CHAPTER 237 GENERAL EXCISE TAX LAW

GENERAL EXCISE TAX LAW

CHAPTER237,Page1(UnofficialCompilation)

CHAPTER 237GENERAL EXCISE TAX LAW

Definitions;Administration

Section237-1 Definitions237-2 “Business”, “engaging” in business, defined237-3 “Gross income”, “gross proceeds of sale”, defined237-4 “Wholesaler”, “jobber”, defined237-5 “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Exemption of certain scientific contracts with the United States237-27 Exemption of certain petroleum refiners237-27.1 Repealed

GENERAL EXCISE TAX LAW


237-27.5 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 wholesale237-29.6 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.TaxInformationReleaseNo.89-6,“GeneralExciseTaxontheFund-RaisingActivitiesofPublicSchoolSponsoredGroups”TaxInformationReleaseNo.89-10,“TaxabilityofGrossReceiptsDerivedbyHelicopterTourOperators”

GENERAL EXCISE TAX LAW §237-1


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.

“Overhead”meanscontinuousorgeneral costsoccurring in thenormalcourseofabusiness, includingbutnotlimitedtocostsforlabor,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,brokerorotherpersonwhoisauthorizedoremployedbyanunlicensedsellertoassistsuchsellerinsellingpropertyforuseintheState,byprocuringordersforsuchsalesorotherwise,andwhocarriesonsuchactivitiesintheState,itbeingimmaterialwhethersuchactivitiesareregularorintermittent;buttheterm“representative”doesnotincludeamanufacturer’srepresentativewhosefunctionsarewhollypromotionalandtoactasliaisonbetweenanunlicensedsellerandasellerorsellers,andwhichdonotincludetheprocuring,solicitingoracceptingofordersforpropertyorthemakingofdeliveriesofproperty,orthecollectingofpaymentfordeliveriesofproperty,orthekeepingofbooksofaccountconcerningpropertyorders,deliveriesorcollectionstranspiringbetweenanunlicensedsellerandasellerorsellers.AnyunlicensedsellerwhoinpersoncarriesonanysuchactivityintheStateshallalsobeclassedasarepresentative.

“Retailing” or “sales at retail” includes the sale of tangible personal property for consumption or use by thepurchaserandnotforresale,therentingoftangiblepersonalproperty,andtherenderingofservicesbyoneengagedinaservicebusinessorcalling,asdefinedinsection237-7,toapersonwhoisnotpurchasingtheservicesforresale.Personsdescribedinthisdefinitionare“retailers”.

“Sale”or“sales”includestheexchangeofpropertiesaswellasthesalethereofformoney.“Taxpayer”meansanypersonliableforanytaxhereunder.

18-237-1

§237-2 GENERAL EXCISE TAX LAW


“Taxyear”or“taxableyear”meanseitherthecalendaryearorthetaxpayer’sfiscalyearwhenthesameconstitutesthetaxperiodinsteadofthecalendaryearpursuanttosection237-11.[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]

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”

Attorney General Opinions

Taxcreditsofonepartnercanbeappliedagainstgrossincometaxdueandowingbythepartnership.Att.Gen.Op.64-5.


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”


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.

§237-3 “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.

(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”


Withtheexceptionofpre-bidcosts,all itemsenteringintothetotalcontractpriceofaCapehartprojectcontractorconstitutegrossincomesubjecttogeneralexcisetaxation.Att.Gen.Op.61-85.

18-237-3



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,otherthanthesegregatedcostoffeed,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;

18-237-4



(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;

(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,whenthepublisherisundercontractwiththeadvertiserstodistributeaminimumnumberofmagazinesorsimilarprintedmaterialstothepublicordefinedsegmentofthepublic,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.Salesofautomobilestoleasingcompanieswereatretailratherthanwholesale,whereagreementsbetweenleasingcompanyanditscustomers

wereactuallyleasesandnotconditionalsales.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.

§237-5 “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 improvebuildingsorstructures,ofanykindordescription,includinganyportionthereof,ortomakeanyinstallationtherein,ortomake,construct,repair,orimproveanyhighway,road,street,sidewalk,ditch,excavation,fill,bridge,shaft,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.


