thereshallbeexemptedfrom,andexcludedfromthemeasureof,thetaxesimposedbythischapterallofthevalueorgrossproceedsarisingfromthemanufacture,production,orsaleoftangiblepersonalproperty:
(1) Shippedbythemanufacturer,producer,orsellertoapointoutsidetheStatewherethepropertyisresoldorotherwiseconsumedorusedoutsidetheState;or
(2) Thesaleofwhichisexemptundersection237-24.3(2).(b) For the purposes of this section, the manufacturer, producer, or seller shall take from the purchaser, a
certificate,insuchformasthedepartmentshallprescribe,certifyingthatthetangiblepersonalpropertypurchasedistoberesoldorotherwiseconsumedorusedoutsidetheState.Anypurchaserwhoshallfurnishsuchacertificateshallbeobligatedtopaytotheseller,upondemand,ifthepropertypurchasedisnotresoldorotherwiseconsumedorusedoutsidetheState,theamountoftheadditionaltaxwhichbyreasonthereofisimposedupontheseller.[L1987,c239,ptof§4;amL1988,c173,§1;amL1993,c220,§4;amL1994,c141,§4]
Cross Reference
TaxInformationReleaseNo.88-1,“GeneralExciseTaxExemptionforSalesofTangiblePersonalPropertyShippedOutoftheState” OBSOLETETaxInformationReleaseNo.93-4,“ApplicationofSection237-24.3(1)(C),HawaiiRevisedStatutes(HRS)(FormerlySection237-24(18)(C),
HRS)(Note:thereferencetosection237-24.3(1)(C)shouldbetosection237-24.3(2)(C))”TaxInformationReleaseNo.98-5,“GeneralExciseTaxExemptionforTangiblePersonalProperty,IncludingSouvenirsandGiftItems,Shipped
OutoftheState”
§237-29.53 Exemption for contracting or services exported out of State. (a)Thereshallbeexemptedfrom,andexcludedfromthemeasureof,taxesimposedbythischapter,allofthevalueorgrossincomederivedfromcontracting(asdefinedundersection237-6)orservicesperformedbyapersonengagedinaservicebusinessorcallingintheStateforuseoutsidetheStatewhere:
(1) Thecontractingorservicesareforresale,consumption,oruseoutsidetheState;and(2) Thevalueorgrossincomederivedfromthecontractingorservicesperformedwouldotherwisebesubjectto
thetaximposedunderthischapteroncontractingorservicesatthehighestrate.Forthepurposesof thissubsection, thesellerorpersonrenderingthecontractingorservicesexportedandresold,consumed,orusedoutsidetheStateshalltakefromthecustomer,acertificateoranequivalent,inaformthedepartmentprescribes,certifyingthatthecontractingorservicepurchasedistobeotherwiseresold,consumed,orusedoutsidetheState.Anycustomerwhofurnishesthiscertificateoranequivalentshallbeobligatedtopaythesellerorpersonrenderingthecontractingorservices,upondemand,ifthecontractingorservicepurchasedisnotresoldorotherwiseconsumedorusedoutsidetheState,theamountoftheadditionaltaxwhichbyreasonthereofisimposeduponthesellerorpersonrenderingthecontractingorservice.
18-237-29.53
GENERAL EXCISE TAX LAW [§237-29.7]
CHAPTER237,Page41(UnofficialCompilation)
(b) There shall be exempted from, and excluded from themeasure of, taxes imposedby this chapter, all ofthevalueorgrossincomederivedfromcontracting(asdefinedinsection237-6)orservicesperformedbyapersonengagedinaservicebusinessorcallingintheStateforapurchaserwhoresellsallofthecontractingorservicesforresale,consumption,oruseoutsidetheStatepursuanttosubsection(a).Forthepurposesofthissubsection,theselleror person rendering the contractingor services for a purchaserwho resells the contractingor services for resale,consumption,oruseoutsidetheStateshalltakefromthepurchaser,acertificateoranequivalent,inaformthatthedepartmentprescribes,certifyingthatthecontractingorservicespurchasedistobeforresale,consumption,oruseoutsidetheStatepursuant tosubsection(a).Anypurchaserwhofurnishesthiscertificateoranequivalentshallbeobligatedtopaythesellerorpersonrenderingthecontractingorservices,upondemand,ifthecontractingorservicespurchasedisnotresoldinitsentiretytoacustomerofthepurchaserwhohascompliedwithsubsection(a),theamountoftheadditionaltaxwhichbyreasonthereofisimposeduponthesellerorthepersonrenderingthecontractingorservice.[L1999,c70,§1;amL2000,c198,§6]
Note
The1999enactmentappliestogrossincomeandgrossproceedsreceivedafterDecember31,1999. L1999,c70,§11.Applicabilityof2000amendment. L2000,c198,§17.
Cross Reference
TaxInformationReleaseNo.2008-01,“RevocationofOutline,Act70,SLH1999andAct198,SLH2000,RevocationofOutline,Act71,SLH1999andAct198,SLH2000”
TaxInformationReleaseNo.2009-02,“Exemptionforcontractingorservicesexportedoutofstate,HRSsection237-29.53;Impositionoftaxonimportedservicesorcontracting,HRSsection238-2.3”
TaxInformationReleaseNo.2018-06,“GeneralExciseTaxExemptionforContractingandServicesExportedOutsidetheState;SourcingofIncomefromContractingandServices”
[§237-29.55] Exemption for sale of tangible personal property for resale at wholesale. (a)Thereshallbeexemptedfrom,andexcludedfromthemeasureof,thetaxesimposedbythischapterallofthegrossproceedsorgrossincomearisingfromthesaleoftangiblepersonalpropertyimportedtoHawaiifromaforeignordomesticsourcetoalicensedtaxpayerforsubsequentresaleforthepurposeofwholesaleasdefinedundersection237-4.
(b) Thedepartment,byrule,mayprovidethatasellermaytakefromthepurchaserofimportedtangiblepersonalproperty, a certificate, in a form that thedepartment shallprescribe, certifying that thepurchaserof the importedtangiblepropertyshallreselltheimportedtangiblepersonalpropertyatwholesaleasdefinedundersection237-4.Anypurchaserwhofurnishesacertificateshallbeobligatedtopaytotheseller,upondemand,ifthesaleinfactisnotasaleforthepurposeofresaleatwholesale,theamountoftheadditionaltaxwhichbyreasonthereofisimposedupontheseller.Theabsenceofacertificate,unlessthesalesofthebusinessareexclusivelyasaleforthepurposeofresaleatwholesale,initself,shallgiverisetothepresumptionthatthesaleisnotasaleforthepurposeofresaleatwholesale.[L1998,c247,§1]
Cross Reference
TaxInformationReleaseNo.98-8,“ApplicationofAct247,SessionLawsofHawaii1998(Act247),Relating to theGeneralExciseTaxExemptionforTangiblePersonalPropertyImportedIntotheStateforResaleatWholesale”
[§237-29.57] Exemption for intangible property used outside the State. (a)AllofthevalueorgrossproceedsarisingfromtheuseofintangiblepropertyoutsidetheStateshallbeexemptedfrom,andexcludedfromthemeasureof,thetaxesimposedbythischapter.
(b) Forthepurposesofthissection,thesellerorlicensorshalltakefromthepurchaseracertificate,inaformprescribedbythedepartment,certifyingthattheintangiblepropertyistobeusedoutsidetheState.Anypurchaserwhofurnishesthecertificateshallbeobligatedtopaytothesellerorlicensor,upondemand,theamountoftheadditionaltaxthatisimposeduponthesellerorlicensor,iftheintangiblepropertyisusedinthisState.[L2018,c183,§1]
Note
SectionappliestotaxableyearsbeginningafterDecember31,2018.L2018,c183,§7.
§237-29.6 REPEALED effective January 1, 2000. L1999,c70,§9.Cross Reference
TaxInformationReleaseNo.88-2,“GeneralExciseTaxExemptionforCertainComputerServices” OBSOLETE
§237-29.65 REPEALED. L2007,c9,§26.
[§237-29.7] Exemption of insurance companies. Thischaptershallnotapplytothegrossincomeorgrossproceedsofinsurancecompaniesauthorizedtodobusinessunderchapter431;exceptthisexemptionshallnotapplytoanygrossincomeorgrossproceeds receivedafterDecember31,1991,as rents frominvestments in realproperty in thisState;
§237-29.75 GENERAL EXCISE TAX LAW
CHAPTER237,Page42(UnofficialCompilation)
providedthatgrossincomeorgrossproceedsfrominvestmentsinrealpropertyreceivedbyinsurancecompaniesafterDecember31,1991,underwrittencontractsenteredintobeforeJanuary1,1992,thatdonotprovideforthepassingonoftaxesortaxincreasesshallnotbetaxeduntilthecontractsarerenegotiated,renewed,orextended.[L1991,c286,§1]
Note
“January1,1992”substitutedforthe“effectivedateofthisAct”.
