reglab/statecodes huggingface dataset:
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 235 - INCOME TAX LAW › Subchapter 6 - RETURNS AND PAYMENTS; ADMINISTRATION › Section 18-235-112 - Time for assessment of deficiency attributable to gain upon conversion

Current through June, 2024
(a) (Reserved)
(b) Notification required by taxpayer.
				Notification pursuant to section
				235-112(b),
				HRS, shall be made in a written statement attached to the taxpayer's income tax
				return for the taxable year or years in which the converted property is
				replaced, the intention not to replace the property is formed, or the period
				for replacement expires. The notification shall include all details related to
				the replacement of the converted property.
(c) Property not replaced, period for
				replacement expires. If the taxpayer does not replace and does not intend to
				replace the converted property within the required replacement period as set
				forth in section 1033(a)(2)(B), IRC, the taxpayer shall amend the tax return
				for the year in which the property was converted. The amended return shall be
				filed within the required replacement period. Any gain or loss on the
				conversion of the property shall be reported on the amended return, and any
				taxes owed shall be submitted at the time the amended return is
				filed.
(d) Limitation period.
				Pursuant to section
				235-112(b),
				HRS, the department may assess any deficiency attributable to gain on the
				conversion of property within three years from the date the department is
				notified by the taxpayer that the converted property has been replaced or that
				the taxpayer does not intend to replace the converted property.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 235 - INCOME TAX LAW › Subchapter 6 - RETURNS AND PAYMENTS; ADMINISTRATION › Section 18-235-113 - Time for assessment of deficiency attributable to gain upon sale of residence

Current through June, 2024
(a)
				(Reserved)
(b) Notification
				required by taxpayer. Notice to the department as required by section
				235-113(b), HRS, shall be made in the taxpayer's tax return for the taxable
				year in which the gain from the sale of the principal residence is
				realized.
(c) Limitation period.
				Pursuant to section 235-113, HRS, the department may assess any deficiency
				attributable to any gain from the sale of property used as the taxpayer's
				principal residence as set forth in section 235-113(a), HRS. The deficiency
				shall be assessed within three years from the date the department is notified
				that the taxpayer has purchased replacement property, intends not to replace
				the property, or the period for replacement expires.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 235 - INCOME TAX LAW › Subchapter 6 - RETURNS AND PAYMENTS; ADMINISTRATION › Section 18-235-122 - S corporations; domestic and foreign

Current through June, 2024
(a) The
				definitions in section 18-235-4-01 apply to this section.
(b) A resident shareholder of an S
				corporation is subject to tax on the shareholder's pro rata share of the S
				corporation's income from whatever source derived.
(c) A nonresident shareholder of an S
				corporation is subject to tax on the shareholder's pro rata share of the S
				corporation's Hawaii source income.
(d) Shareholders of an S corporation shall be
				subject to tax on their pro rata shares of S corporation income whether or not
				the S corporation is required to file a return.
(e) An S corporation shall determine Hawaii
				source income by allocation and apportionment under the Uniform Division of
				Income for Tax Purposes Act, sections
				235-21 to
				235-39, HRS, if
				and to the extent that:
(1) The S corporation
				derives income from business activity both within and without this
				State,
(2) The S corporation's
				business activity is taxable in both this State and another jurisdiction,
				and
(3) The income is not derived
				from the rendering of purely personal services.
Otherwise, an S corporation shall determine Hawaii source
				  income by allocation and separate accounting pursuant to section
				  235-5,
				  HRS, and section 18-235-5-02. For an S corporation incorporated in Hawaii,
				  Hawaii source income includes income that is allocated or apportioned to any
				  jurisdiction in which the S corporation is not taxable.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 1 - DEFINITIONS; ADMINISTRATION › Section 18-237-3 - "Gross income", "gross proceeds of sale", defined

Current through June, 2024
(a) See Administrative Rule §
				18-237-13(c)(1) for the exemption from the general excise tax of all rents
				received on account of the lease or rental of dwelling units developed and
				constructed pursuant to §§ 359G-6 and 359G-11, HRS.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 1 - DEFINITIONS; ADMINISTRATION › Section 18-237-8.6-01 - Definitions