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,allthedutiesandpowersprescribedorgrantedbytheexistingorfuturetaxlawsoftheStatesofarasthesamemaybeapplicabletothe

§237-8.5 GENERAL EXCISE TAX LAW


administrationofthischapterandarenotcontrarytotheexpressprovisionshereof.[L1935,c141,§20;RL1945,§5450;RL1955,§117-9;amLSp19592d,c1,§16;HRS§237-8]

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;or(B) January1,2019,ifthecountysurchargeonstatetaxwasestablishedbytheadoptionofanordinance

afterJune30,2015,butpriortoMarch31,2018;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]

18-237-8.6-01 to

18-237-8.6-10



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:



(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


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”



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,regardlessoftheplaceofsaleorthefactthatdeliveriesmaybemadetopointsoutsidetheState.

(C) Ifanypersonliableforthetaxonmanufacturersshipsortransportstheperson’sproduct,oranypartthereof,outoftheState,whetherinafinishedorunfinishedcondition,orsellsthesamefordeliverytopointsoutsidetheState(forexample,consignedtoamainlandpurchaserviacommoncarrierf.o.b.Honolulu),thevalueoftheproductsintheconditionorforminwhichtheyexistimmediatelybeforeenteringinterstateorforeigncommerce,determinedashereinafterprovided,shallbethebasisfortheassessmentofthetaximposedbythisparagraph.Thistaxshallbedueandpayableasofthedateofentryoftheproductsintointerstateorforeigncommerce,whethertheproductsarethensoldornot.Thedepartmentshalldeterminethebasisforassessment,asprovidedbythisparagraph,asfollows:

(i)Iftheproductsatthetimeoftheirentryintointerstateorforeigncommercealreadyhavebeensold,thegrossproceedsofsale,lessthetransportationexpenses,ifany,incurredinrealizingthegrossproceedsfortransportationfromthetimeofentryoftheproductsintointerstateorforeigncommerce,includinginsuranceandstorageintransit,shallbethemeasureofthevalueoftheproducts;

(ii)Iftheproductshavenotbeensoldatthetimeoftheirentryintointerstateorforeigncommerce,and incasesgovernedbyclause (i) inwhich theproductsaresoldundercircumstancessuchthat thegrossproceedsof sale arenot indicativeof the truevalueof theproducts, thevalue

18-237-13-01



of theproductsconstitutingthebasisforassessmentshallcorrespondasnearlyaspossible tothe gross proceeds of sales for delivery outside theState, adjusted as provided in clause (i),orifsufficientdataarenotavailable,salesintheState,ofsimilarproductsoflikequalityandcharacterandinsimilarquantities,madebythetaxpayer(unlessnotindicativeofthetruevalue)orbyothers.SalesoutsidetheState,adjustedasprovidedinclause(i),maybeconsideredwhenthey constitute the best available data.Thedepartment shall prescribe uniformand equitablerulesforascertainingthevalues;

(iii)Attheelectionofthetaxpayerandwiththeapprovalofthedepartment,thetaxpayermaymakethetaxpayer’sreturnsunderclause(i)eventhoughtheproductshavenotbeensoldatthetimeoftheirentryintointerstateorforeigncommerce;and

(iv)InallcasesinwhichproductsleavetheStateinanunfinishedcondition,thebasisforassessmentshallbeadjustedsoastodeducttheportionofthevalueasisattributabletothefinishingofthegoodsoutsidetheState.

(2) Taxonbusinessofsellingtangiblepersonalproperty;producing.(A) Uponeverypersonengagingorcontinuinginthebusinessofsellinganytangiblepersonalproperty

whatsoever (not including, however, bonds or other evidence of indebtedness, or stocks), there islikewiseherebylevied,andshallbeassessedandcollected,ataxequivalenttofourpercentofthegrossproceedsofsalesofthebusiness;providedthat,inthecaseofawholesaler,thetaxshallbeequaltoone-halfofonepercentofthegrossproceedsofsalesofthebusiness;andprovidedfurtherthatinsofarasthesaleoftangiblepersonalpropertyisawholesalesaleundersection237-4(a)(8)(B),thetaxshallbeone-halfofonepercentofthegrossproceeds.UponeverypersonengagingorcontinuingwithinthisStateinthebusinessofaproducer,thetaxshallbeequaltoone-halfofonepercentofthegrossproceedsofsalesofthebusiness,orthevalueoftheproducts,forsale,ifsoldfordeliveryoutsidetheStateorshippedortransportedoutoftheState,andthevalueoftheproductsshallbedeterminedinthesamemannerasthevalueofmanufacturedproductscoveredinthecasesunderparagraph(1)(C).