Case Notes
ManagementcompanyforforeigninsurersauthorizedtodobusinessinHawaiiwasnotan“insurancecompany”exemptfromgeneralexcisetaxesunderthissection,where,interalia,company’sarrangementswithinsurersindicatedthatitwasaseparatetaxablelegalentity.115H.180,166P.3d353(2007).
§237-29.75 REPEALED. L2007,c9,§27.
[§237-29.8] Call centers; exemption; engaging in business; definitions. (a)Thischaptershallnotapplytoamountsreceivedfromapersonoperatingacallcenterbyapersonengagedinbusinessasatelecommunicationscommoncarrierfor interstate or foreign telecommunications services, including toll-free telecommunications, telecommunicationscapabilitiesforelectronicmail,voice,anddatatelecommunications,computerizedtelephonesupport,facsimile,wideareatelecommunicationsservices,orcomputer-to-computercommunication.
(b) TheestablishmentofacallcenterinthisStatebyanypersonshallnotbeusedbyitselfbytheStatetofindthatanyotherpartoftheperson’sbusinessisengagedinbusinessinthisStateforthepurposesofthischapter.Grossincomeorgrossproceedsreceivedbyacallcenterforcustomerserviceandsupportshallbeexemptfromthemeasureoftaxesimposedbythischapter.
(c) Thedepartment,byrule,mayprovidethatthepersonprovidingthetelecommunicationsservicemaytakefromthepersonoperatingacallcenteracertificate,inaformthatthedepartmentshallprescribe,certifyingthattheamountsreceivedfortelecommunicationsservicesareforoperatingacallcenter.Ifthecertificateisrequiredbyruleofthedepartment,theabsenceofthecertificateinitselfshallgiverisetothepresumptionthattheamountsreceivedfromthesaleoftelecommunicationsservicesarenotforoperatingacallcenter.
(d) Asusedinthissection:“Call center”means a physical or electronicoperation that focuses onproviding customer service and support
for computer hardware and software companies, manufacturing companies, software service organizations, andtelecommunicationssupportservices,withinanorganizationinwhichamanagedgroupofindividualsspendmostoftheirtimeengaginginbusinessbytelephone,usuallyworkinginacomputer-automatedenvironment;providedthattheoperationshallnotincludetelemarketingorsales.
“Customerserviceandsupport”meansproductsupport, technicalassistance,salessupport,phoneorcomputer-basedconfigurationassistance,softwareupgradehelplines,andtraditionalhelpdeskservices.
“Telecommunicationscommoncarrier”meansanypersonthatowns,operates,manages,orcontrolsanyfacilityusedtofurnishtelecommunicationsservicesforprofittothepublic,ortoclassesofusersastobeeffectivelyavailabletothepublic,engagedintheprovisionofservices,suchasvoice,data,image,graphics,andvideoservices,thatmakeuseofallorpartoftheirtransmissionfacilities,switches,broadcastequipment,signalling,orcontroldevices.
“Telecommunications service” or “telecommunications”means the offering of transmission between or amongpointsspecifiedbyauser,ofinformationoftheuser’schoosing,includingvoice,data,image,graphics,andvideowithoutchangeintheformorcontentoftheinformation,assentandreceived,bymeansofelectromagnetictransmission,orothersimilarlycapablemeansoftransmission,withorwithoutbenefitofanyclosedtransmissionmedium.
(e) ThissectionshallnotapplytogrossproceedsorgrossincomereceivedafterJune30,2010.[L2000,c195,§2]
[§237- ] Temporary suspension of exemption of certain amounts; levy of tax. [Note: section is temporary and uncodified, shall take effect July 1, 2011 and shall be repealed on June 30, 2013. L 2011, c 105, §6] (a)Notwithstandinganyotherlawtothecontrary,theexemptionofthefollowingamountsfromtaxationunderthischaptershallbesuspendedfromJuly1,2011,throughJune30,2013:
(1) Amountsdeductedfromthegrossincomereceivedbycontractorsasdescribedundersection237-13(3)(B);(2) Reimbursementsreceivedbyfederalcost-pluscontractorsforthecostsofpurchasedmaterials,plant,and
equipmentasdescribedundersection237-13(3)(C);(3) Grossreceiptsofhomeserviceprovidersactingasservicecarriersprovidingmobile telecommunications
servicestootherhomeserviceprovidersasdescribedundersection237-13(6)(D);(4) Amountsdeducted from thegross incomeof realproperty lesseesbecauseof receipt fromsublesseesas
describedundersection237-16.5;(5) Thevalueorgrossincomereceivedbynonprofitorganizationsfromcertainconventions,conferences,trade
showexhibits,ordisplayspacesasdescribedundersection237-16.8;(6) Amountsreceivedbysugarcaneproducersasdescribedundersection237-24(14);
GENERAL EXCISE TAX LAW [§237- ]
CHAPTER237,Page43(UnofficialCompilation)
(7) Amounts received from the loading, transportation, and unloading of agricultural commodities shippedinterislandasdescribedundersection237-24.3(1);
(8) Amounts received from the saleof intoxicating liquor, cigarettesand tobaccoproducts, andagricultural,meat,orfishproductstopersonsorcommoncarriersengagedininterstateorforeigncommerceasdescribedundersection237-24.3(2);
(9) Amountsreceivedoraccruedfromtheloadingorunloadingofcargoasdescribedundersection237-24.3(4)(A);
(10)Amountsreceivedoraccruedfromtugboatandtowageservicesasdescribedundersection237-24.3(4)(B);(11)Amountsreceivedoraccruedfromthetransportationofpilotsorgovernmentofficialsandothermaritime-
relatedservicesasdescribedundersection237-24.3(4)(C);(12)Amountsreceivedbylabororganizationsforrealpropertyleasesasdescribedundersection237-24.3(10);(13)Amountsreceivedasrentforaircraftoraircraftenginesusedforinterstateairtransportationasdescribed
undersection237-24.3(12);(14)Amountsreceivedbyexchangesandexchangemembersasdescribedundersection237-24.5;(15)Amountsreceivedashightechnologyresearchanddevelopmentgrantsundersection206M-15asdescribed
undersection237-24.7(10);(16)Amounts received from the servicing andmaintenanceof aircraft or constructionof aircraft service and
maintenancefacilitiesasdescribedundersection237-24.9;(17)Grossproceedsfromthesaleofthefollowing:
(A) IntoxicatingliquortotheUnitedStates(includinganyagencyorinstrumentalityoftheUnitedStatesthatiswhollyownedorotherwisesoconstitutedastobeimmunefromthelevyofataxunderchapter238or244D,butnotincludingnationalbanks)oranyorganizationtowhichthesaleispermittedbytheprovisoof“Class3”ofsection281-31thatislocatedonanyArmy,Navy,orAirForcereservationasdescribedundersection237-25(a)(1);
(B) TobaccoproductsandcigarettestotheUnitedStates(includinganyagencyorinstrumentalitythereofthatiswhollyownedorotherwisesoconstitutedastobeimmunefromthelevyoftaxunderchapter238or245,butnotincludingnationalbanks)asdescribedundersection237-25(a)(2);and
(C) “Other tangible personal property” to theUnited States (including any agency, instrumentality, orfederalcreditunionthereof,butnotincludingnationalbanks)andanystate-charteredcreditunionasdescribedundersection237-25(a)(3);
(18)Amountsreceivedbypetroleumproductrefinersfromotherrefinersforfurtherrefiningofpetroleumproductsasdescribedundersection237-27;
(19)Gross proceeds received from the construction, reconstruction, erection, operation, use,maintenance, orfurnishing of air pollution control facilities, as described under section 237-27.5, that do not have validcertificatesofexemptiononJuly1,2011;
(20)Grossproceedsreceivedfromshipbuildingandshiprepairsasdescribedundersection237-28.1;(21)Amountsreceivedbytelecommunicationscommoncarriersfromcallcenteroperatorsforinterstateorforeign
telecommunicationsservicesasdescribedundersection237-29.8;(22)Grossproceedsreceivedbyqualifiedbusinessesinenterprisezones,asdescribedundersection209E-11,that
donothavevalidcertificatesofqualificationfromthedepartmentofbusiness,economicdevelopment,andtourismonJuly1,2011;and
(23)Grossproceedsreceivedbycontractorslicensedunderchapter444forconstructionwithinenterprisezonesperformedforqualifiedbusinesseswithintheenterprisezonesorbusinessesapprovedbythedepartmentofbusiness,economicdevelopment,andtourismtoenrollintotheenterprisezoneprogram,asdescribedundersection209E-11.
(b) Exceptasotherwiseprovidedundersubsection(f),(g),or(h),thereislevied,assessed,andcollectedannuallyagainstataxpayerreceivingorderivingpreviouslyexemptgrossincomeorgrossproceedsofsalefromJuly1,2011,toJune30,2013,ataxattherateoffourpercentonthatpreviouslyexemptgrossincomeorgrossproceedsofsale.
