NEIL ABERCROMBIE

FREDERICK D. PABLO

GOVERNORDIRECTOR OF TAXATIONBRIAN SCHATZRANDOLF L. M. BALDEMORLT. GOVERNOR

DEPUTY DIRECTOR

STATE OF HAWAII

DEPARTMENT OF TAXATIONP.O. BOX 259
HONOLULU, HAWAII 96809

PHONE NO: (808) 587-1510
FAX NO: (808) 587-1560

November 9, 2011

DEPARTMENT OF TAXATION ANNOUNCEMENT NO. 2011-27
RE:Division of Income and Information Reporting Under Act 105, Session Laws of Hawaii 2011

Act 105, Session Laws of Hawaii 2011, requires the Department of Taxation(“Department”) to gather information from all taxpayers who have exemptions or deductions
from the general excise and use tax, in order to provide comprehensive information fordetermining the impact of Act 105 on businesses. See Department of Taxation Announcement
No. 2011-26. Act 105 temporarily suspends certain general excise tax and use tax exemptions
for the period from July 1, 2011 through June 30, 2013. The suspension means that thetransactions will no longer be exempt from the general excise tax or use tax. See Department ofTaxation Announcement No. 2011-09. Reporting on an exemption or deduction is required eventhough the exemption or deduction has not been suspended by Act 105.
Sections 237-18(a), (b), (e), (f), (g) and (h) of the Hawaii Revised Statutes ("HRS")
provide that certain persons engaged in:
1. the operation of coin operated devices;
2. producing an event or spectacle and/or promoting a staged event;3. the sale of insurance or real estate;
4. the sale of tour packages; or
5. furnishing transportation of passengers or property through arrangements between motor
carriers
that split commissions or gross proceeds with others, will only be subject to tax on the portion of
the commissions or proceeds that are retained by that person.1 For Form G-45, "Periodic
General Excise/Use Tax Return," and Form G-49, "Annual Return & Reconciliation of General
Excise/Use Tax," the instructions provide that the amount of commissions or proceeds that are
not subject to tax under section 237-18(a), (b), (e), (f), (g) and (h) are not reported because theseamounts are not the gross income of the taxpayer. See page 21 of General Instructions for
Filing General Excise/Use Tax Return. However, some taxpayers have chosen to report theseamounts as their gross income and report the amount paid to the other party as an exemption ordeduction.
On the current Schedule GE-1," Survey of General Excise/Use Tax Exemptions andDeductions," HRS sections 237-18(a), (b), (e), (f), (g) and (h), are not listed as an exemption or1

Sections 237-18(a), (b), (e). (f), (g) and (h) were not suspended by Act 105.

Department of Taxation Announcement No. 2011-27
November 9, 2011
Page 2 of 2deduction. Taxpayers who only report amounts not subject to tax under section 237-18(a), (b),(e), (f), (g) or (h), as an exemption or deduction on their Form G-45 and Form G-49, haveinquired whether Schedule GE-1 should be filed and if so, how Schedule GE-1 should becompleted. These taxpayers are not required to file Schedule GE-1 because sections 237-18(a),(b), (e), (f), (g) and (h) are divisions of income, not exemptions or deductions. If any taxpayers
already filed Schedule GE-1 and reported amounts under sections 237-18(a), (b), (e), (f), (g) or(h), as an exemption or deduction, there is no need to amend Schedule GE-1.
For more information on this Act, please contact the Rules Office at 808-587-1577.

FREDERICK D. PABLO
Director of Taxation