(B) Grossproceedsofsalesoftangiblepropertyininterstateandforeigncommerceshallconstituteapartofthemeasureofthetaximposedonpersonsinthebusinessofsellingtangiblepersonalproperty,totheextent,undertheconditions,andinaccordancewiththeprovisionsoftheConstitutionoftheUnitedStatesandtheActsoftheCongressoftheUnitedStateswhichmaybenowinforceormaybehereafteradopted,andwheneverthereoccursintheStateanactivitytowhich,undertheConstitutionandActsofCongress,theremaybeattributedgrossproceedsofsales,thegrossproceedsshallbesoattributed.

(C) Nomanufacturerorproducer,engagedinsuchbusinessintheStateandsellingthemanufacturer’sorproducer’sproductsfordeliveryoutsideoftheState(forexample,consignedtoamainlandpurchaserviacommoncarrierf.o.b.Honolulu),shallberequiredtopaythetaximposedinthischapterfortheprivilegeofsosellingtheproducts,andthevalueorgrossproceedsofsalesoftheproductsshallbeincludedonlyindeterminingthemeasureofthetaximposeduponthemanufacturerorproducer.

(D) Whenamanufacturerorproducer,engagedinsuchbusinessintheState,alsoisengagedinsellingthemanufacturer’sorproducer’sproductsintheStateatwholesale,retail,orinanyothermanner,thetaxfortheprivilegeofengaginginthebusinessofsellingtheproductsintheStateshallapplytothemanufacturerorproduceraswellasthetaxfortheprivilegeofmanufacturingorproducingintheState,andthemanufacturerorproducershallmakethereturnsofthegrossproceedsofthewholesale,retail,orothersalesrequiredfortheprivilegeofsellingintheState,aswellasmakingthereturnsofthevalueorgrossproceedsofsalesof theproductsrequiredfor theprivilegeofmanufacturingorproducingintheState.ThemanufacturerorproducershallpaythetaximposedinthischapterfortheprivilegeofsellingitsproductsintheState,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

18-237-13-02



(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),on:

(i)Anothertaxpayerwhoisacontractor,asdefinedinsection237-6; (ii)A specialty contractor, duly licensed by the department of commerce and consumer affairs

pursuanttosection444-9,inrespectofthespecialtycontractor’sbusiness;or (iii)Aspecialtycontractorwhoisnotlicensedbythedepartmentofcommerceandconsumeraffairs

pursuanttosection444-9,butwhoperformscontractingactivitiesonfederalmilitaryinstallationsandnowhereelseinthisState;

provided that any person claiming a deduction under this paragraph shall be required to show intheperson’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;allsuchgrossincomeshallbetaxableunderparagraph(9);providedthatinsofarasthebusinessofrentingorleasingrealpropertyunderaleaseistaxedundersection237-16.5,thetaxshallbeleviedbysection237-16.5.

(4) Taxupontheaters,amusements,radiobroadcastingstations,etc.(A) UponeverypersonengagingorcontinuingwithintheStateinthebusinessofoperatingatheater,opera

house,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.