(c) Asusedinthissection,“previouslyexemptgrossincomeorgrossproceedsofsale”meanstheamountofthegrossincomeorgrossproceedsofsale,theexemptionforwhichissuspendedundersubsection(a).Thetermalsoincludesthevaluereceivedbyanonprofitorganizationfromconventions,conferences,tradeshowexhibits,anddisplayspaces,theexemptionforwhichissuspendedundersubsection(a)(5).
(d) Thetaxpayer,againstwhomthetaxisleviedandassessedunderthissection,shallberesponsibleforpaymentofthetaxtothedirectoroftaxation.
(e) Notwithstandingsection237-8.6,nocountysurchargeshallbelevied,assessed,orcollectedonanypreviouslyexemptgrossincomeorgrossproceedsofsalethatissubjecttotaxationundersubsection(b).
(f) ThissectionshallnotapplytogrossincomeorgrossproceedsfrombindingwrittencontractsenteredintopriortoJuly1,2011,thatdonotpermitthepassingonofincreasedratesoftaxes.
(g) Thissectionshallnotapplytogrossincomeorgrossproceedsfromstevedoringservicesandrelatedservices,asdefinedinsection382-1,furnishedtoacompanybyitswhollyownedsubsidiary.
[§237- ] GENERAL EXCISE TAX LAW
CHAPTER237,Page44(UnofficialCompilation)
(h) Thetaximposedundersubsection(b)shallnotapplytoanygrossincomeorgrossproceedsofsalethatcannotlegallybesotaxedundertheConstitutionorlawsoftheUnitedStates,butonlysolongas,andonlytotheextenttowhichtheStateiswithoutpowertoimposethetax.
Totheextentthatanyexemption,exclusion,orapportionmentisnecessarytocomplywiththeprecedingsentence,thedirectoroftaxationshall:
(1) Exemptorexcludethegrossincomeorgrossproceedsofsalefromthetaxundersubsection(b);or(2) ApportionthegrossincomeorgrossproceedsofsalederivedwithintheStatebypersonsengagedinbusiness
bothwithinandwithouttheStatetodeterminethegrossincomeorgrossproceedsofsalethatissubjecttotaxationunderthischapterforthepurposesofsection237-21.
(i) Thischaptershallapplytothepayment,collection,enforcement,andappealofthetaxleviedunderthissection.Thedirectoroftaxationmayestablishadditionalrequirements,procedures,andformspursuanttorulesadopted
underchapter91,toeffectuatethissection.[L2011,c105,§2]Cross Reference
TaxInformationReleaseNo.2011-01,“GeneralExciseTaxationofConventionandConferenceFees”TaxInformationReleaseNo.2011-02,“GeneralExciseTaxationofSalesofTangiblePersonalPropertytotheFederalGovernmentandthe
GrandfatheringRulesUnderAct105,SLH2011”TaxInformationReleaseNo.2011-03,“EffectofAct105,SLH2011,onGeneralExciseTaxLiabilityofMobileTelecommunicationsService
Providers”TaxInformationReleaseNo.2011-04,“GeneralExciseTaxReportingRequirementsforNonprofitOrganizations”
[§237- ] Information reporting. [Note: section is temporary and uncodified, shall take effect July 1, 2011 and shall be repealed on June 30, 2013. L 2011, c 105, §6] BeginningJuly1,2011,thedirectoroftaxationshallrequireinformationreportingonallexclusionsorexemptionsofallamounts,persons,ortransactionsfromthischapter,exceptforthefollowing:
(1) Amountsreceivedthatareexemptundersection237-24(1)through(7);and(2) Anyotheramounts,persons,ortransactionsasdeterminedbythedirectortobeinthebestinterestoftax
administrationandmadebyofficialpronouncement.[L2011,c105,§2]
RETURNS AND PAYMENTS
§237-30 Monthly, quarterly, or semiannual return, computation of tax, payment. (a) The taxes leviedhereundershallbepayableinmonthlyinstallmentsonorbeforethetwentiethdayofthecalendarmonthfollowingthemonthinwhichtheyaccrue.Thetaxpayer,onorbeforethetwentiethdayofthecalendarmonthfollowingthemonthinwhichthetaxesaccrue,shallmakeoutandsignareturnoftheinstallmentoftaxforwhichthetaxpayerisliablefortheprecedingmonthandtransmitthesame,togetherwitharemittance,intheformrequiredbysection237-31,fortheamountofthetax,totheofficeofthedepartmentoftaxationintheappropriatedistricthereinafterdesignated.
(b) Notwithstandingsubsection(a),thedirectoroftaxation,forgoodcause,maypermitataxpayertofilethetaxpayer’sreturnrequiredunderthissectionandmakepaymentsthereon:
(1) Onaquarterlybasisduringthecalendarorfiscalyear,thereturnandpaymenttobemadeonorbeforethetwentiethdayofthecalendarmonthafterthecloseofeachquarter,towit:forcalendaryeartaxpayers,onorbeforeApril20,July20,October20,andJanuary20or,forfiscalyeartaxpayers,onorbeforethetwentiethdayofthefourthmonth,seventhmonth,andtenthmonthfollowingthebeginningofthefiscalyearandonorbeforethetwentiethdayofthemonthfollowingthecloseofthefiscalyear;providedthatthedirectorissatisfiedthatthegrantofthepermitwillnotundulyjeopardizethecollectionofthetaxesduethereonandthetaxpayer’stotaltaxliabilityforthecalendarorfiscalyearunderthischapterwillnotexceed$4,000;or
(2) Onasemiannualbasisduringthecalendarorfiscalyear,thereturnandpaymenttobemadeonorbeforethetwentieth day of the calendarmonth after the close of each six-month period, towit: for calendar yeartaxpayers,onJuly20andJanuary20or, forfiscalyear taxpayers,onorbefore the twentiethdayof theseventhmonthfollowingthebeginningofthefiscalyearandonorbeforethelastdayofthemonthfollowingthecloseofthefiscalyear;providedthatthedirectorissatisfiedthatthegrantofthepermitwillnotundulyjeopardizethecollectionofthetaxesduethereonandthetaxpayer’stotaltaxliabilityforthecalendarorfiscalyearunderthischapterwillnotexceed$2,000.
Thedirector,forgoodcause,maypermitataxpayertomakemonthlypaymentsbasedonthetaxpayer’sestimatedquarterlyorsemiannualliability,providedthetaxpayerfilesareconciliationreturnattheendofeachquarterorattheendofeachsix-monthperiodduringthecalendarorfiscalyear,asprovidedinthissection.
(c) If a taxpayerfiling the taxpayer’s returnon a quarterly or semiannual basis, as provided in this section,becomesdelinquentineitherthefilingofthetaxpayer’sreturnorthepaymentofthetaxesduethereon,oriftheliabilityofataxpayer,whopossessesapermittofilethetaxpayer’sreturnandtomakepaymentsonasemiannualbasisexceeds$2,000ingeneralexcisetaxesduringthecalendaryearorexceeds$4,000ingeneralexcisetaxesduringthecalendar
18-237-30
GENERAL EXCISE TAX LAW §237-31
CHAPTER237,Page45(UnofficialCompilation)
yearifmakingpaymentsonaquarterlybasis,orifthedirectordeterminesthatanysuchquarterlyorsemiannualfilingofreturnwouldundulyjeopardizetheproperadministrationofthischapter,includingtheassessmentorcollectionofthegeneralexcisetax,thedirectormay,atanytime,revokeataxpayer’spermit,inwhichcasethetaxpayerwillthenberequiredtofilethetaxpayer’sreturnandmakepaymentsthereonashereinprovidedinsubsection(a).
(d) Thedirectormayadoptandpromulgaterulesandregulationstocarryoutthepurposesofthissection.(e) Section232-2doesnotapplytoamonthlyreturn.[L1935,c141,§5;amL1941,c265,§3;RL1945,§5461;
amL1945,c253,§5;amL1953,c161,§5;RL1955,§117-25;amL1957,c34,§9;amLSp19592d,c1,§16;amL1964,c23,§2;amL1965,c177,§1;amL1967,c26,§1andc37,§1;HRS§237-30;amL1981,c139,§1;amimpL1984,c90,§1;amL1985,c130,§1;gench1985;amL1993,c39,§1;amLSp20013d,c8,§3;amL2009,c196,§4]
Note
The2009amendmentappliestoreturnsandpaymentsdueafterMay31,2009.L2009,c196,§8.
Cross Reference
Rules,seechapter91.TaxInformationReleaseNo.94-6,“ResaleCertificates”
[§237-30.5] Collection of rental by third party; filing with department; statement required. (a)EverypersonauthorizedunderanagreementbytheownerofrealpropertylocatedwithinthisStatetocollectrentonbehalfofsuchownershallbesubjecttothissection.