Current through June, 2024
As used in sections 18-237-86-01 to 18-237-86-10, unless the
				  context otherwise requires:
"Control" means to exercise restraining or directing
				  influence over.
"Hawaii district" means the taxation district for the county
				  of Hawaii.
"Intangible property" means, but is not limited to,
				  franchises, patent, copyright, formula, process, design, pattern, know how,
				  format, or other similar items.
"Kauai district" means the taxation district for the county
				  of Kauai.
"Maui district" means the taxation district for the counties
				  of Maui and Kalawao, which includes the islands of Maui, Molokai, and
				  Lanai.
"Oahu district" means the taxation district for the city and
				  county of Honolulu.
"Tangible personal property" is generally property that may
				  be touched or felt.
"Taxation district" means the Kauai district, Hawaii
				  district, Maui district, or Oahu district, as those districts are defined in
				  this section.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 1 - DEFINITIONS; ADMINISTRATION › Section 18-237-8.6-02 - Allocation of gross income and gross proceeds from sales of tangible personal property

Current through June, 2024
Except as provided in this section, the gross income and
				  gross proceeds of sale derived from a taxpayer's sale of tangible personal
				  property shall be allocated to the taxation district where the property is
				  delivered, regardless of where the title to the property passes.
Example 1:
Taxpayer, a retailer located in the
				  Oahu district, receives an order for products from Purchaser. Taxpayer accepts
				  the order and delivers the products to the Maui district. Taxpayer shall
				  allocate the gross income from the sale to the Maui district, where the
				  products were delivered.
Example 2:
Taxpayer, a retailer located in the
				  Maui district, sells products to Purchaser located in the Oahu district.
				  Pursuant to Purchaser's instructions, Taxpayer directs Taxpayer's product
				  manufacturer, who is located in the Kauai district, to deliver the products to
				  Purchaser's office in the Maui district. Taxpayer shall allocate the gross
				  income from the sale to the Maui district, where the products were
				  delivered.
Example 3:
Retailer, located out of state, sells
				  and delivers products to Purchaser in the Oahu district. Retailer shall
				  allocate the gross income from the sale to the Oahu district, where the
				  products were delivered.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 1 - DEFINITIONS; ADMINISTRATION › Section 18-237-8.6-03 - Allocation of gross income from contracting and services

Current through June, 2024
(a) Gross income from contracting or services
				performed by a taxpayer engaged in a service business shall be allocated to the
				taxation district where the services are used or consumed, as provided in
				sections 18-237-2953-03 to 18-237-2953-13.
(b) If services are used or consumed in more
				than one taxation district, gross income shall be allocated using any
				reasonable method; provided that the method is consistently used by the
				taxpayer and supported by verifiable data that reasonably quantifies the
				proportionate benefit received by each taxation district.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 1 - DEFINITIONS; ADMINISTRATION › Section 18-237-8.6-05 - Allocation of gross income from the rental, lease, or license of tangible and intangible personal property

Current through June, 2024
(a) Except as
				provided in this section, gross income from the rental, lease, or license of
				tangible and intangible personal property shall be allocated to the taxation
				district where the property is used.
Example 1:
Taxpayer is engaged in the business
				  of renting motor vehicles in each of the four taxation districts. Taxpayer
				  rents a vehicle to a customer in the Maui district. Taxpayer shall allocate the
				  gross income received from the rental to the Maui district, where the vehicle
				  is used.
Example 2:
Taxpayer, located in the Oahu
				  district, is engaged in the business of renting equipment. Taxpayer rents
				  equipment to XYZ, located in the Maui district, for a job in the Kauai
				  district. Taxpayer shall allocate the gross income from this rental to the
				  Kauai district, where the property is used.
Example 3:
Taxpayer, located in the Oahu
				  district, wrote and copyrighted a song. A musician pays Taxpayer a royalty to
				  perform that song for profit in a hotel in the Maui district. Taxpayer shall
				  allocate the gross income from the license of the copyright to the Maui
				  district where the property is used.
(b) Where a taxpayer rents or leases tangible
				personal property or licenses or receives a royalty from intangible personal
				property that is used in more than one taxation district, gross income shall be
				allocated using any reasonable method; provided that the method is consistently
				used by the taxpayer and supported by verifiable data that reasonably
				quantifies the proportionate benefit received by each taxation district. This
				rule also applies to property that is constantly in transit between taxation
				districts, such as barges, containers, and aircrafts without home ports or
				bases.
Example 1:
Taxpayer rents equipment to XYZ to be
				  used in the Maui district and the Oahu district. The equipment will be used in
				  the Maui district for six months and in the Oahu district for six months.
				  Taxpayer shall allocate fifty per cent of the gross income from the rental of
				  the equipment to the Maui district and fifty per cent to the Oahu
				  district.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 1 - DEFINITIONS; ADMINISTRATION › Section 18-237-8.6-06 - Allocation of gross income from the rental or lease of real property