18-237-13-03



(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,thetaxshallbeimposedonthegrossincomereceivedorderivedfromprovidinginterstateorforeignmobiletelecommunicationsservicestoacustomerwithaplaceofprimaryuseinthisStatewhensuchservicesoriginateinonestateandterminateinanotherstate,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 (iv)Gross receipts of a home service provider acting as a serving carrier providing mobile

telecommunicationsservicestoanotherhomeserviceprovider’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’sreturnadeduction

18-237-13-06

18-237-13(6)

18-237-13-08



fromthegrossamounttaxablehereunderinthesumoftheamountsodisbursed.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]

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.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



TelevisionFilmProductionIndustry”TaxInformationReleaseNo.2011-02,“GeneralExciseTaxationofSalesofTangiblePersonalPropertytotheFederalGovernmentandthe

GrandfatheringRulesUnderAct105,SLH2011”TaxInformationReleaseNo.2011-03,“EffectofAct105,SLH2011,onGeneralExciseTaxLiabilityofMobileTelecommunicationsService

Providers”


Generalexciseandusetaxesmaybeappliedtoimportedgoods,nolongerintransit,regardlessofwhetherimportedgoodsareintheiroriginalpackages.Att.Gen.Op.94-2.

18-237-13-10





Case Notes

Professionsdefined.34H.245.Taxonpersonssellingtopostexchangesandship’sstoresallowed.Notunconstitutional.37H.314,aff’d174F.2d21.Radiostations.40H.121,aff’d216F.2d700.Applicability of tax on selling to sales bymanufacturer. 41H. 615. Abusiness printing andpublishing a daily newspaper, etc. is not a

“manufacturer”.43H.154.See279F.2d636,aff’g43H.154.Taxonforeignmanufacturer’srepresentative,noviolationofcommerceclause.46H.269,379P.2d336.Thetaxontruckingbusiness’grossreceiptsforservicesrenderedwhollywithintheStateinvolvingthroughbillsofladingdoesnotviolatethecommerceclause.48H.486,405P.2d382.

Doubtintaxstatuteistoberesolvedinfavoroftaxpayer.45H.167,363P.2d990.“canning”underpriorlawconstrued;packingfrozenpineapplesinhermeticallysealedcansisnot“canning”.45H.167,363P.2d990.

Arrangementbetweenmilkproducersanddistributorcreatedagency,ratherthansalesrelationship,andproducerswerenotsubjecttotaxatproducingrate.46H.292,380P.2d156.

Applicablerulesofconstructionintaxcases.50H.603,446P.2d171.Ratesapplicabletoadvertisingrevenuesofaprintingandpublishingfirm.50H.603,446P.2d171.Individualearninglivelihoodastrusteeinbankruptcyiscoveredbyeitherparagraph(6)or(10)orboth.52H.56,469P.2d814.Failuretocollecttaxfromsomewhofallwithinstatutecannotexcuseothersfrompayingwhattheyowe.53H.419,495P.2d1172.Commissionsreceivedbytravelagenciesaresubjecttotax;applicationoftaxdoesnotcontravenethecommerceortheimport-exportclauses.

53H.419,495P.2d1172.Feesreceivedastrustee,executor,andcorporatedirectorwereheldsubjecttotax.53H.435,496P.2d1.Catchallparagraph(10)broadenoughtocoverparagraphs(6)and(8).53H.435,496P.2d1.“Intermediary”withinmeaningofparagraph(6)definedasonewhomerelyactsasaconduitfortheservicesrenderedbetweenthetaxpayer

renderingtheserviceandthecustomerreceivingtheservices.53H.518,497P.2d908.Exemptionsfromtaxationconstruedstrictlyagainsttaxpayer.55H.572,524P.2d890.Statutesimposingtaxesarestrictlyconstruedinfavoroftaxpayer.56H.321,536P.2d91.Grossincomeearnedbyout-of-statelessoroffilmprintsandtelecastrightstobeusedinHawaiiistaxableunderthissection57H.175,554

P.2d242.InterestincomeearnedbyNondomiciliarycorporationfrominstallmentsalesofHawaiianlandissubjecttotax.57H.436,559P.2d264.“Servicebusinessorcalling”inparagraph(6)v.“wholesaler”construed.63H.579,633P.2d535.Taxonvalueof services renderedonbehalfofor furnished towhollyownedsubsidiarycorporationsand intereston fundsborrowedand

disbursedontheiraccountupheld.65H.240,649P.2d1155.Slaughterhouseoperator,hograisers,andporkmerchantsarenot“manufacturers”.69H.125,735P.2d935.Taxpayer’sphotoprocessingactivitiesconstituted“manufacturing,”whichwastaxableatrateof0.5%,ratherthana“service,”whichwouldbe

taxableatrateof4%. 79H.503,904P.2d517.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.