(b) Everywrittenrentalcollectionagreementshallhaveonthefirstpageoftheagreementthename,address,socialsecuritynumber,and,ifavailable,thegeneralexcisetaxnumberoftheowneroftherealpropertybeingrented,theaddressofthepropertybeingrented,andthefollowingstatementwhichshallbesetforthinboldprintandinten-pointtypesize:
“HAWAII GENERAL EXCISE TAXES MUST BE PAID ON THE GROSS RENTS COLLECTED BY ANY PERSON RENTING REAL PROPERTY IN THE STATE OF HAWAII. A COPY OF THE FIRST PAGE OF THIS AGREEMENT, OR OF FEDERAL INTERNAL REVENUE FORM 1099 STATING THE AMOUNT OF RENTS COLLECTED, SHALL BE FILED WITH THE HAWAII DEPARTMENT OF TAXATION.”
Everypersonenteringanoralrentalcollectionagreementshallfurnishthedepartmentoftaxationtheinformationrequiredunderthissubsectionandshallgivetheownerofthepropertyacopyofthenoticerequiredbythissubsection.
(c) Everypersonauthorized tocollect rent foranotherpersonshallfileacopyof thefirstpageof the rentalcollectionagreementwiththedepartmentoftaxationwithinthirtydaysafterenteringintotheagreement,orshallfileacopyoffederalInternalRevenueform1099,thepropertyowner’ssocialsecuritynumber,and,ifavailable,thegeneralexcisetaxlicensenumberoftheownerofthepropertybeingrentedwiththedepartmentoftaxationatthesametimeassuchformsmustbefiledwiththeInternalRevenueService.
(d) EverypersonauthorizedunderanagreementbytheownerofrealpropertylocatedwithinthisStatetocollectrentonbehalfofsuchownerwithinninetydaysaftertheeffectivedateofthissectionshallfurnishthedepartmentoftaxationwiththeinformationrequiredinsubsection(b)andinthecaseoffederalform1099suchformforthetaxableyear1983.Thepersonalsoshallnotifytheownerthatsuchinformationisbeingfurnishedandgivetheowneracopyofthenoticerequiredbysubsection(b).[L1983,c234,§2]
§237-31 Remittances. Allremittancesoftaxesimposedbythischaptershallbemadebymoney,bankdraft,check,cashier’scheck,moneyorder,orcertificateofdeposittotheofficeofthedepartmentoftaxationtowhichthereturnwastransmitted.Thedepartmentshallissueitsreceiptstherefortothetaxpayerandshallpaythemoneysintothestatetreasuryasastaterealization,tobekeptandaccountedforasprovidedbylaw;providedthat:
(1) Asum,nottoexceed$5,000,000,fromallgeneralexcisetaxrevenuesrealizedbytheStateshallbedepositedinthestatetreasuryineachfiscalyeartothecreditofthecompoundinterestbondreservefund;
(2) AsumfromallgeneralexcisetaxrevenuesrealizedbytheStatethatisequaltoone-halfofthetotalamountoffundsappropriatedortransferredoutofthehurricanereservetrustfundundersections4and5ofAct62,SessionLawsofHawaii2011,shallbedepositedintothehurricanereservetrustfundinfiscalyear2013-2014andinfiscalyear2014-2015;providedthatthedepositrequiredineachfiscalyearshallbemadebyOctober1ofthatfiscalyear;and
(3) Commencingwithfiscalyear2018-2019,asumfromallgeneralexcisetaxrevenuesrealizedbytheStatethat represents the difference between the state public employer’s annual required contribution for theseparate trust fund established under section 87A-42 and the amount of the state public employer’scontributionsintothattrustfundshallbedepositedtothecreditoftheState’sannualrequiredcontributionintothattrustfundineachfiscalyear,asprovidedinsection87A-42.[L1935,c141,§12;RL1945,§5462;RL1955,§117-26;amLSp19592d,c1,§16;HRS§237-31;amL1981,c159,§1;amL1984,c163,§1;amL1985,c239,§1;amL1989,c368,§3;amL1990,c163,§3;amL1992,c209,§§1,6assuperseded
§237-32 GENERAL EXCISE TAX LAW
CHAPTER237,Page46(UnofficialCompilation)
byamL1993,c364,§25;amL1999,c110,§1,andc155,§4;amL2004,c115,§2;amL2006,c304,§§2,4;amL2009,c11,§3;amL2011,c62,§8;amL2013,c157,§2andc268,§9]
Cross Reference
Depositstohighwayfund,see§248-8.Stateeducationalfacilitiesimprovementspecialfund,see§36-2.
§237-32 Penalties. Penaltiesandinterestshallbeaddedtoandbecomeapartofthetax,whenandasprovidedbysection231-39.[L1935,c141,ptof§13;amL1941,c265,§8;RL1945,§5463;amL1945,c253,§5;amL1953,c125,§10;RL1955,§117-27;HRS§237-32]
Case Notes
Penaltiesandinterestautomaticallyfollownonpaymentoftaxes.40H.121,aff’d216F.2d700.
§237-33 Annual return, payment of tax. Onorbeforethetwentiethdayofthefourthmonthfollowingthecloseofthetaxableyear,eachtaxpayershallmakeareturnshowingthevalueofproducts,grossproceedsofsalesorgrossincome,andcomputetheamountoftaxchargeableagainstthetaxpayerinaccordancewiththischapteranddeducttheamountofmonthlypayments(ashereinbeforeprovided),andtransmitwiththetaxpayer’sreportaremittanceintheformrequiredbysection237-31coveringtheresidueof the taxchargeableagainst the taxpayer to thedistrictofficeof thedepartmentoftaxationhereinafterdesignated.Thereturnshallbesignedbythetaxpayer,ifmadebyanindividual,orbythepresident,vice-president,secretary,ortreasurerofacorporation,ifmadeonbehalfofacorporation.Ifmadeonbehalfofapartnership,firm,society,unincorporatedassociation,group,hui,jointadventure,jointstockcompany,corporation,trustestate,decedent’sestate,trust,orotherentity,anyindividualdelegatedbytheentityshallsignthesameonbehalfofthetaxpayer.Ifforanyreasonitisnotpracticablefortheindividualtaxpayertosignthereturn,itmaybedonebyanydulyauthorizedagent.Thedepartment,forgoodcauseshown,mayextendthetimeformakingthereturnontheapplicationofanytaxpayerandgrantsuchreasonableadditionaltimewithinwhichtomakethesameasmay,byit,bedeemedadvisable.
Section232-2appliestotheannualreturn,butnottoamonthlyreturn.[L1935,c141,ptof§6;amL1941,c265,§4;amL1943,c4;RL1945,§5464;amL1945,c253,§7;RL1955,§117-28;amL1957,c34,§10;amLSp19592d,c1,§16;amL1965,c75,§1;amL1967,c37,§1;HRS§237-33;amL1980,c237,§1;amimpL1984,c90,§1;gench1985]
Cross Reference
TaxInformationReleaseNo.92-1,“ExtensionsofTimeforFilingAnnualReturnsofGeneralExciseandTransientAccommodationsTaxes”TaxInformationReleaseNo.94-6,“ResaleCertificates”
[§237-33.5] Federal assessments; adjustments of gross income or gross proceeds of sale; report to the department. [Section effective January 1, 1994] (a)Anypersonrequiredtoreporttothedepartmentbysection235-101(b),alsoshallreporttothedepartmentanychange,correction,adjustment,orrecomputationofgrossincomeorgrossproceedsofsalesubjecttothetaximposedbythischapter.Thisreportshallbemadeintheformofareturnamendingtheperson’sgrossincomeorgrossproceedsofsaleaspreviouslyreportedonareturnfiledwiththedepartmentforthetaxableyear.Ifnoreturnhasbeenfiledwiththedepartmentforthetaxableyear,areturnshallbefiledandshalltakeintoaccountanychange,correction,adjustment,orrecomputationofgrossincomeorgrossproceedsofsale.
(b) Anyreturnoramendedreturnrequiredbythissectionshallbefiledwiththedepartmentwithinninetydaysafterthechange,correction,adjustment,orrecomputationisfinallydeterminedoranamendedreturnisfiledwiththeInternalRevenueService.ThereturnoramendedreturnshallbeaccompaniedbyacopyofthedocumentissuedbytheUnitedStatesnotifyingthetaxpayerofthechange,correction,adjustment,orrecomputation.
(c) Thestatutoryperiod for theassessmentofanydeficiencyor thedeterminationofany refundattributabletothereportrequiredbythissectionshallnotexpirebeforetheexpirationofoneyearfromthedatethedepartmentis notified by the taxpayer or the InternalRevenueService,whichever is earlier, of such a report as provided insubsection(a).Beforetheexpirationofthisone-yearperiod,thedepartmentandthetaxpayermayagree,inwriting,totheextensionofthisperiod.Theperiodsoagreeduponmaybefurtherextendedbysubsequentagreementsinwritingmadebeforetheexpirationoftheperiodpreviouslyagreedupon.[L1993,c32,§1]
§237-34 Filing of returns; disclosure of returns unlawful, penalty; destruction of returns. (a)Allmonthlyandannualreturnsshallbetransmittedtotheofficeofthetaxationdistrictinwhichtheprivilegeuponwhichthetaxaccruedisexercised.Wheretheprivilegeisexercisedinmorethanonetaxationdistrictthereturnsshallbetransmittedtotheofficeofthefirstdistrict.
