HAWAII REVISED STATUTES
GENERAL EXCISE TAX LAW
(Updated September 15, 1997)
237-2 "BUSINESS", "ENGAGING" IN BUSINESS, DEFINED
237-3 "GROSS INCOME", "GROSS PROCEEDS OF SALE", DEFINED
237-4 "WHOLESALER", "JOBBER", DEFINED
237-5 "PRODUCER" DEFINED
237-6 "CONTRACTOR", "FEDERAL COST-PLUS CONTRACTOR", DEFINED
237-7 "SERVICE BUSINESS OR CALLING", DEFINED
237-8 ADMINISTRATION AND ENFORCEMENT BY DEPARTMENT
237-8.5 COUNTY GENERAL EXCISE AND USE TAX SURCHARGE; ADMINISTRATION
LICENSES; TAX; EXEMPTIONS
237-9 LICENSES; PENALTY
237-11 TAX YEAR
237-12 TAX CUMULATIVE; EXTENT OF LICENSE
237-13 IMPOSITION OF TAX
237-13.5 ASSESSMENT ON GENERATED ELECTRICITY
237-14 SEGREGATION OF GROSS INCOME, ETC., ON RECORDS AND IN RETURNS
237-16 TAX ON CERTAIN RETAILING
237-17 PERSONS WITH IMPAIRED SIGHT, HEARING, OR WHO ARE TOTALLY DISABLED
237-18 FURTHER PROVISIONS AS TO APPLICATION OF TAX
237-19 CONSIDERATION PAID NOT INDICATIVE OF TRUE VALUE
237-20 PRINCIPLES APPLICABLE IN CERTAIN SITUATIONS
237-22 CONFORMITY TO CONSTITUTION, ETC.
237-23 EXEMPTIONS, PERSONS EXEMPT, APPLICATIONS FOR EXEMPTION
237-23.5 RELATED ENTITIES; COMMON PAYMASTER; CERTAIN EXEMPT TRANSACTIONS
237-24 AMOUNTS NOT TAXABLE
237-24.3 ADDITIONAL AMOUNTS NOT TAXABLE
237-24-5 ADDITIONAL EXEMPTIONS
237-24.7 ADDITIONAL AMOUNTS NOT TAXABLE
237-24.8 AMOUNTS NOT TAXABLE FOR FINANCIAL INSTITUTIONS
237-25 EXEMPTIONS OF SALES AND GROSS PROCEEDS OF SALES TO FEDERAL GOVERNMENT
237-26 EXEMPTION OF CERTAIN SCIENTIFIC CONTRACTS WITH THE UNITED STATES
237-27 EXEMPTION OF CERTAIN PETROLEUM REFINERS
237-27.1 EXEMPTION OF SALE OF ALCOHOL FUELS
237-27.5 AIR POLLUTION CONTROL FACILITY
237-27.6 SOLID WASTE PROCESSING, DISPOSAL, AND ELECTRIC GENERATING FACILITY; CERTAIN AMOUNTS EXEMPT
237-28.1 EXEMPTION OF CERTAIN SHIPBUILDING AND SHIP REPAIR BUSINESS
237-28.2 EXEMPTION OF PRODUCERS OF MOTION PICTURE OR TELEVISION FILMS
237-29 EXEMPTIONS FOR CERTIFIED OR APPROVED HOUSING PROJECTS
237-29.5 EXEMPTION FOR SALES OF TANGIBLE PERSONAL PROPERTY SHIPPED OUT OF THE STATE
237-29.6 EXEMPTION OF CERTAIN COMPUTER SERVICES
237-29.7 EXEMPTION OF INSURANCE COMPANIES
RETURNS AND PAYMENTS
237-30 MONTHLY, QUARTERLY, OR SEMIANNUAL RETURN, COMPUTATION OF TAX, PAYMENT
237-30.5 COLLECTION OF RENTAL BY THIRD PARTY; FILING WITH DEPARTMENT; STATEMENT REQUIRED
237-33 ANNUAL RETURN, PAYMENT OF TAX
237-33.5 FEDERAL ASSESSMENTS; ADJUSTMENTS OF GROSS INCOME OR GROSS PROCEEDS OF SALE; REPORT TO THE DEPARTMENT
237-34 FILING OF RETURNS; DISCLOSURE OF RETURNS UNLAWFUL, PENALTY; DESTRUCTION OF RETURNS
237-35 CONSOLIDATED REPORTS; INTERRELATED BUSINESS
ASSESSMENTS, REFUNDS, AND RECORDS
237-36 ERRONEOUS RETURNS, DISALLOWANCE OF EXEMPTION, PAYMENT
237-37 REFUNDS AND CREDITS
237-38 FAILURE TO MAKE RETURN
237-39 AUDITS; PROCEDURE, PENALTIES
237-40 LIMITATION PERIOD
237-41 RECORDS TO BE KEPT; EXAMINATION; PENALTIES
237-43 BULK SALES
237-44 ENTERTAINMENT BUSINESS
237-45 PREREQUISITE FOR FINAL SETTLEMENT OF CONTRACTS WITH THE STATE OR SUBDIVISIONS THEREOF
237-46 COLLECTION BY SUIT; INJUNCTION
237-47 DISTRICT JUDGES; CONCURRENT CIVIL JURISDICTION IN TAX COLLECTIONS
237-49 UNFAIR COMPETITION; PENALTY
HRS Section 237-1 Definitions.