Delawarecorporationcamewithinthepurviewofparagraph(2)whereitsoldbookstothestatelibraryforeconomicgain,itsactivitiestookplaceintheState,andthroughitsbusinessactivityinHawaii,obtainedopportunities,protections,andbenefitsaffordedbytheState.103H.359,82P.3d804.

Wheretaxpayergainedoreconomicallybenefitedfromsubleasingtransactions,thedirector’sassessmentandimpositionofthegeneralexcisetaxfortaxpayer’ssubleasingactivitieswasproper.110H.25,129P.3d528.

WheremanagementcompanyforforeigninsurerauthorizedtodobusinessinHawaiididnotholdageneralagent,subagent,orsolicitorlicenseunderchapter431,article9(1993),itcouldnothavebeenlegallyappointedaseitherageneralagent,subagent,orsolicitorofinsurer;thusitdidnotqualifyasa“generalagent”,“subagent”,or“solicitor”asdefinedbychapter431(1993),didnotfallwithintheparametersofthecategorydescribedbyparagraph(7)andwasthussubjecttoageneralexcisetaxrateoffourpercentpursuanttoparagraph(6).115H.180,166P.3d353.

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;40H.722,728;43H.131,144;44H.584,587,358P.2d539.

§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.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

(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.


Legislationprohibitingvisiblepass-ontaxfromsellertobuyermightdeprivebuyerofrighttosalestaxdeductiononfederalincometaxreturn.Att.Gen.Op.65-13.

18-237-16



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:“Lease”meanstherentalofrealpropertyunderaninstrumentinwritingbywhichoneconveysrealpropertyfora

specifiedtermandforaspecifiedconsideration,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,equaltofourpercentofthegrossproceedsorgross

18-237-16.5

18-237-16.5

GENERAL EXCISE TAX LAW [§237-16.8]


incomereceivedorderivedfromtheleasing;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.“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;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.

(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



TelevisionFilmProductionIndustry”TaxInformationReleaseNo.2016-01,“AmendmenttoGeneralInstructionsforFilingtheGeneralExcise/UseTaxReturns(FormsG-45and

G-49)RelatingtoTransientAccommodationsRentals”


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]

18-237-20





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”




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,asamended,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;providedthattheexemptionshallapplyonlytotheactivitiesofthosepersonsintheconductofcemeteries



andshallnotapply 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.

(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”


Exemptionofcorporationoperatinganonprofitmedicalandhospitalserviceprogramundercontractwithindividualsandgroups.Att.Gen.Op.64-6.





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) Anaffiliatedgroupofcorporationswithin themeaningof section1504 (with respect toaffiliatedgroup

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,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


§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);

(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,

GENERAL EXCISE TAX LAW §237-24.3


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”


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.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;andprovidedfurtherthatgrossrentalincomeorgrossrentalproceedsfrom



investmentsinrealpropertyreceivedbyanemployeebenefitplanafterJune30,1994,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(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,§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))”


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;

(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))”


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: (i)Thesaleorpurchaseofsecuritiesorproducts,orboth,boughtorsoldonanexchangebyexchange

membersfor 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’scountytransportationsystem,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) AmountsreceivedunderpropertyandcasualtyinsurancepoliciesfordamageorlossofinventoryusedintheconductofatradeorbusinesslocatedwithintheStateoraportionthereofthatisdeclaredanaturaldisasterareabythegovernorpursuanttosection209-2;

(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), includingpartnerships,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;

(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;(B) Estimated tax benefits (capital goods excise tax credit, net economic gain from tax deferral from

accelerateddepreciation,andothertaxbenefitswithasubstantiallysimilareffect);and(C) Theestimatedresidualvalueofthepropertyattheexpirationoftheinitialtermofthelease;

(5) Themaximumleasetermduringwhichthelessorfinancialinstitutionmustrecoverthelessor’sfullinvestmentintheproperty,plustheestimatedtotalcostoffinancingtheproperty,shallbefortyyears;and

(6) Attheexpirationofthelease(includinganyrenewalsorextensionswiththesamelessee),allinterestinthepropertyshallbeeitherliquidatedorleasedagainonanonoperatingbasisassoonaspracticable(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


§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).