(b) Alltaxreturnsandreturninformationrequiredtobefiledunderthischapter,andthereportofanyinvestigationofthereturnorofthesubjectmatterofthereturn,shallbeconfidential.Itshallbeunlawfulforanypersonoranyofficeroremployeeof theState, includingtheauditoror theauditor’sagentwithregardto taxreturninformationobtainedpursuanttosection23-5(a),tointentionallymakeknowninformationimpartedbyanytaxreturnorreturn
18-237-33
18-237-34
GENERAL EXCISE TAX LAW §237-36
CHAPTER237,Page47(UnofficialCompilation)
informationfiledpursuanttothischapter,oranyreportofanyinvestigationofthereturnorofthesubjectmatterofthereturn,ortowilfullypermitanyreturn,returninformation,orreportsomade,oranycopythereof,tobeseenorexaminedbyanyperson;providedthatfortaxpurposesonly,thetaxpayer,thetaxpayer’sauthorizedagent,orpersonswithamaterialinterestinthereturn,returninformation,orreportmayexaminethem.Unlessotherwiseprovidedbylaw,personswithamaterialinterestinthereturn,returninformation,orreportshallinclude:
(1) Trustees;(2) Partners;(3) Personsnamedinaboardresolutionoraonepercentshareholderinthecaseofacorporatereturn;(4) Thepersonauthorizedtoactforacorporationindissolution;(5) TheshareholderofanScorporation;(6) Thepersonalrepresentative,trustee,heir,orbeneficiaryofanestateortrustinthecaseoftheestate’sor
decedent’sreturn;(7) Thecommittee,trustee,orguardianofanypersoninparagraphs(1)through(6)whoisincompetent;(8) Thetrusteeinbankruptcyorreceiver,andtheattorney-in-factofanypersoninparagraphs(1)through(7);(9) PersonsdulyauthorizedbytheStateinconnectionwiththeirofficialduties;(10)AnydulyaccreditedtaxofficialoftheUnitedStatesorofanystateorterritory;(11)TheMultistateTaxCommissionoritsauthorizedrepresentative;(12)Membersofalimitedliabilitycompany;and(13)Apersoncontractuallyobligatedtopaythetaxesassessedagainstanotherwhenthelatterpersonisunder
auditbythedepartment.AnyviolationofthissubsectionshallbeaclassCfelony.
(c) Thedepartmentmaydestroythemonthlyreturnsfiledpursuanttosection237-30,oranyofthem,upontheexpirationofthreeyearsaftertheendofthecalendaryearinwhichthetaxessoreturnedaccrued.[L1935,c141,§6(2);RL1945,§5465;amL1945,c253,§8;RL1955,§117-29;amLSp19592d,c1,§16;amL1967,c37,§1;HRS§237-34;amL1974,c139,§5;amL1981,c170,§1;amL1984,c95,§3;amL1990,c184,§9;amL1993,c5,§2;amL1997,c178,§5;amL2000,c34,§1;amL2014,c136,§5]
Note
Developmentagreementrequirementsandeffectof1990amendmentuntilDecember31,2002.L1990,c184,§§11,13.The2000amendmentappliestodiscussionsafterApril20,2000regardingtheassessmentofadditionaltaxes.L2000,c34,§4.
Cross Reference
Transitcapitaldevelopmentfund,seechapter51D.TaxInformationReleaseNo.82-7,“ConfidentialityofTaxReturnsandInformationImpartedTherein—NetIncomeTaxandGeneralExcise
Tax”
§237-35 Consolidated reports; interrelated business. Whenanytaxpayerisengagedintwoormoreformsofbusinessactivitytaxableunderthischapterwhichareinterrelated,orwhichareoflikecharacter,thetaxpayershallfileaconsolidatedreturncoveringallbusinessactivities,whicharethusinterrelatedoroflikecharacter.[L1935,c141,§6(3);RL1945,§5466;RL1955,§117-30;HRS§237-35]
ASSESSMENTS, REFUNDS, AND RECORDS
§237-36 Erroneous returns, disallowance of exemption, payment. If any returnmade is erroneous,or is sodeficientasnottodisclosethefulltaxliability,orifthetaxpayer,inthetaxpayer’sreturn,shalldisclaimliabilityforthetaxonanygrossincomeorgrossproceedsofsalesliabletothetax,orifthetaxpayershallmakeapplicationundersection237-23foranexemptiontowhichthetaxpayerisnotentitled,thedepartmentoftaxationshallcorrecttheerrororassesstheproperamountoftaxes.Ifsuchrecomputationresultsinanadditionaltaxliability,orifthedepartmentproposestoassessanygrossincomeorgrossproceedsofsalesbyreasonofthedisallowanceofanexemptionclaimedinthereturnorforwhichapplicationhasbeenfiled,thedepartmentshallfirstgivenoticetothetaxpayeroftheproposedassessment,andthetaxpayershallthereuponhaveanopportunitywithinthirtydaystoconferwiththedepartment.Aftertheexpirationofthirtydaysfromthenotificationthedepartmentshallassessthegrossincomeorgrossproceedsofsalesofthetaxpayeroranyportionthereofwhichthedepartmentbelieveshasnottheretoforebeenassessed,andshallgivenoticetothetaxpayeroftheamountofthetax,andtheamountthereofshallbepaidwithintwentydaysafterthedatethenoticewasmailed,properlyaddressedtothetaxpayeratthetaxpayer’slastknownaddressorplaceofbusiness.
Nopreliminarynoticeshallbenecessarywheretheamountofthetaxiscalculatedbythedepartmentfromgrossincomereturnedbythetaxpayerassubjecttothetax(unlessthetaxpayershallhaveclaimedthattheapplicablerateoftaxislowerthantherateoftaxappliedbythedepartment);insuchcasethetaxshallbedueandpayableonthetenthdayafterthedatethestatementwasmailed.Inacaseofdisallowanceofanexemptionforwhichapplicationwasmadeundersection237-23thedepartment,beforemakinganassessment,mayrequiretheapplicant,bydemandmadeupon
§237-37 GENERAL EXCISE TAX LAW
CHAPTER237,Page48(UnofficialCompilation)
theapplicantbymailordeliverythereoftotheaddressshownintheapplication,tofileinformationreturnsastotheapplicant’sgrossincomeorgrossproceedsofsaleswithinsuchreasonabletimeasthedepartmentmayallow,andintheeventoffailure,neglect,orrefusaltocomplywiththedemand,thedepartmentshallmakeanassessmentundersection237-38,inlieuofthissection.[L1935,c141,§7(1);amL1941,c265,§5;RL1945,§5467;amL1945,c253,§9;amL1947,c111,§10;amL1953,c125,ptof§10;RL1955,§117-31;amLSp19592d,c1,§16;HRS§237-36;amimpL1984,c90,§1;gench1985]
§237-37 Refunds and credits. Iftheamountalreadypaidexceedsthatwhichshouldhavebeenpaidonthebasisofthetaxrecomputedasprovidedinsection237-36,theexcesssopaidshallbeimmediatelyrefundedtothetaxpayerinthemannerprovidedinsection231-23(c).Thetaxpayermay,atthetaxpayer’selection,applyanoverpaymentcredittotaxessubsequentlyaccruinghereunder.Allrefundsandthedetailsthereof,includingthenamesofthepersonsreceivingtherefundandtheamountrefundedshallbeaccessiblefortheinspectionofthepublicintheofficeofthedepartmentoftaxationinthetaxationdistrictinwhichthepersonreceivingtherefundmadetheperson’sreturns.
Norecoursemaybehadexceptundersection40-35orbyappealforrefundsoftaxespaidpursuanttoanassessmentbythedirectoroftaxation,providedthatiftheassessmentbythedirectorshallcontainclericalerrors,transpositionoffigures,typographicalerrors,anderrorsincalculationorifthereshallbeanillegalorerroneousassessment,theusualrefundsproceduresshallapply.Norefundoroverpaymentcreditmaybehadunderthissectioninanyeventunlesstheoriginalpaymentofthetaxwasduetothelawhavingbeeninterpretedorappliedinrespectofthetaxpayerconcerneddifferentlythaninrespectoftaxpayersgenerally.Astoalltaxpaymentforwhicharefundorcreditisnotauthorizedbythissection(includingwithoutprejudicetothegeneralityoftheforegoingcasesofunconstitutionality)theremediesprovidedbyappealorundersection40-35areexclusive.[L1935,c141,ptof§7;RL1945,§5468;amL1953,c125,ptof§10;RL1955,§117-32;amL1957,c34,§11(1)andc152,§1;amLSp19592d,c1,§16;amL1963,c45,§2;amL1967,c37,§1;HRS§237-37;amimpL1984,c90,§1;gench1985]
Revision Note
Section“231-23(c)”substitutedfor“231-23(d)”.