When used in this chapter, unless otherwise required by the context, the definitions contained in this section and in sections 237-2 to 237-7 shall govern.
"Casual sale" means an occasional or isolated sale or transaction involving:
(1) Tangible personal property by a person who is not required to be licensed under this chapter, or
(2) Tangible personal property which is not ordinarily sold in the business of a person who is regularly engaged in business.
"Comptroller" means the comptroller of the State.
"Penalty" or "penalties", when used in connection with the additions to the tax imposed for delinquency in payment, includes interest as well.
"Person" or "Company" includes every individual, partnership, society, unincorporated association, joint adventure, group, hui, joint stock company, corporation, trustee, personal representative, trust estate, decedent's estate, trust, trustee in bankruptcy, or other entity, whether such persons are doing business for themselves or in a fiduciary capacity, and whether the individuals are residents or nonresidents of the State, and whether the corporation or other association is created or organized under the laws of the State or of another jurisdiction. Any person who has in the person's possession, for sale in the State, the property of a nonresident owner, other than as an employee of such owner, shall be deemed the seller of the property, when sold.
"Prepaid legal service plan" ("Plan") means a group legal service plan in which the cost of the services are prepaid by the group member or by some other person or organization in the member's behalf. A group legal service plan is a plan by which legal services are rendered to individual members of a group identifiable in terms of some common interest. A plan shall provide:
(A) That individual members shall be afforded freedom of choice in the selection of their own attorney or attorneys to provide legal services under such plan.
(B) For the payment of equal amounts for the cost of services rendered without regard to the identity of the attorney or attorneys selected by the plan member or members. No plan shall otherwise discriminate on the basis of such selection.
"Purchasing agent" means any person who, as an agent and not a seller, for a consideration, is engaged in the State in the business of purchasing for the purchasing agent's principal or principals from an unlicensed seller or sellers property for use by such principals in the State, for example, by forwarding orders for such purchases, in behalf of such principals, it being immaterial whether the purchasing agent is compensated for the purchasing agent's services by the seller or by the purchaser; but the term "purchasing agent," does not include an employee of the purchaser.
"Representative" means any salesperson, commission agent, manufacturer's representative,, broker or other person who is authorized or employed by an unlicensed seller to assist such seller in selling property for use in the State, by procuring orders for such sales or otherwise, and who carries on such activities in the State, it being immaterial whether such activities are regular or intermittent; but the term "representative" does not include a manufacturer's representative whose functions are wholly promotional and to act as liaison between an unlicensed seller and a seller or sellers, and which do not include the procuring, soliciting or accepting of orders for property or the making of deliveries of property, or the collecting of payment for deliveries of property, or the keeping of books of account concerning property orders, deliveries or collections transpiring between an unlicensed seller and a seller or sellers. Any unlicensed seller who in person carries on any such activity in the State shall also be classed as a representative.
"Sale" or "sales" includes the exchange of properties as well as the sale thereof for money.
"Taxpayer" means any person liable for any tax hereunder.
"Tax year" or "taxable year" means either the calendar year or the taxpayer's fiscal year when the same constitutes the tax period instead of the calendar year pursuant to section 237-11.
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HRS Section 237-2 "Business", "engaging" in business, defined.