Current through June, 2024
Gross income from a taxpayer's rental or lease of real
				  property in the State shall be allocated to the taxation district where the
				  real property is located.
Example 1:
Taxpayer rents condominium units
				  located in each of the four taxation districts. Taxpayer shall allocate the
				  gross income from the rental of each unit to the taxation district where the
				  condominium unit is located.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 1 - DEFINITIONS; ADMINISTRATION › Section 18-237-8.6-08 - Allocation of gross income from interest

Current through June, 2024
(a) The
				gross income from a taxpayer's investment interest shall be allocated to the
				taxation district where the investment is controlled Alternatively, the
				taxpayer may allocate the gross income by using any reasonable method; provided
				that the method is consistently used by the taxpayer and is supported by
				verifiable data that reasonably reflects the benefit received by the taxation
				district.
Example 1:
Taxpayer has retail locations in all
				  taxation districts and has corporate offices located in the Oahu district.
				  Taxpayer has a central cash management account controlled by the corporate
				  office located in the Oahu district that places the gross receipts from all
				  retail locations into one interest bearing bank account. Taxpayer shall
				  allocate the interest received from this bank account to the Oahu district
				  because the account is controlled by the corporate office located in the Oahu
				  district.
Example 2:
Assume the same facts as in example
				  1, except that a separate bank account is created for the Maui district retail
				  locations. The money deposited into that bank account is used for improvements
				  to the Maui district stores and controlled by the Maui district retail
				  locations. Interest on this bank account shall be allocated to the Maui
				  district.
(b) When interest
				is earned from the sale of tangible personal property on a deferred or
				installment payment plan, the interest shall be allocated to the taxation
				district where the tangible personal property is delivered. Alternatively, the
				taxpayer may allocate the gross income by using any reasonable method; provided
				that the method is consistently used by the taxpayer and supported by
				verifiable data that reasonably reflects the benefit received by the taxation
				district.
Example 1:
Taxpayer, located in the Hawaii
				  district, sells equipment to Purchaser, located in the Kauai district, on an
				  installment payment plan. Taxpayer delivers the equipment to Purchaser in the
				  Kauai district. Every month for twelve months, Taxpayer receives a payment from
				  Purchaser, which includes principal and interest. Taxpayer shall allocate the
				  interest received from each payment to the Kauai district.
(c) When interest is earned from the sale of
				real property on a deferred payment plan, the gross income from the interest
				shall be allocated to the taxation district where the real property is located.
Example 1:
Taxpayer sells real estate located in
				  the Oahu district pursuant to an agreement of sale, which provides for deferred
				  payments of the sales price and an interest charge. Taxpayer shall allocate the
				  interest received to the Oahu district because the real estate that is the
				  subject of the agreement of sale is located in the Oahu
				  district.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 1 - DEFINITIONS; ADMINISTRATION › Section 18-237-8.6-09 - Allocation of gross income of theaters, amusements, etc.

Current through June, 2024
The gross income from the business of operating a theater,
				  opera house, moving picture show, vaudeville, amusement park, dance hall,
				  skating rink, or any other place where amusements are offered to the public
				  shall be allocated to the taxation district where the event takes place
				  Alternatively, the taxpayer may allocate the gross income by using any
				  reasonable method; provided that the method is consistently used by the
				  taxpayer and supported by verifiable data that reasonably reflects the benefit
				  received by the taxation district.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 1 - DEFINITIONS; ADMINISTRATION › Section 18-237-8.6-10 - All others

Current through June, 2024
If sections 18-237-86-02 to 18-237-86-09 do not apply, gross
				  income shall be allocated to a taxation district based upon the rules for
				  allocating gross income which are the most relevant to the taxpayer's
				  particular business activity Alternatively, the taxpayer may allocate the gross
				  income by using any reasonable method; provided that the method is consistently
				  used by the taxpayer and supported by verifiable data that reasonably reflects
				  the benefit received by the taxation district
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-13-02 - Tax on business of selling tangible personal property; producing

Current through June, 2024
(a) Recapping tires or selling tangible
				personal property for use in recapping tires.
(1) Sales by recapper. This paragraph applies
				to a person who purchases used tires or accepts used tires as trade-ins and
				subsequently recaps the same for the person's own stock for sale. When tires
				covered by this paragraph are sold, the sales take the rate of:
(A) One-half of one percent if made to
				another person who purchases the tires for purposes of resale; and
(B) Four percent if made for consumption or
				use by the purchaser and not for resale.
Example 1:
A tire recapper (taxpayer R) sells
				  tires from stock to a service station operator (taxpayer S) who purchases the
				  tires for purposes of resale. Taxpayer R is subject to the general excise tax
				  at the rate of one-half of one percent on the amount received from taxpayer
				  S.
Example 2:
A tire recapper (taxpayer R) sells
				  tires from stock to a customer who installs the tires on the customer's family
				  automobile. Taxpayer R is subject to the general excise tax at the rate of four
				  percent on the amount received from the customer.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-13-06.05 - Tax on service business; fees and commissions received by a director, trustee, executor, or other fiduciary