Cross Reference
TaxInformationReleaseNo.2002-1,“AuditofNetIncome,GeneralExcise,andUseTaxReturns;AppealRights;ClaimsforRefund;andPaymenttoStateUnderProtest”
Case Notes
Exclusiveremedyprovisionconstruedasapplyingonlywheredisputedtaxhasbeenpaidandarefundisbeingsought.57H.1,548P.2d246.
§237-38 Failure to make return. If anyperson fails,neglects,or refuses tomakea return, thedepartmentoftaxationmayproceedasitdeemsbesttoobtaininformationonwhichtobasetheassessmentofthetax.Afterprocuringtheinformationthedepartmentshallproceedtoassessthetaxasprovidedinsection237-36.Theassessmentshallbepresumedtobecorrectuntilandunless,uponanappealdulytakenasprovidedinthischapter,thecontraryshallbeclearlyprovedbythepersonassessed,andtheburdenofproofuponsuchappealshallbeuponthepersonassessedtodisprovethecorrectnessoftheassessment.[L1935,c141,§8;amL1941,c265,§6;RL1945,§5469;amL1953,c125,ptof§10;RL1955,§117-33;amLSp19592d,c1,§16;HRS§237-38]
§237-39 Audits; procedure, penalties. (a)Forthepurposeofverificationorauditofareturnmadebythetaxpayer,orwherethereisreasonablegroundtobelievethatanyreturnmadeissodeficientasnottoformthebasisofasatisfactoryassessmentofthetax,orforthepurposeofmakinganassessmentwherenoreturnhasbeenmade,thedepartmentoftaxationortheMultistateTaxCommissionpursuanttochapter255,ortheauthorizedrepresentativethereof,mayexamineallaccountbooks,bankbooks,bankstatements,records,vouchers,taxpayer’scopiesoffederaltaxreturns,andanyandallotherdocumentsandevidencehavinganyrelevancytothedeterminationofthegrossincomeorgrossproceedsofsalesofanytaxpayerasrequiredtobereturnedunderthischapterandmaysummonorrequiretheattendanceofthepersonbyorforwhomthereturn,ifany,hasbeenmadeorwhosetaxisbeingassessed,andanyemployeeoftheperson,andmaysummonorrequiretheattendanceofanypersonhavingknowledgeinthepremises,namingthetimeandplaceinthesummons,andmayrequiretheproductionofanybooks,statements,orotherevidenceopentoexamination,andmaytaketestimonyinreferencetoanymatterrelevanttothegrossincomeorgrossproceedsofsalesofthetaxpayerfortheperiodunderconsideration,withpowertorequirethatthepersonsocalledandappearingshallbeinterrogatedunderoathandtoadministertheoath.
(b) Ifthedepartmentdeterminesthatanygrossincomeorgrossproceedsofsalesliabletothetaxhavenotbeenassessed,thedepartmentmayassessthesameasprovidedinsections237-36and237-38.
(c) Anyindividualknowinglygivingfalsetestimonyunderoathatanyhearingbeforethedepartmentshallbeguiltyofperjuryandshallbepunishedasprovidedbylaw.
(d) Any person refusing or neglecting to obey any summons issued by the department, and any individualappearingandrefusing to testifyunderoath,shallbefined$50for thefirstoffenseand$100foreachsucceeding
GENERAL EXCISE TAX LAW §237-40
CHAPTER237,Page49(UnofficialCompilation)
offense.[L1941,c265,§7;RL1945,§5470;RL1955,§117-34;amLSp19592d,c1,§16;HRS§237-39;amL1974,c139,§6;amL2017,c12,§50]
Cross Reference
TaxInformationReleaseNo.2002-1,“AuditofNetIncome,GeneralExcise,andUseTaxReturns;AppealRights;ClaimsforRefund;andPaymenttoStateUnderProtest”
§237-40 Limitation period. (a)Generalrule.Theamountofexcisetaxesimposedbythischaptershallbeassessedorleviedwithinthreeyearsaftertheannualreturnwasfiled,orwithinthreeyearsoftheduedateprescribedforthefilingofsaidreturn,whicheverislater,andnoproceedingincourtwithoutassessmentforthecollectionofanyofthetaxesshallbebegunaftertheexpirationoftheperiod.Wheretheassessmentofthetaximposedbythischapterhasbeenmadewithintheperiodoflimitationapplicablethereto,thetaxmaybecollectedbylevyorbyaproceedingincourtunderchapter231;providedthatthelevyismadeortheproceedingwasbegunwithinfifteenyearsaftertheassessmentofthetax.ForanytaxthathasbeenassessedpriortoJuly1,2009,thelevyorproceedingshallbebarredafterJune30,2024.
Notwithstandinganyotherprovisiontothecontraryinthissection,thelimitationoncollectionafterassessmentinthissectionshallbesuspendedfortheperiod:
(1) Thetaxpayeragreestosuspendtheperiod;(2) TheassetsofthetaxpayerareincontrolorcustodyofacourtinanyproceedingbeforeanycourtoftheUnited
Statesoranystate,andforsixmonthsthereafter;(3) Anofferincompromiseundersection231-3(10)ispending;and(4) DuringwhichthetaxpayerisoutsidetheStateiftheperiodofabsenceisforacontinuousperiodofatleast
sixmonths; provided that if at the timeof the taxpayer’s return to theState theperiodof limitationsoncollectionafterassessmentwouldexpirebeforetheexpirationofsixmonthsfromthedateofthetaxpayer’sreturn,theperiodshallnotexpirebeforetheexpirationofthesixmonths.
(b) Exceptions.Inthecaseofafalseorfraudulentreturnwithintenttoevadetax,orofafailuretofiletheannualreturn,thetaxmaybeassessedorleviedatanytime;providedthattheburdenofproofwithrespecttotheissuesoffalsityorfraudandintenttoevadetaxshallbeupontheState.
(c) Extensionbyagreement.Where,beforetheexpirationoftheperiodprescribedinsubsection(a)or(d),boththedepartmentoftaxationandthetaxpayerhaveconsentedinwritingtotheassessmentorlevyofthetaxafterthedatefixedbysubsection(a)orthecreditorrefundofthetaxafterthedatefixedbysubsection(d),thetaxmaybeassessedorleviedortheoverpayment,ifany,maybecreditedorrefundedatanytimepriortotheexpirationoftheperiodagreedupon.Theperiodsoagreeduponmaybeextendedbysubsequentagreementsinwritingmadebeforetheexpirationoftheperiodpreviouslyagreedupon.
(d) Refunds.Nocreditorrefundshallbeallowedforanytaximposedbythischapter,unlessaclaimforsuchcreditorrefundshallbefiledasfollows:
(1) Ifanannualreturnistimelyfiled,orisfiledwithinthreeyearsafterthedateprescribedforfilingtheannualreturn,thenthecreditorrefundshallbeclaimedwithinthreeyearsafterthedatetheannualreturnwasfiledorthedateprescribedforfilingtheannualreturn,whicheverislater.
(2) Ifanannualreturnisnotfiled,orisfiledmorethanthreeyearsafterthedateprescribedforfilingtheannualreturn,aclaimforcreditorrefundshallbefiledwithin:(A) Threeyearsafterthepaymentofthetax;or(B) Threeyearsafterthedateprescribedforthefilingoftheannualreturn,
whicheverislater.Paragraphs(1)and(2)aremutuallyexclusive.Thelimitationshallnotapplytoacreditorrefundpursuanttoanappealprovidedforbysection237-42.[L1943,c140,§2;RL1945,§5471;RL1955,§117-35;amLSp1957,c1,§29;amLSp19592d,c1,§16;HRS§237-40;amL1969,c274,§3;amL1971,c9,§2;amL1983,c103,§1;amL1992,c104,§1;amL1993,c257,§2;amL2009,c166,§7]
Note
Applicabilityof2009amendment.L2009,c166,§27.
Cross Reference
Suspensionoflimitationperiodduringbankruptcyproceedings,see§231-3.5.TaxInformationReleaseNo.99-4.“ApplicationoftheFranchiseTax,GeneralExciseTax,andIncomeTaxtoMortgageLoanCompanies,
IncludingMortgageLoanCompaniesOrganizedasPassthroughEntitiesandSoleProprietorships”TaxInformationReleaseNo.2002-1,“AuditofNetIncome,GeneralExcise,andUseTaxReturns;AppealRights;ClaimsforRefund;and
PaymenttoStateUnderProtest”
Case Notes
Nodiscoverytollingperiodappliestotaxstatutes.69H.515,750P.2d81.
