Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237 - GENERAL EXCISE TAX LAW › Subchapter 2 - LICENSES; TAX; EXEMPTIONS › Section 18-237-13(6)-08 - Gross income received from Customer by Intermediary subject to general excise tax at the four percent rate

Current through June, 2024
(a) In order for
				Service Provider to be eligible for the intermediary services rate, the gross
				income received from Customer by Intermediary must be subject to the general
				excise tax at the rate of four percent on all the gross income received for or
				derived from those services.
Example 1:
Intermediary, a service station,
				  enters into an agreement with Customer to recap Customer's tires. Intermediary
				  contracts with Service Provider to recap Customer's tires. Service Provider
				  bills Intermediary for recapping the tires and Intermediary bills Customer.
				  Customer pays Intermediary, which is subject to the general excise tax at the
				  rate of four percent on all the gross income received for or derived from those
				  services. Intermediary pays Service Provider.
In order for Service Provider to be eligible for the
				  intermediary services rate, the gross income received from Customer by
				  Intermediary must be subject to the general excise tax at the rate of four
				  percent on all the gross income received for or derived from those services.
				  Here, Intermediary is subject to the general excise tax at the rate of four
				  percent on all the gross income received for or derived from those services
				  furnished to Customer.
Example 2:
Assume the same facts as in Example
				  20 above, except that Service Provider arranges for W to recap the tire. W
				  bills Service Provider, Service Provider bills Intermediary, and Intermediary
				  bills Customer. Customer pays Intermediary. Intermediary pays Service Provider
				  and Service Provider pays W.
In order for Service Provider to be eligible for the
				  intermediary services rate, the gross income received from Customer by
				  Intermediary must be subject to the general excise tax at the rate of four
				  percent on all the gross income received for or derived from those
				  services.
W is eligible for the intermediary services rate because
				  Intermediary is subject to the general excise tax at the rate of four percent
				  on all the gross income received for or derived from those services furnished
				  to Customer, notwithstanding that Service Provider also is subject to the
				  one-half percent intermediary services rate.
(b) Service Provider is not eligible for the
				intermediary services rate if there are only three parties and Intermediary is
				not subject to the general excise tax.
Example 3:
Intermediary, a tax-exempt hospital
				  under section
				  237-23(a)(6),
				  HRS, contracts with Service Provider to provide counseling services to
				  Customers (Intermediary's patients). Service Provider provides the counseling
				  services and bills Intermediary. Intermediary bills the Customer's insurers.
				  The insurers pay Intermediary and Intermediary pays Service Provider.
In order for Service Provider to be eligible for the
				  intermediary services rate, the gross income received from Customer by
				  Intermediary must be subject to the general excise tax at the rate of four
				  percent on all the gross income received for or derived from those services.
				  The gross income received from Customer is not subject to the general excise
				  tax at the rate of four percent because Intermediary is exempt from the general
				  excise tax. The intermediary services rate is not applicable to the payments
				  Service Provider receives from Intermediary. Service Provider is subject to the
				  general excise tax at the rate of four percent.
(c) The Service Provider is not eligible for
				the intermediary services rate if income is divided between the Service
				Provider and another person under section
				237-18,
				HRS.
Example 4:
Intermediary, a Realtor, enters into
				  an agreement with Customer to sell Customer's real estate. Service Provider, a
				  licensed real estate agent with Intermediary, sells the real estate. The income
				  received by Intermediary is divided between Intermediary and Service Provider,
				  pursuant to section
				  237-18,
				  HRS.
In order for Service Provider to be eligible for the
				  intermediary services rate, the gross income received from Customer by
				  Intermediary must be subject to the general excise tax at the rate of four
				  percent on all the gross income received for or derived from those services.
				  The gross income received from Customer is not subject to the general excise
				  tax at the rate of four percent on all the gross income received for or derived
				  from those services because Intermediary, pursuant to section
				  237-18,
				  HRS, has split its income with Service Provider. The intermediary services rate
				  is not applicable to the payment Service Provider receives. Service Provider is
				  subject to the general excise tax at the rate of four percent on Service
				  Provider's share of the income.