Current through June, 2024
(a) Scope. This
				section sets forth the application of the provisions of chapter
				237, HRS, relating to the imposition
				of the general excise tax on fees and commissions received by a person who
				serves as a fiduciary such as, but not limited to, a director, trustee,
				executor, administrator, custodian, or guardian. The purpose of this subsection
				is to clarify for purposes of chapter
				237, HRS, those fees and commissions
				derived from the performance of fiduciary services which are more than casual
				transactions. This subsection, therefore, does not apply to those persons who,
				by practice or profession, serve as fiduciaries such as attorneys and
				accountants who are taxed under section
				237-13(8),
				HRS, and those persons engaged in business as fiduciary companies under the
				provisions of chapter 402, HRS.
(b)
				Imposition of tax; rate of tax. Section
				237-13, HRS,
				levies a general excise tax against persons on account of their business and
				other activities in the State measured by the application of rates against
				gross income. Fees and commissions received by fiduciaries such as, but not
				limited to, directors, trustees, executors, administrators, custodians, or
				guardians may be taxed by section
				237-13(6), (8), or
				(10), HRS, respectively, as follows:
(1) Section
				237-13(6),
				HRS, imposes a tax equal to four percent of the gross income upon every person
				engaging or continuing within the State in any service business or
				calling.
(2) Section
				237-13(8),
				HRS, imposes a tax equal to four percent of the gross income upon every person
				engaging or continuing within the State in the practice of a
				profession.
(3) Section
				237-13(10),
				HRS, imposes a tax equal to four percent of the gross income upon every person
				engaging or continuing within the State in any business, trade, activity,
				occupation, or calling not otherwise specifically included in section
				237-13,
				HRS.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-13-06.11 - Tax on service business; tire recapping services

Current through June, 2024
(a) This section applies to the gross income
				derived from recapping a tire belonging to another person.
(b) When recapping services are rendered upon
				the order of or at the request of another taxpayer who is engaged in the
				service business and who in fact acts or acts in the nature of an intermediary
				between the person rendering such services and the ultimate recipient of the
				benefits of services:
(1) The gross income of
				the recapper takes the rate of one-half of one percent;
(2) The gross income of the intermediary
				takes the rate of four percent.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-13-08 - Professions

Current through June, 2024
Fees and commissions received by a director, trustee,
				  executor, or other such fiduciary. See section
				  18-237-13-06.05.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-13-10 - Tax on other business

Current through June, 2024
(a) The furnishing
				or use of trading stamps and similar devices.
(1) General excise tax, rates applicable,
				amounts. A person, hereinafter called the "user of stamps or other devices,"
				who uses in, with, or for any transaction, stamps, coupons, tickets,
				certificates, cards, or other similar devices, redeemable in goods, wares, or
				merchandise, or which entitle the customer to procure from any person any
				goods, wares, or merchandise, free of charge, or for less than the retail
				market price thereof, is taxable upon the full amount of gross proceeds of sale
				or gross income of the transaction in, with, or for which the stamps or other
				devices are used, at the rates provided by chapter
				237, HRS, without any deduction
				therefrom on account of the cost of the stamps or other devices.
(2) Stamp company, tax applicable to. The
				person who furnishes to the user of the stamps or other devices, or redeems,
				such stamps, coupons, tickets, certificates, cards, or other similar devices,
				is taxable upon the gross income received or derived therefrom at the rate
				provided by section
				237-13(10),
				HRS.
(3) Prize, no tax applies,
				when; transfer of merchandise to person awarding prize.
(A) As to the goods, wares, or merchandise
				which constitute the prize for or redemption value of the stamps or similar
				devices, no tax applies in respect of the transfer of such goods, wares, or
				merchandise to the person surrendering the stamps or similar devices for
				redemption or who receives the prize, except to the extent of the additional
				consideration, if any, received or derived therefrom when the goods, wares, or
				merchandise are transferred for a price other than the stamps or devices
				themselves.
(B) As to the transfer
				of such goods, wares, or merchandise to the person giving the prize or
				redeeming the stamps or similar devices, this shall be deemed a sale at
				wholesale.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-13(6)-01 - One-half percent intermediary services rate, in general