"Business" as used in this chapter, includes all activities (personal, professional, or corporate), engaged in or caused to be engaged in with the object of gain or economic benefit either direct or indirect, but does not include casual sales.
The term "engaging" as used in this chapter with reference to engaging or continuing in business also includes the exercise of corporate or franchise powers.
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HRS Section 237-3 "Gross income", "gross proceeds of sale", defined.
(a) "Gross income" means the gross receipts, cash or accrued, of the taxpayer received as compensation for personal services and the gross receipts of the taxpayer derived from trade, business, commerce, or sales and the value proceeding or accruing from the sale of tangible personal property, or service, or both, and all receipts, actual or accrued as hereinafter provided, by reason of the investment of the capital of the business engaged in, including interest, discount, rentals, royalties, fees, or other emoluments however designated and without any deductions on account of the cost of property sold, the cost of materials used, labor cost, taxes, royalties, interest, or discount paid or any other expenses whatsoever. Every taxpayer shall be presumed to be dealing on a cash basis unless the taxpayer proves to the satisfaction of the department of taxation that the taxpayer is dealing on an accrual basis and the taxpayer's books are so kept, or unless the taxpayer employs or is required to employ the accrual basis for the purposes of the tax imposed by chapter 235 for any taxable year in which event the taxpayer shall report the taxpayer's gross income for the purposes of this chapter on the accrual basis for the same period.
"Gross proceeds of sale" means the value actually proceeding from the sale of tangible personal property without any deduction on account of the cost of property sold or expenses of any kind.
(b) The words "gross income" and "gross proceeds of sales" shall not be construed to include: gross receipts from the sale of securities as defined in 15 United States Code section 78c or similar laws of jurisdictions outside the United States, contracts for the sale of a commodity for future delivery and other agreements, options, and rights as defined in 7 United States Code section 2 that are permitted to be traded on a board of trade designated by the Commodities Futures Trading Commission under the Commodity Exchange Act, or evidence of indebtedness or, except as otherwise provided, from the sale of land in fee simple, improved or unimproved, dividends as defined by chapter 235; cash discounts allowed and taken on sales; the proceeds of sale of goods, wares, or merchandise returned by customers when the sale price is refunded either in cash or by credit; or the sale price of any article accepted as part payment on any new article sold, if the full sale price of the new article is included in the "gross income" or "gross proceeds of sales"; gross receipts from the sale or transfer of materials or supplies, interest on loans, or the provision of engineering, construction, maintenance, or managerial services by one member" of an "affiliated public service company group" to another "member" of the same group as such terms are defined in section 239-2(6). Accounts found to be worthless and actually charged off for income tax purposes may, at corresponding periods be deducted from gross proceeds of We, or gross income, within this chapter: so far as they reflect taxable sales made, or gross income earned, after July 1, 1935, but shall be added to gross proceeds of sale or gross income when and if afterwards collected.
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HRS Section 237-4 "Wholesaler", "jobber", defined.
"Wholesaler" or "jobber" applies only to a person making sales at wholesale. Only the following are sales at wholesale:
(1) Sales to a licensed retail merchant, jobber, or other licensed seller for purposes of resale;
(2) Sales to a licensed manufacturer of material or commodities which are to be incorporated by the manufacturer into a finished or saleable product (including the container or package in which the product is contained) during the course of its preservation, manufacture, or processing, including preparation for market, and which will remain in such finished or saleable product in such form as to be perceptible to the senses, which finished or saleable product is to be sold and not otherwise used by the manufacturer;
(3) Sales to a licensed producer or cooperative association of materials or commodities which are to be incorporated by the producer or by the cooperative association into a finished or saleable product which is to be sold and not otherwise used by the producer or cooperative association, including specifically materials or commodities expended as essential to the planting, growth, nurturing, and production of commodities which are sold by the producer or by the cooperative association;
(4) Sales to a licensed contractor, of material or commodities which are to be incorporated by the contractor into the finished work or project required by the contract and which will remain in such finished work or project in such form as to be perceptible to the senses;