§237-41 GENERAL EXCISE TAX LAW
CHAPTER237,Page50(UnofficialCompilation)
§237-41 Records to be kept; examination. EverytaxpayershallkeepintheEnglishlanguagewithintheState,andpreserveforaperiodofthreeyears,suitablerecordsofgrossproceedsofsalesandgrossincome,andsuchotherbooks,recordsofaccount,andinvoicesasmayberequiredbythedepartmentoftaxation,andallsuchbooks,records,andinvoicesshallbeopenforexaminationatanytimebythedepartmentortheMultistateTaxCommissionpursuanttochapter255,ortheauthorizedrepresentativethereof.[L1935,c141,§22;amL1937,c202,§2;amL1943,c140,§1;RL1945,§5472;amL1945,c253,§10;RL1955,§117-36;amLSp19592d,c1,§16;HRS§237-41;amL1969,c274,§4;amL1974,c139,§7;amL1995,c92,§13]
Cross Reference
TaxInformationReleaseNo.86-3,“ExemptionfromtheGeneralExciseTaxforAmountsReceivedonPurchasesMadeWithU.S.DepartmentofAgricultureFoodCoupons”
TaxInformationReleaseNo.2002-1,“AuditofNetIncome,GeneralExcise,andUseTaxReturns;AppealRights;ClaimsforRefund;andPaymenttoStateUnderProtest”
§237-41.5 Certain amounts held in trust; liability of key individuals. (a)Thereshallbepersonalliabilityforthetaxesimposedunderthischapterasprovidedinthissectionforthefollowingamountsofgrossincomeorgrossproceeds:
(1) Anyamountcollectedasarecoveryofthetaxpayer’sliabilityunderthischapter,wheretheamountispassedonasthetaxowedbythetaxpayerunderthischapterforthetransactionandisseparatelystatedoraccountedforinareceipt,contract,invoice,billing,orotherevidenceofthebusinessactivity;or
(2) Anamountequaltothetaxliabilityunderthischapteronatransactionwhereataxpayerdoesnotseparatelystateoraccountfortheamountasataxrecoveryasprovidedinparagraph(1).Forpurposesofthisparagraph,theamountoftheimputedtaxliabilityistheresultofmultiplyingthegrossincomeorgrossproceedsreceivedinthetransactionbythetaxrate.
Theamountsunderparagraphs(1)and(2)shallbeheldintrustforthebenefitoftheStateandforpaymenttotheStateinthemannerandatthetimerequiredbythischapter.
(b) Thepersonalliabilityunderthissectionappliestoanyofficer,member,manager,orotherpersonhavingcontrolorsupervisionoveramountsofgrossproceedsorgrossincomecollectedtopaythegeneralexcisetaxandheldintrustundersubsection(a),orwhoischargedwiththeresponsibilityforthefilingofreturnsorthepaymentofgeneralexcisetaxongrossincomeorgrossproceedscollectedandheldintrustundersubsection(a).Thepersonshallbepersonallyliableforanyunpaidtaxesandinterestandpenaltiesonthosetaxes,ifsuchofficerorotherpersonwilfullyfailstopayortocausetobepaidanytaxesduefromthetaxpayerpursuanttothischapter.
Thissubsectionshallnotapplytoanyofficer,manager,orotherpersonhavingcontrolorsupervisionoveramountsofgrossproceedsorgrossincomecollectedtopaythegeneralexcisetaxandheldintrustundersubsection(a),orwhoischargedwiththeresponsibilityforthefilingofreturnsorthepaymentofgeneralexcisetaxongrossincomeorgrossproceedscollectedandheldintrustundersubsection(a)foranonprofitorganization.
Forpurposesofthissubsection:“Nonprofitorganization”meansacorporateentity,association,orotherdulycharteredentitythatisregistered
withtheStateandisexemptfromtheapplicationofthischapterpursuanttosection237-23(a)(3),(4),(5),(6),or(7).“Wilfullyfails topayor tocause tobepaid”shallbeconstruedinaccordancewith judicial interpretationsgiven
to similarprovisionsof the InternalRevenueCode; consistent therewith, the term“wilfully” shallmeanavoluntary,intentionalviolationofaknownlegalduty.
(c) Anofficer,member,manager,orotherresponsiblepersonshallbeliableonlyforgeneralexcisetaxesongrossincomeorgrossproceedscollected,plusinterestandpenaltiesonthosetaxes,thatbecamedueduringtheperiodthepersonhadcontrol,supervision,responsibility,oradutytoactforthetaxpayerasdescribedinsubsection(b)ofthissection.
(d) Personsliableundersubsection(b)areexemptfromliabilitywhennonpaymentofthegeneralexcisetaxongrossincomeorgrossproceedsheldintrustisforgoodcauseasdeterminedbythedirector.
(e) Thevoluntaryorinvoluntarydissolutionofthetaxpayerorthewithdrawalorsurrenderofitsrighttoengageinbusinessinthisstateshallnotdischargetheliabilityherebyimposed.[L2010,c155,§2,amL2012,c219,§2;amL2013,c52,§2]
Cross Reference
Tax InformationReleaseNo.2010-05,“Act155,SessionLawsofHawaii2010,Relating toGeneralExciseTax;TheGeneralExciseTaxProtectionAct”
APPEALS
§237-42 Appeals. Anypersonaggrievedbyanyassessmentofthetaxforanymonthoranyyearmayappealfromtheassessmentinthemannerandwithinthetimeandinallotherrespectsasprovidedinthecaseofincometaxappealsby
18-237-41
GENERAL EXCISE TAX LAW §237-43
CHAPTER237,Page51(UnofficialCompilation)
section235-114.[L1935,c141,§1;amL1937,c202,§1;RL1945,§5473;amL1953,c125,ptof§10;RL1955,§117-37;amLSp1957,c1,§29;HRS§237-42;amL2000,c199,§3;amL2004,c123,§3]
Note
The2000amendmentdoesnotaffectrightsanddutiesthatmatured,penaltiesthatwereincurred,andproceedingsthatwerebegunbeforeJune8,2000.L2000,c199,§§11and13.
The2004amendmentappliestotaxappealsfiledonorafterJuly1,2004.L2004,c123,§14.
Cross Reference
TaxInformationReleaseNo.2002-1,“AuditofNetIncome,GeneralExcise,andUseTaxReturns;AppealRights;ClaimsforRefund;andPaymenttoStateUnderProtest”
Case Notes
Prepaymentrequirementisconstitutional.57H.1,548P.2d.246.Taxpayer’s42U.S.C.§1983claimagainstvalidityofHawaii’sgeneralexcisetaxbarred,wherestateremediesavailabletotaxpayerwere“plain,
adequate,andcomplete”.940F.Supp.260.
§237-43 Bulk sales; transfers; penalties. (a)Inanycaseofthesaleortransferinbulkofthewhole,oralargepartofastockofmerchandiseandfixtures,ormerchandise,orfixtures,orotherassetsorpropertyofabusiness,otherwisethanintheordinarycourseoftrade,business,commerce,orsales,thesellershallmakeawrittenandverifiedreportofthebulksaleortransfertothedepartmentnotlaterthantendaysafterthepossession,orthecontrol,orthetitleoftheproperty,oranypartthereof,haspassedtothepurchaser.Thereportshallcontainthenameandaddressofthepurchaser,abriefdescriptionofthepropertysoldandthepurchaseprice,thedatewhenthesaleortransferistobeorwasconsummated,andsuchotherfactsasthedepartmentmayrequire.Thepurchasermaymakethereportfortheseller.
(b) Thepurchaserofthepropertyshallwithholdpaymentofthepurchasepriceuntilthereceiptofacertificatefrom the department to the effect that all taxes, penalties, and interest levied or accrued under title 14 for taxesadministeredbythedepartmentagainsttheseller,orconstitutingalienupontheproperty,havebeenpaid.Acertificateshallnotbeissuedwhilethedepartmentinvestigates(includingbyaudit)whethertaxeshavebeenleviedoraccruedagainsttheseller.Thecertificateshallshowonitsfacethatthedepartmenthashadnoticeofthebulksaleortransfer,andshallalsoshowthenamesofthesellerandpurchaser,abriefdescriptionofthepropertysoldortransferred,andthedateofconsummationofthesaleortransfer,togetherwithsuchotherinformationasthedepartmentshallprescribe.
(c) Iftherequiredreportofthebulksaleortransferisnotmade,orifthetaxes,penalties,andinterestshallnotbepaidwithintwentydaysafterthesaleortransfer,orwithinsuchfurthertimeasthedepartmentmayallow,thepurchasershallbepersonallyliabletopaytotheStatetheamountofalltaxes,penalties,andinterestleviedoraccruedunder title14 for taxesadministeredby thedepartmentagainst thesellerorconstitutinga lienupon theproperty,togetherwithpenaltiesandinterestthereafteraccruing,notexceeding,however,theamountofthepurchaseprice.Theissuanceofacertificateintheprescribedformshallbeacompletedefensetothebulksaleortransferliabilityimposedintheprecedingsentence,butshallnotbeadefensetoanyliabilityofthepurchaserunderanyotherprovisionoflawforliabilitiesandobligations.Anypurchasersucceedingtotheliabilitiesofthesellerunderthissectionshallmakeawrittenreportthereofuponthenextduedateforthereportingofgrossincometaxes.