Current through June, 2024
(a) Section
				237-13(6),
				HRS, provides that where any person engaging or continuing within the State in
				any service business or calling not otherwise specifically taxed under chapter
				237 renders such services upon or at
				the request of another taxpayer who is engaged in the service business and who,
				in fact, acts as or acts in the nature of an intermediary between the person
				rendering such services and the ultimate recipient of the benefits of such
				services, so much of the gross income as is received by the person rendering
				the services shall be subject to tax at the rate of one-half of one percent and
				all of the gross income received by the intermediary from the principal shall
				be subject to tax at the rate of four percent.
(b) This provision has been interpreted very
				strictly by the courts in all three reported cases addressing this issue.
In re Tax Appeal Busk Enter.
, 53 Haw. 518 (1972);
In re Tax Appeal Pacific Laundry
, T.A. No. 1864,
affirmed
65 Haw. 678 (1982); and
In re Tax
				Appeal McDonald's Restaurants
, T.A. No. 2232 (1985). The
				Department has been guided by these cases in applying the intermediary services
				rate and drafting these rules. These cases require a "clear analogue to the
				wholesaler-retailer-customer transaction of goods" and the intermediary must be
				a "mere conduit." While few states tax services as extensively as Hawaii does,
				the Department has searched the statutes, rules, and case law of other states
				for legal tests relating to the resale of property or services, the wholesale
				sale of property or services, the consumption or use of property or services,
				and the recipient of property or services. The authorities that discuss
				services use the same terms that are used in the area of property - use,
				consumption, recipient, resale. Others reach a conclusion without articulating
				a clear reason for the conclusion, e.g., the "primary objective" of the parties
				was to resell the service. This may be attributable to the ephemeral nature of
				a service, as opposed to the sale of property which can be tracked at each
				level of sale.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-13(6)-02 - Summary of the rules

Current through June, 2024
The intermediary services rate of one-half percent is
				  applicable to the gross income received or derived when:
(1) A service business provides services
				("Service Provider");
(2) Upon the
				request or order of another service business which acts as an "Intermediary"
				between the Service Provider and the ultimate recipient of the services
				("Customer");
(3) Both Service
				Provider and Intermediary are licensed persons in this State;
(4) There are at least three parties (Service
				Provider, Intermediary, and Customer); and
(5) The gross income received from Customer
				by Intermediary is subject to the general excise tax at the four percent rate
				on all the gross income received for or derived from those services.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-13(6)-03 - Definitions; generally

Current through June, 2024
For purposes of sections 18-237-13(6)- 01 to 18-237-13(6)-
				  09:
"Customer" means the person who is the ultimate recipient of
				  the services of Service Provider. The term "Customer" is used regardless of
				  whether the payment received by Service Provider qualifies for the intermediary
				  services rate.
"Intermediary" is defined in section 18-237-13(6)- 06. The
				  term "Intermediary" is used regardless of whether the payment received by
				  Service Provider qualifies for the intermediary services rate.
"Service Provider" means the taxpayer claiming the one-half
				  percent intermediary services rate who provides the services to Customer. The
				  term "Service Provider" is used regardless of whether the payment received
				  qualifies for the intermediary services rate.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-13(6)-05 - "Licensed person in this State, defined"

Current through June, 2024
(a)
				"Licensed person in this State" means a person subject to the taxing
				jurisdiction of the State and licensed under chapter
				237, HRS;
(b) "Licensed person in this State" does not
				include a person who is not subject to the taxing jurisdiction of the
				State.
Example 1:
Intermediary, a consulting company
				  located in California, enters into an agreement with Customer. Intermediary
				  contracts with Service Provider, located in Hawaii, to perform services in
				  Hawaii for Customer. Intermediary, however, does not perform any services in
				  Hawaii. Service Provider bills Intermediary and Intermediary bills Customer.
				  Customer pays Intermediary and Intermediary pays Service Provider.
In order for Service Provider to be eligible for the
				  intermediary services rate, both Service Provider and Intermediary must be
				  licensed persons in this State. Intermediary, however, is not a licensed person
				  in this State because Intermediary is not subject to the taxing jurisdiction of
				  the State. The intermediary services rate is not applicable to the payment
				  Service Provider receives from Intermediary. Service Provider is subject to the
				  general excise tax at the rate of four percent on the total payments received
				  from Intermediary.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-13(6)-09 - Burden of proof on Service Provider