(5) Sales to a licensed producer, or to a cooperative association described in section 237-23(a)(7) for sale to such producer, or to a licensed person operating a feed lot of poultry or animal feed, hatching eggs, semen, replacement stock breeding services for the purpose of raising or producing animal or poultry products for disposition as described in section 237-5 or to be incorporated in a manufactured product as described in paragraph (2) or for the purpose of breeding, hatching, milking, or egg laying other than for the customer's own consumption of the meat, poultry, eggs, or milk so produced; provided that in the case of a feed lot operator, only the segregated cost of the feed furnished by the feed lot operator as part of the feed lot operator's service to a licensed producer of poultry or animals to be butchered or to a cooperative association described in section 237-23(a)(7) of such licensed producers shall be deemed to be a sale at wholesale; and provided further that any amount derived from the furnishing of feed lot services, other than the segregated cost of feed, shall be deemed taxable at the service business rate. This paragraph shall not apply to the sale of feed for poultry or animals to be used for hauling, transportation, or sports purposes;
(6) Sales to a licensed producer, or to a cooperative association described in section 237-23(a)(7) for sale to the producer, of seed for producing agricultural products, or bait for catching fish (including the catching of bait for catching fish), which agricultural products or fish are to be disposed of as described in section 237-5 or to be incorporated in a manufactured product as described in paragraph (2);
(7) Sales to a licensed producer, or to a cooperative association described in section 237-23(a)(7) for sale to such producer; of polypropylene shade cloth; of polyfilm; of polyethylene film; of cartons and such other containers, wrappers, and sacks, and binders to be used for packaging eggs, vegetables, fruits, and other agricultural products; of seedlings and cuttings for producing nursery plants; or of chick containers; which cartons and such other containers, wrappers, and sacks, binders, seedlings, cuttings, and containers are to be used as described in section 237-5, or to be incorporated in a manufactured product as described in paragraph (2);
(8) Sales of tangible personal property to a licensed person engaged in the service business; provided that (A) the property is not consumed or incidental to the performance of the services; (B) there is a resale of the article at the retail rate of four percent; and (C) the resale of the article is separately charged or billed by the person rendering the services;
(9) Sales to a licensed leasing company of capital goods which are thereafter leased as a service to others. Capital goods means goods which have a depreciable life and which are purchased by the leasing company for lease to its customers.
If the use tax law is finally held by a court of competent jurisdiction to be unconstitutional or invalid insofar as it purports to tax the use or consumption of tangible personal property imported into the State in interstate or foreign commerce or both, wholesalers and jobbers shall be taxed thereafter under this chapter in accordance with the following definition (which shall supersede the preceding paragraph otherwise defining "wholesaler" or "jobber"): "Wholesaler" or "jobber" means a person, or a definitely organized division thereof, definitely organized to render and rendering a general distribution. service which buys and maintains at the person's place of business a stock or lines of merchandise which the person distributes; and which, through salespersons, advertising, or sales promotion devices, sells to licensed retailers, to institutional or licensed commercial or industrial users, in wholesale quantities and at wholesale rates. A corporation deemed not to be carrying on a trade or business in this State under section 235-6 shall nevertheless be deemed to be a wholesaler and shall be subject to the tax imposed by this chapter.
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HRS Section 237-5 "Producer" defined. "Producer" means any person engaged in the business of raising and producing agricultural products in their natural state, or in producing natural resource products, or engaged in the business of fishing or aquaculture, for sale, or for shipment or transportation out of the State, of the agricultural or aquaculture products in their natural or processed state, or butchered and dressed, or the natural resource products, or fish.
As used in this section "agricultural products" include floricultural, horticultural, viticultural, forestry, nut, coffee, dairy, livestock, poultry, bee, animal, and any other farm, agronomic, or plantation products.
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HRS Section 237-6 "Contractor", "federal cost-plus contractor", defined.
"Contractor" includes, for purposes of this chapter:
(1) Every person engaging in the business of contracting to erect, construct, repair, or improve buildings or structures, of any kind or description, including any portion thereof, or to make any installation therein, or to make, construct, repair, or improve any highway, road, street, sidewalk, ditch, excavation, fill, bridge, shaft, well, culvert, sewer, water system, drainage system, dredging or harbor improvement project, electric or steam rail, lighting or power system, transmission line, tower, dock, wharf, or other improvements;
(2) Every person engaging in the practice of architecture, professional engineering, land surveying, and landscape architecture, as defined in section 464-1; and
(3) Every person engaged in the practice of pest control or fumigation as a pest control operator as defined in section 460J-1.
