Source: http://files.hawaii.gov/tax/news/announce/1990_2003/2001ann21.htm
Timestamp: 2019-04-20 18:38:26+00:00

Document:
Please note that Act 9 does not affect the Public Utilities Commission's oversight and regulation of transportation service providers.
Act 9 provides transitional rules for the conversion from the PSC tax system to the GET system. Affected taxpayers are required to file a 2001 Form U-6 (PSC tax return) for the tax year in which October 1, 2001, occurs, and pay the PSC tax payments assigned to the months of the taxable year up to September 30, 2001. 4 Act 9 contains a provision, which allows the PSC tax payments assigned to the months in the taxable year after September 30, 2001, to be abated. Instead, the actual gross income received on October 1, 2001, and thereafter, will be subject to the GET.
Any adjustments will be reflected in the taxpayer's November 2001 statement from the Department, which will be mailed out in December. Taxpayers should not submit PSC tax payments for amounts due after September 30, 2001. If a taxpayer has already submitted a payment for October, November, or December 2001, it will be reflected in the taxpayer's November statement. Any overpayment resulting from either the adjustments made by the Department or a payment made by the taxpayer for periods after September 30, 2001, will be refunded in December.
For transportation services income received after September 30, 2001, the taxpayer shall report and pay the GET on line 9 ("services including professional") of Forms G-45 (general excise/use tax periodic return) and G-49 (general excise/use tax annual return).
Under the PSC tax law, motor carriers were allowed to divide their income with another motor carrier when transportation of passengers or property was furnished through arrangements between the motor carriers. HRS §239-2. Act 9 preserves this benefit by adding a similar provision to the GET law. HRS §237-18(h).
Though Act 9 does not specifically address filing and reporting procedures for taxpayers who are operating in their first, second, or final year of operation when October 1, 2001, occurs, the Department will administer the tax law as described below.
First and second year filers are still required to file an amended Form U-6 (PSC tax return). 6 To file an amended Form U-6, a first or second year filer must compute its PSC tax liability for the taxable year through September 30, 2001, only and state this amount on the amended Form U-6. (As stated above, the taxes due for the rest of the year are abated under Act 9.) The taxpayer should then offset the amended tax liability for the year with any PSC tax payments paid through September 30, 2001, (i.e., full payment or quarterly or monthly installments); any difference will represent a balance due to the Department or a refund due to the taxpayer. Any overpayment (including payments made by the taxpayer for PSC taxes due for October 2001, or thereafter) will be refunded to the taxpayer.
A transportation service provider in its first year of doing business must file an amended Form U-6 to adjust the estimate used in its original filing to reflect the actual gross income received during the year in which October 1, 2001, occurs. To file an amended Form U-6, the taxpayer should total the tax installments paid through September 30, 2001. Compare this amount with the actual income earned for the tax year through September 30, 2001, multiplied by the four percent tax rate. Any overpayment or underpayment of PSC taxes should be reported on the amended Form U-6. The first-year filer's PSC taxes due for the installments due after September 30, 2001, are abated. The gross income received on October 1, 2001, and thereafter must be reported on GET returns.
Example 1. Carrier ABC is a transportation service provider taxable under HRS §239-6. It began its public service company business on March 1, 2001, and is a calendar year taxpayer making quarterly installment payments. Carrier ABC will be subject to the PSC tax from the date that it commenced business (March 1, 2001) through September 30, 2001. Beginning on October 1, 2001, Carrier ABC will be subject to the GET on its gross income received on and after that date. Carrier ABC must file an amended PSC tax Form U-6 to reflect the actual gross income received for the period through September 30, 2001, multiplied by the four percent tax rate. See HRS §239-9(e). Compare this computed tax amount to the taxes paid through September 30, 2001, and report any overpayment or underpayment on the amended Form U-6. The PSC tax payments for the period October 1, 2001, through December 31, 2001, will be abated under Act 9.
A transportation service provider in its second year of doing business must file an amended Form U-6 to adjust the estimate used in its original filing. First, the taxpayer must compute the actual average monthly gross income from the inception of business through September 30, 2001. Next, multiply the resulting actual average monthly gross income by the number of months in the (second) taxable year occurring before October 1, 2001. Multiply this result by four percent to arrive at the PSC taxes due.
Second, to determine the amount of any underpayment or overpayment of PSC taxes for the portion of the taxable year through September 30, 2001, divide by twelve (12) the estimated taxes reported for the second PSC taxable year (made on the originally-filed Form U-6). Multiply the result by the number of months in the taxable year occurring before October 1, 2001, and subtract this result from the amount determined in the previous paragraph. Claim or report the resulting overpayment or underpayment on the amended Form U-6.
If a transportation service provider goes out of business in the tax year in which October 1, 2001, occurs, then it must continue to pay the PSC tax through September 30, 2001. The PSC tax installments due for the months remaining after September 30, 2001, will be abated. Gross income received beginning on October 1, 2001, will be subject to the GET.
Example 2. Pauhana Carriers ("Pauhana") chooses to end its PSC business on May 30, 2001, after 10 years of business. Pauhana is a calendar year taxpayer. For tax year 2001, Pauhana makes monthly installment tax payments based on its 2000 gross income. Pauhana must continue to pay its monthly PSC taxes through September 30, 2001. Under Act 9, the monthly PSC tax installments due for the months of October through December will be abated.
For more information on the procedures for first, second, or final year filers, please call Taxpayer Services at (808) 587-4242 or toll-free at 1-800-222-3229.
If a transportation service provider affected by Act 9 does not currently hold a GET license, it must obtain such a license before filing its GET returns. The taxpayer should complete Form BB-1 (State of Hawaii Basic Business Application) and submit it to the Department with a one-time $20 license fee. Under normal circumstances, the Department would recommend that the Form BB-1 be mailed in; however, because of these special circumstances, we suggest that taxpayers apply for their licenses in person at any of the district offices for immediate issuance of a license number.
Though the airlines industry is, as a technical matter, an affected taxpayer, the amendments made by Act 9 have no practical effect on it because both the GET and PSC tax on income from airline transportation are preempted under federal law. See Aloha Airlines, Inc. v. Director of Taxation , 464 U.S. 7 (1983), in which the United States Supreme Court held that the Federal Aviation Act of 1958, §1113(a), as amended, 49 U.S.C.A. §1513(a) prohibits states from levying a tax on the gross receipts derived from the sale of air transportation.
Transportation service providers who are taxed under HRS §239-5(b) and report income on line 1a(1) of Form U-6 are not affected by Act 9.
The PSC tax is not a deferred tax. When a transportation service provider files its 2001 Form U-6 (the PSC tax return), the tax is measured by the income it received in the 2000 tax year. With the filing of this Form U-6, the taxpayer is satisfying its 2001 reporting requirements (rather than its 2000 year responsibilities).
In implementing Act 9, the Department will assign the PSC taxes due for the taxable year on monthly basis. Using this method, the PSC taxes that should be paid will be the amount assigned to the months in the taxable year that occur before October 1, 2001 (the date of conversion from the PSC tax to GET system). The PSC taxes that should be abated will be the amount assigned to the months in the taxable year that occur after September 30, 2001.
For first and second year filers, adjustments will be made after the receipt of the required filing of an amended Form U-6 for the first or second year of the taxpayer's operations, whichever is applicable.
HRS §239-9(e) pertains to adjustments of gross income estimates for first and second year filers, and states "An amended return shall be filed after the close of the applicable taxable year for each year for which an estimated tax return was filed[.]"

References: §239
 §237
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 §1113
 §1513
 §239
 §239