Current through June, 2024
(a) Service
				Provider has the burden of providing evidence satisfactory to the Department
				that Service Provider qualifies for the intermediary services rate of one-half
				percent. Whether Service Provider qualifies for the intermediary services rate
				is determined by all the factual circumstances; no single factor is
				controlling.
(b) Some of the
				relevant factors include the following:
(1)
				Whether there is a written contract identifying the customer for whom
				Intermediary is purchasing Service Provider's services, the services performed
				by the Intermediary for Customer, and the services performed by Service
				Provider at the request of Intermediary;
(2) Whether there has been a separate charge
				or bill by Intermediary for Service Provider's services; and
(3) Whether Intermediary has executed a
				certificate on a form prescribed by the Department that states that
				Intermediary will not alter, use, or otherwise consume Service Provider's
				services. Intermediary may execute a certificate which is applicable to every
				purchase of services from Service Provider, unless it is specified in writing
				that the certificate does not apply or until the certificate is revoked by
				notice in writing.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-16 - Tax on certain retailing

Current through June, 2024
(a) Gross income
				received or derived from recapping tires or from selling tangible personal
				property for use in recapping tires. See Administrative Rules §
				18-237-13(B)(1).
(b) Furnishing or
				use of trading stamps and similar devices. See Administrative Rules §
				18-237-13(j).
(c) Containers and
				packaging materials. See Administrative Rules § 18-237-4(b).
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-16.5-02 - Tax on written real property leases; deduction allowed

Current through June, 2024
(a) Section
				237-16.5,
				HRS, imposes the general excise tax at the rate of four percent upon the gross
				proceeds or gross income received or derived from the business of leasing real
				property in the State. A Lessee who subleases real property under a sublease
				shall be allowed a deduction from the amount of gross proceeds or gross income
				received from the Sublessee under section
				237-16.5,
				HRS, and sections 18-237-16.5-03 to 18-237-16.5-06. In no case shall the amount
				of the deduction exceed the total amount received from the sublease of the real
				property.
Example 3:
Lessor L leases its building to
				  lessee A, who does not sublease the building or any portion of the building. A
				  is subject to the tax under section
				  237-16.5,
				  HRS, but is not allowed the sublease deduction because there is no
				  sublease.
(b) The requirements for the
				sublease deduction are as follows:
(1) The
				Lessor must submit to the Lessee, a certificate that certifies that the Lessor
				is licensed and taxable under the general excise tax law;
(2) The Lessee must be licensed and taxable
				under the general excise tax law;
(3) The Lessee must report the amount paid to
				the Lessor, the amount of the sublease deduction, and the name and general
				excise tax number of the Lessor on the Lessee's general excise tax return in
				lieu of filing a copy of the certificate with the general excise tax
				return;
(4) The Lessee's sublease
				deduction is limited to leases and subleases in writing and related to the same
				real property or space; and
(5) The
				Lessee must compute the allocations required by section 18-237-16.5-04 and
				section 18-237-16.5-05 with no allowances for changes during the specified term
				of the sublease, provided that this requirement shall not apply to a lease with
				terms that vary in the amount of periodic rent due, including a percentage
				lease with fixed minimum rent, a percentage lease with no minimum rent, a
				combination percentage lease with fixed minimum rent or percentage leases with
				no minimum rent, whichever amount is higher, or a graduated or step-up
				lease.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-16.5-03 - Deduction for sublease of real property or space

Current through June, 2024
(a)
				General Rule. A Lessee who subleases real property or space shall be allowed a
				deduction from the amount of gross proceeds or gross income received from the
				Sublessee. The deduction shall be the total amount paid by the Lessee to the
				Lessor, subject to the requirements and allocations provided under section
				237-16.5,
				HRS, and sections 18-237-16.5-03 to 18-237-16.5-06, at the maximum allowable
				rate. The allowable rate to be used in computing the deduction is as follows:
(1) For gross proceeds or gross income paid
				in the months of October, November, and December, 1998, 0.125;
(2) In calendar year 1999, 0.25;
(3) In calendar year 2000, 0.375;
(4) In calendar year 2001, 0.50;
(5) In calendar year 2002, 0.625;
(6) In calendar year 2003, 0.75;
				and
(7) In calendar year 2004, and
				thereafter, 0.875.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-16.5-04 - Allocation - sublease of less than one hundred percent of the real property or space