"Federal cost-plus contractor" means a contractor having a contract with the United States or an instrumentality thereof, excluding national banks, where, by the terms of the contract, the United States or such instrumentality, excluding national banks, agrees to reimburse the contractor for the cost of material, plant, or equipment used in the performance of the contract and for taxes which the contractor may be required to pay with respect to such material, plant, or equipment, whether the contractor's profit is computed in the form of a fixed fee or on a percentage basis; and also means a subcontractor under such a contract, who also operates on a cost-plus basis.
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HRS Section 237-7 "Service business or calling", defined.
"Service business or calling" includes all activities engaged in for other persons for a consideration which involve the rendering of a service as distinguished from the sale of tangible property or the production and sale of tangible property. "Service business or calling" does not include the services rendered by an employee to the employee's employer.
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HRS Section 237-8 Administration and enforcement by department.
The administration of this chapter is vested in and shall be exercised by the department of taxation, which shall prescribe forms and reasonable rules of procedure in conformity with this chapter for the making of returns and for the ascertainment, assessment, and collection of the taxes imposed hereunder. Such forms and rules, when prescribed by the department and printed and published in the manner provided by law shall have the force and effect of law. The enforcement of this chapter in any of the courts of the State is under the exclusive jurisdiction of the department, which shall require the assistance of the attorney general of the State, the respective county attorneys and the prosecuting attorney of the counties where suit is brought; but these attorneys shall receive no fees or compensation for services rendered in enforcing this chapter in addition to the respective salaries paid by law to them.
The department shall have, in addition to all of the duties and powers herein prescribed or granted, all the duties and powers prescribed or granted by the existing or future tax laws of the State so far as the same may be applicable to the administration of this chapter and are not contrary to the express provisions hereof.
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HRS Section 237-8.5 County general excise and use tax surcharge; administration.
(a) The county general excise and use tax surcharge, upon the adoption of county ordinances under section 46-16.7, shall be levied, assessed, and collected as provided in this section on all gross proceeds and gross income taxable under this chapter at the four per cent tax rate in such manner that the combined state general excise tax and the county general excise and use tax surcharge tax shall be four and one-half per cent in those counties adopting the surcharge. All provisions of this chapter shall apply to the county general excise and use tax surcharge; and with respect to the surcharge, the director shall have all the rights and powers provided under this chapter. In addition, the director of taxation shall have the exclusive rights and power to determine the county or counties in which a person is engaged in business and, in the case of a person engaged in business in more than one county, the director shall determine through apportionment or other means, that portion of the general excise and use tax surcharge attributable to business conducted in each county.
(b) Each county general excise and use tax surcharge adopted pursuant to section 46-16.7(a) shall be levied as of January 1, 1993, and shall continue for a period of ten years through December 31, 2002, or until earlier repealed.
(c) The county general excise and use tax surcharge shall be imposed on the gross proceeds or gross income of all written contracts that require the passing on of the taxes imposed under this chapter; provided that if the gross proceeds or gross income are received as payments after December 31, 1992, on contracts entered into before June 19, 1990, and the written contracts do not provide for the passing on of increased rates of taxes, the county general excise and use tax surcharge shall not be imposed on the gross proceeds or gross income covered under the written contracts. The county general excise and use tax surcharge shall be imposed on the gross proceeds or gross income from all contracts entered into on or after June 19, 1990, whether or not the contract allows for the passing on of any tax or any tax increases.
(d) No county general excise and use tax surcharge shall be established on any:
(1) Gross income or gross proceeds taxable under this chapter at the one-half per cent tax rate;
(2) Gross income or gross proceeds taxable under this chapter at the 0.15 per cent tax rate; or
(3) Transactions, amounts, persons, gross income, or gross proceeds exempt from tax under this chapter.
(e) The director of taxation shall revise the general excise tax forms to provide for the clear and separate designation of the imposition and payment of the county general excise and use tax surcharge.
The taxpayer shall designate the taxation district to which the county general excise and use tax surcharge is assigned in accordance with rules adopted by the director of taxation under chapter 91. The taxpayer shall file a schedule with the taxpayer's periodic and annual general excise and use tax returns summarizing the amount of taxes assigned to each taxation district.
The penalties provided by section 231-39 for failure to file a tax return shall be imposed on the amount of surcharge due on the return being filed for the failure to file the schedule required to accompany the return. In addition, there shall be added to the tax an amount equal to ten per cent of the amount of the surcharge and tax due on the return being filed for the failure to file the schedule or the failure to correctly report the assignment of the general excise tax by taxation district on the schedule required under this subsection.