(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”




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)Asuseinthissection:(1) “Petroleumproducts”meanspetroleum,anydistillate,fraction,orderivativeofpetroleum,naturalgasorits

components,gasmanufacturedfromapetroleumproduct,andanyproductderivedfromthegasorfromthemanufacturethereof,suchasbenzene,xylene,toluene,acetylene,tars,componentsoftars,andammonia.

(2) “Refiner”meansanypersonwho,intheState,engagesinthebusinessofrefiningpetroleumproductsandistaxableunderthischapter,uponthevalueorgrossproceedsofsalesofthepetroleumproductsresultantfromthebusiness.Apersonwhoisengagedinbusinessasarefinerandalsoinotherbusinessshallbedeemedarefineronlyinrespectofthebusinessthatproducestheproductsincludedinthemeasureofthetaximposedbythischapter.

(3) “Refining”means:(A) Anyprocessperformedbyarefinerthatincludesachangeinthecharacterorpropertiesofapetroleum

productthroughtheapplicationofheat,or(B) Thecompoundingbyarefinerofapetroleumproductwithaproduct thathasbeenrefinedbythe

refinerbytheprocessstatedinclause(A).(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]

§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.

“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.

(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.2009-02,“Exemptionforcontractingorservicesexportedoutofstate,HRSsection237-29.53;Impositionoftaxonimportedservicesorcontracting,HRSsection238-2.3”

[§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”

§237-29.6 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;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,ortoclassesofusersastobeeffectivelyavailableto

[§237- ] GENERAL EXCISE TAX LAW


thepublic,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);(7) Amounts received from the loading, transportation, and unloading of agricultural commodities shipped

interislandasdescribedundersection237-24.3(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)Amountsreceivedbytelecommunicationscommoncarriersfromcallcenteroperatorsforinterstateorforeigntelecommunicationsservicesasdescribedundersection237-29.8;

(22)Grossproceedsreceivedbyqualifiedbusinessesinenterprisezones,asdescribedundersection209E-11,thatdonothavevalidcertificatesofqualificationfromthedepartmentofbusiness,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.

(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,shallmakeoutandsignareturnoftheinstallmentoftaxforwhichthetaxpayerisliableforthe

18-237-30

[§237-30.5] GENERAL EXCISE TAX LAW


precedingmonthandtransmitthesame,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$4,000ingeneralexcisetaxesduringthecalendaryearifmakingpaymentsonaquarterlybasis,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,§§1,6assupersededbyamL1993,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 thetaxchargeableagainst thetaxpayer 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-

18-237-33



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),tointentionallymakeknowninformationimpartedbyanytaxreturnorreturninformationfiledpursuanttothischapter,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”

18-237-34



§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,bydemandmadeupontheapplicantbymailordeliverythereoftotheaddressshownintheapplication,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 individualappearingandrefusingto testifyunderoath,shallbefined$50for thefirstoffenseand$100foreachsucceedingoffense.[L1941,c265,§7;RL1945,§5470;RL1955,§117-34;amLSp19592d,c1,§16;HRS§237-39;amL1974,c139,§6;amL2017,c12,§50]

Cross Reference


§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,maybecreditedorrefundedatanytimepriortotheexpirationofthe



periodagreedupon.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 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”


§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.

18-237-41



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


APPEALS

§237-42 Appeals. Anypersonaggrievedbyanyassessmentofthetaxforanymonthoranyyearmayappealfromtheassessmentinthemannerandwithinthetimeandinallotherrespectsasprovidedinthecaseofincometaxappealsbysection235-114.[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


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,andinterestleviedoraccrued



under 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.

(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.

§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]

CHAPTER 237 GENERAL EXCISE TAX LAW

Documents

Transcript of CHAPTER 237 GENERAL EXCISE TAX LAW