Current through June, 2024
(a) If the Lessee
				subleases less than one hundred percent of the real property or space that was
				leased from the Lessor, the Lessee shall allocate the total amount of gross
				proceeds or gross income paid by the Lessee for that real property or space
				based upon the percentage of real property or space subleased, or the fair
				rental value as determined by the factors in section 18-237-16.5-06. The
				director of taxation may redetermine the amount of the Lessee's deduction under
				section
				237-16.5(d),
				HRS, if the director finds that the basis for the allocation is not reasonable
				or that redetermination is necessary to prevent the avoidance of taxes. The
				total amount allocated by the Lessee to all subleases shall not exceed the
				total amount of gross proceeds paid by the Lessee to the Lessor.
(b) The Lessee's allocation may be based upon
				the percentage of the real property or space subleased by the Lessee when it is
				reasonable under the circumstances.
(1) The
				percentage of real property or space subleased by the Lessee shall be
				multiplied by the amount of gross proceeds or gross income paid by the Lessee
				to the Lessor for the real property or space.
(2) The product of the preceding
				multiplication shall be deducted by the Lessee from the amount of gross
				proceeds or gross income received for subleasing the real property or
				space.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-16.5-05 - Allocation - Various real property or space with different rental values; sublease of one hundred percent of the real property or space

Current through June, 2024
If the Lessee leases from the Lessor various real property
				  or space which has different rental values and the Lessee subleases the real
				  property or space, the Lessee shall allocate the total amount of gross proceeds
				  or gross income paid by the Lessee for all real property or space based upon
				  the percentage of real property or space leased, or if not reasonable, the fair
				  rental value as determined by factors in section 237-16.5-06 for each real
				  property or space before the Lessee may compute the deduction under section
				  237-16.5(g),
				  HRS.
Example 9:
Lessor L leases real property XYZ,
				  which is divided into spaces X, Y, and Z, to lessee A for $10,000. Space X is
				  fifty percent of the entire real property and spaces Y and Z account for
				  twenty-five percent each of the real property. Lessee A allocates the gross
				  proceeds paid to L based upon the percentage of space leased as follows: Space
				  X ($5,000), Space Y ($2,500), and Space Z ($2,500).
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-16.5-06 - Allocation based upon fair rental value

Current through June, 2024
(a) The Lessee, in
				addition to the size, quality and location of the real property or space, shall
				consider the following factors when an allocation under section 18-237-16.5-04
				or section 18-237-16.5-05 is required and the allocation based upon the
				percentage of the real property or space subleased is not reasonable under the
				circumstances.
(1) Factors for vacant land.
(A) Current rents paid and asked for
				comparable vacant lands in the same area as of the date when the lease is
				executed; and
(B) The written
				opinion of a person knowledgeable about rental values for vacant lands,
				including a real estate appraiser certified under chapter 466K, HRS, or real
				estate broker licensed under chapter
				467, HRS, with a knowledge of rental
				values for vacant lands.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-16.5-07 - Burden of proof on the taxpayer

Current through June, 2024
The taxpayer has the burden of providing evidence
				  satisfactory to the department of taxation that the taxpayer qualifies to be
				  taxed under section
				  237-16.5,
				  HRS, instead of section
				  237-13(10),
				  HRS. If the taxpayer qualifies to be taxed under section
				  237-16.5,
				  HRS, the taxpayer has the burden of providing evidence satisfactory to the
				  department that the taxpayer qualifies for the deduction for the sublease of
				  the real property or space.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-20-02 - Summary of the rules

Current through June, 2024
The reimbursement exemption applies when:
(1) Taxpayer pays a cost or advance to Third
				Party (section 18-237-20-05 );
(2)
				For or on behalf of Reimbursing Party (section 18-237-20-06 ); and
(3) Taxpayer is repaid the cost or advance
				and receives no additional monetary consideration for making the cost or
				advance (section 18-237-20-4 ).
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-20-03 - Definitions; generally

Current through June, 2024
For purposes of sections
				  18-237-20-01 to
				  18-237-20-07:
"Reimbursement" means an amount that Taxpayer receives from
				  the Reimbursing Party for making the cost or advance for or on behalf of
				  Reimbursing Party and does not include additional monetary
				  consideration.
"Reimbursing Party" means the party who repays the Taxpayer
				  for making the cost or advance to the Third Party for or on behalf of the
				  Reimbursing Party. The term "Reimbursing Party" is used regardless of whether
				  the amount received by the Taxpayer is a taxable or nontaxable
				  reimbursement.
"Taxpayer" means the party attempting to claim the exemption
				  under section
				  237-20,
				  HRS, for the amount received from the Reimbursing Party. The term "Taxpayer" is
				  used regardless of whether the amount received by the Taxpayer is a taxable or
				  nontaxable reimbursement.
"Third Party" means the party to whom the Taxpayer pays the
				  cost or advance and does not include the Taxpayer's employees. The term "Third
				  Party" is used regardless of whether the amount received by the Taxpayer is a
				  taxable or nontaxable reimbursement.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-20-05 - "Cost or advance", defined