(d) Forpurposesofthissection:“Property”meansanythingthatmaybethesubjectofownership,includingeverykindofasset,whetherrealor
personal,tangibleorintangible,andwithoutlimitation,suchaslandandbuildings,goodwill,notes,accounts,andotherintangibleproperty.Theterm“property”shallnotincludeanyinterestinresidentialrealproperty.
“Purchaseprice”meansthetotalfairmarketvalue,asofthedateofsaleortransfer,ofallpropertytransferred,whetherornotmoneyorpropertyisexchangedtherefor.
“Purchaser”meansanypersonwhoreceivespropertyinabulksaleortransfer,whetherornotmoneyorpropertyisexchangedtherefor.
“Sale”meansthetransferofpropertyforcompensation.“Seller”meansanypersonwhosellsortransfersanypropertyinabulksaleortransfer,whetherornotmoneyor
propertyisexchangedtherefor.“Transfer”means the sale,conveyance,ordistributionbyanymode,director indirect, absoluteorconditional,
voluntaryorinvoluntary,oftitletoorbeneficialownershipinproperty,orinteresttherein.Theterm“transfer”doesnotincludeabonafide,arm’slength:
(1) Creation,modification,orterminationofaleaseinterest;(2) Creation,modification,orreleaseofalienorencumbrance;or(3) Transferoccurringasaresultoftheenforcementofalien.
(e) Failuretomakethereportrequiredbythissectionshallbepunishablebyafineofnotmorethan$100.Anysellerwhowilfullyfailstomakethereportrequiredbythissectionshall,inadditiontootherpenaltiesprovidedbylaw,beguiltyofamisdemeanoranduponconvictionthereof,shallbefinednotmorethan$5,000orimprisonednotmorethanoneyear,orboth.
§237-44 GENERAL EXCISE TAX LAW
CHAPTER237,Page52(UnofficialCompilation)
(f) Thepurchaser shallhave thepurchaser’s remedyagainst the seller for theamountof taxes,penalties,orinterestpaidbythepurchaser.
(g) ThissectionsupplementsanddoesnotdisplaceanyremediesavailabletothedepartmentundertheUniformFraudulentTransferActandtheprinciplesoflawandequity.[L1941,c265,§8;RL1945,§5476;RL1955,§117-40;amLSp19592d,c1,§16;HRS§237-43;amimpL1984,c90,§1;gench1985;amL1995,c92,§14assupersededbyc120,§1;amL1996,c132,§§1,2]
Cross Reference
TaxInformationReleaseNo.91-10,“BulkSalesProceduresEffectiveJanuary1,1992”TaxInformationReleaseNo.95-2,“ClarifyingtheApplicationoftheBulkSaleorTransferLawtoSecuredTransactions”
§237-44 Entertainment business. (a)Asusedinthissection:“Admission”meanstheamountpaidforadmissiontoanyplace,includingadmissionbyseasonticketorsubscription,
andalsoincludestheamountpaidforseatsandtables,reservedorotherwise,andothersimilaraccommodations.“Cabaret”meansanyroofgarden,cabaret,orothersimilarplacefurnishingapublicperformance,byorforany
patronorguestwhoisentitledtobepresentduringanyportionoftheperformance,includinganyroominanyhotel,restaurant,hall,orotherpublicplacewheremusicanddancingprivilegesoranyotherentertainmentareaffordedthepatronsinconnectionwiththeservingorsellingoffood,refreshment,ormerchandise.
“Transienttaxpayer”referstoanypersonsubjecttothetaximposedbythischapterwhohasnopermanentplaceofbusinessintheState.
(b) Every person receiving admissions for any circus, carnival, or any other place whatsoever at which atransienttaxpayerisengagedinbusiness(whetherornotfurtheradmissionsarechargedinsidetheplace,suchfurtheradmissions,ifany,beingalsosubjecttothissection),shallsetasidefromtheadmissionsandholdintrustfortheStatefivepercentoftheadmissions,orsuchlesseramountasthedepartmentoftaxationshallapproveassufficient, toguaranteepaymentofthetaxleviedbythischapteronthetransienttaxpayer.Theamountsorequiredtobesetasidefromtheadmissionsshallbedepositedwiththedepartmentpromptlyuponcollectionthereof,fromtimetotime,fordepositbyitinaspecialtrustfundinthetreasuryoftheState,theretoremainuntilrefundeduponvoucherofthedepartment,oruntilappliedtothepaymentofthetaxesguaranteedtherebywiththeconsentofthepersonmakingthedeposit,oruntildepositedincourtpursuanttochapter655ortherulesofcourt.Thedepartmentmaybringanactiontoobtainanadjudicationofitsrighttoapplytheguaranteefundinpaymentoftaxesandmaydepositthefundincourttoawaittheresultsoftheadjudication,ormaybesuedbyaninterestedpersonseekingtoobtaintheadjudicationandmaybeorderedtomakesuchdepositincourt,notwithstandingthatthedepartmentassertsaclaimagainstthefund.
(c) If any person fails to deposit promptly the guarantee fund required by this section, the departmentmaydistrainupontheadmissionsoranybankaccountorotherassetinwhichthesamecanbefound,forthepurposeofobtaininganddepositinginthetreasurytherequiredguaranteefund.
(d) Wheneveratransienttaxpayerisengagedinbusinessatanyplaceforwhichadmissionsarecharged,oratanycabaretwhetherornotadmissionsarecharged,thepersonengagingthetransienttaxpayershallcollectfromthetransienttaxpayer,bywithholdingorotherwise,thetaxleviedbythischapteronthetransienttaxpayer,shallholdthetaxintrustfortheState,andshallreturnandpayoverthetaxtothepropercollectingofficeroftheStateinthemannerandatthetimerequiredbythischapter,fortheaccountofthetransienttaxpayer.Ifthepersonfailstodoso,thepersonshallbeliabletopaytotheStatetheamountofthetaxleviedbythischapteronthetransienttaxpayer,togetherwithpenaltiesandinterestasprovidedbylaw.Theamountoftheliabilitymaybecollectedfromtheguaranteefund,ifany,ormaybeassessedagainstandcollectedfromthepersonsobecomingliableinthesamemannerasifthetaxhadbeenleviedupontheperson.[L1951,c165,§6;amL1953,c68,§2;RL1955,§117-41;amLSp19592d,c1,§16;HRS§237-44;amL1973,c133,§8;amL2017,c12,§51]
§237-45 REPEALED. L1997,c352,§22.
§237-46 Collection by suit; injunction. Thedepartmentoftaxationmaycollecttaxesdueandunpaidunderthischapter,togetherwithallaccruedpenalties,byactioninassumpsitorotherappropriateproceedingsinthecircuitcourtofthejudicialcircuitinwhichtheprivilegetaxedhasbeenexercised.Afterdelinquencyshallhavecontinuedforsixtydays,orifanypersonlawfullyrequiredsotodounderthischaptershallfailtoapplyforandsecurealicenseasprovidedbythischapterforaperiodofsixtydaysafterthefirstdatewhenthepersonwasrequiredunderthischaptertosecurethesame,thedepartmentmayproceedinthecircuitcourtofthejudicialcircuitinwhichtheprivilegetaxedortaxablehasbeenexercised,toobtainaninjunctionrestrainingthefurtherexerciseoftheprivilegeuntilfullpaymentshallhavebeenmadeofalltaxesandpenaltiesandinterestdueunderthischapter,oruntilsuchlicenseissecured,orboth,asthecircumstancesofthecasemayrequire.[L1935,c141,§14;RL1945,§5478;amL1951,c165,§7;RL1955,§117-43;amLSp19592d,c1,§16;HRS§237-46;amimpL1984,c90,§1;gench1985;amL1989,c6,§5]
Rules of Court
Injunctions,seeHRCPrule65.
GENERAL EXCISE TAX LAW §237-49
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§237-47 District judges; concurrent civil jurisdiction in tax collections. Except as otherwise specificallyprovidedbythischapter,theseveraldistrictjudgesshallhaveconcurrentjurisdictionwiththecircuitcourtstohearanddetermineallcivilactionsatlawinassumpsitforthecollectionandenforcementofcollectionandpaymentofalltaxesassessedhereunder,irrespectiveoftheamountclaimed.[L1935,c141,§15;RL1945,§5479;RL1955,§117-44;HRS§237-47;amL1970,c188,§39]
OFFENSES; PENALTIES
§237-48 REPEALED. L1995,c92,§25.
§237-49 Unfair competition; penalty. Notaxpayershalladvertiseorholdouttothepublicinanymanner,directlyorindirectly,thatthetaxherebyimposeduponthetaxpayerisnotconsideredasanelementinthepricetothepurchaser.Anypersonviolatingthissectionshallbefinednotmorethan$50foreachoffense.[L1935,c141,§23;RL1945,§5482;RL1955,§117-47;HRS§237-49;amimpL1984,c90,§1;gench1985]
GENERAL EXCISE TAX LAW
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