Current through June, 2024
(a) "Cost or
				advance" means the actual invoice amount that a Taxpayer pays to a Third
				Party.
Example 7:
Taxpayer is in the business of
				  selling machinery and performing warranty work on machinery. The manufacturer
				  (Reimbursing Party) directs the Taxpayer to perform warranty work on customer's
				  machinery. Taxpayer is unable to do such work and has another company (Third
				  Party) perform the warranty work. The Third Party sends an invoice for $100 to
				  Taxpayer and Taxpayer pays the invoice amount. Reimbursing Party pays Taxpayer
				  $100 with no additional monetary consideration. Conclusion: The $100 is a cost
				  or advance.
(b) "Cost or advance" does
				not include an amount that a Taxpayer pays for costs or expenses consumed by
				the Taxpayer, such as an amount that the Taxpayer pays to its own employees; or
				an amount representing usage of the Taxpayer's supplies or equipment.
Example 8:
Taxpayer provides warranty work for
				  manufacturer (Reimbursing Party). Taxpayer's employees perform warranty work,
				  including repair services and replacement of parts for the manufacturer; no
				  repair services or replacement of parts are performed by persons other than the
				  employees. Taxpayer's employees receive salaries for performing repair services
				  and replacing parts. Taxpayer bills manufacturer a fee of $1,250 plus $1,000
				  representing the salaries paid to Taxpayer's employees for services and
				  replaced parts. Conclusion: The $1,000 is not a cost or advance.
Example 9:
Taxpayer, an accounting firm, bills
				  its client (Reimbursing Party) $1,000 for professional services plus $100
				  representing a share of Taxpayer's overhead costs, including supplies,
				  equipment, and computers. Conclusion: The $100 is not a cost or advance.
Example 10:
Taxpayer, a law firm, bills its
				  client (Reimbursing Party) $1,000 for professional services plus $100 for
				  copying costs at 10 cents a page. The copies were made on Taxpayer's copying
				  equipment using Taxpayer's employees. Conclusion: The $100 is not a cost or
				  advance.
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-20-06 - "For or on behalf of Reimbursing Party", defined

Current through June, 2024
(a) A payment of a cost or advance is "for or
				on behalf of Reimbursing Party" when done at the request or direction of
				Reimbursing Party.
(b) A cost or
				advance is done at the request or direction of Reimbursing Party if:
(1)
(A) The
				payment is made pursuant to a preexisting contract between Reimbursing Party
				and Third Party that creates a direct obligation for Reimbursing Party to pay
				Third Party for property or services;
(B) The payment is made pursuant to a
				preexisting contract between Reimbursing Party and Taxpayer whereby Taxpayer
				pays Third Party for property or services to satisfy an obligation of
				Reimbursing Party; or
(C) The
				payment is made pursuant to a preexisting cost-splitting contract whereby
				Taxpayer pays Third Party for property or services provided to both Taxpayer
				and Reimbursing Party, and Taxpayer receives from Reimbursing Party a payment
				proportionate to Reimbursing Party's share of the cost of the property or
				services based upon an actually calculable factor that has an economic basis
				(e.g., quantity of property, square footage, time spent, lines of
				advertising);
Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-20-07 - Burden of proof on Taxpayer

Current through June, 2024
(a) Taxpayer has
				the burden of providing evidence satisfactory to the Department that Taxpayer
				qualifies for the reimbursement exemption. Whether the transaction qualifies
				for the reimbursement exemption is determined by all the facts and
				circumstances; no single factor is controlling.
(b) The designation or characterization by
				Taxpayer of a receipt of a payment as a reimbursement that qualifies for
				exemption from the general excise tax is not controlling. The substance of a
				transaction, not the form of the transaction nor the designation used by
				Taxpayer, shall determine whether the reimbursement exemption is
				applicable.
Example 39:
Taxpayer provides market surveys,
				  issues press releases, and places advertisements for client (Reimbursing
				  Party). Taxpayer's contract with client includes a provision that costs of
				  transportation, living expenses when traveling, payments for long distance
				  telephone calls and telegrams, and other payments to Third Parties are deemed
				  "reimbursements". Taxpayer's billings to client are broken down into services
				  and "reimbursements". Taxpayer receives payments from client and files a
				  general excise tax return and excludes these costs paid to Third Parties
				  claiming the reimbursement exemption. Conclusion: The expenses designated by
				  Taxpayer as "reimbursements" do not qualify for the reimbursement exemption
				  because the payments from Taxpayer to Third Parties were not for or on behalf
				  of client. The property or services provided by the Third Parties were used,
				  consumed, or altered by Taxpayer. Even though Taxpayer has claimed these costs
				  as qualifying for the reimbursement exemption, such costs do not qualify for
				  the reimbursement exemption."