(f) All taxpayers who file on a fiscal year basis whose fiscal year ends after December 31, 1992, or after December 31, 2002, shall file a short period annual return for the period preceding January 1, 1993, or preceding January 1, 2003. Each fiscal year taxpayer shall also file a short period annual return for the period starting after December, 31, 1992, and ending before January 1, 1994, and for the period starting after December 31, 2002, and ending before January 1, 2004.
All monthly, annual, and amended returns due under this chapter for any period preceding January 1, 2003, which are submitted to the department after December 31, 2002, shall include in payments submitted with the return any county general excise and use tax surcharge that may be due for the period preceding January 1, 2003.
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LICENSES; TAX; EXEMPTIONS
HRS Section 237-9 Licenses; penalty.
(a) Any person who shall have a gross income or gross proceeds of sales or value of products upon which a privilege tax is imposed by this chapter, as a condition precedent to engaging or continuing in such business, shall in writing apply for and obtain from the department of taxation, upon a one-time payment of the sum of $20, a license to engage in and to conduct such business, upon condition that the person shall pay the taxes accruing to the State under this chapter, and the person shall thereby be duly licensed to engage in and conduct the business. Any person licensed or holding a license under this chapter before January 1, 1990, shall pay a one-time license renewal fee of $20 on or before January 31, 1990, as a condition precedent to engaging or continuing in business. The license shall not be transferable and shall be valid only for the person in whose name it is issued and for the transaction of business at the place designated therein. The license may be inspected and examined, and shall at all times be conspicuously displayed at the place for which it is issued.
(b) Licenses and applications therefor shall be in such form as the department shall prescribe, except that where the licensee is engaged in two or more forms of business of different classification, the license shall so state on its face. The license provided for by this section shall be effective until canceled in writing. Any application for the reissuance of a previously canceled license identification number after December 31, 1989, shall be regarded as a new license application and subject to the payment of the one-time license fee of $20. The director may revoke or cancel any license issued under this chapter for cause as provided by rules adopted pursuant to chapter 91.
(c) If the license fee is paid, the department shall not refuse to issue a license or revoke or cancel a license for the exercise of a privilege protected by the First Amendment of the Constitution of the United-States, or for the carrying on of interstate or foreign commerce, or for any privilege the exercise of which, under the Constitution and laws of the United States, cannot be restrained on account of nonpayment of taxes, nor shall section 237-46 be invoked to restrain the exercise of such a privilege, or the carrying on of such commerce.
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HRS Section 237-9.5 No separate licensing, filing, or liability for certain revocable trusts.
In the case of any trust that, for state and federal income tax reporting purposes:
(1) Has no registration or filing requirements separate and apart from its grantor or grantors;
(2) Is subject to the requirement that all items of income, deduction, and credit are to be reported by the individual grantor or grantors; and
(3) Is revocable by the grantor or grantors; no licensing, registration, or filing requirements under this chapter shall apply; provided that the individual grantor or grantors must be licensed under this chapter and pay the appropriate general excise tax on trust income, if the trust income is from engaging in business.
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HRS Section 237-10 Repealed
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HRS Section 237-11 Tax year.
The assessment of taxes herein made and the returns required therefor shall be for the year ending on December 31. If the taxpayer, in exercising a privilege taxable under this chapter, keeps the taxpayer's books reflecting the same on a basis other than the calendar year, the taxpayer may, with the assent of the department of taxation, and upon the direction of the department shall, make the taxpayer's annual returns and pay taxes for the year covering the taxpayer's accounting period as shown by the method of keeping the taxpayer's books.
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HRS Section 237-12 Tax cumulative; extent of license.
(a) The tax imposed by this chapter shall be in addition to the license fee imposed under section 237-9 and all other taxes levied by law as a condition precedent to engaging in any business, trade, or calling. A person exercising a privilege taxable under this chapter, subject to the payment of the license fee imposed under section 237-9, which is a condition precedent to exercising the privilege taxed, may exercise the privilege upon the condition that the person shall pay the tax accruing under this chapter.
(b) In the case of any person entitled to the protection of section 237-9(c), the tax shall be collected only through ordinary means.
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HRS Section 237-13 Imposition of tax.
There is hereby levied and shall be assessed and collected annually privilege taxes against persons on account of their business and other activities in the State measured by the application of rates against values of products, gross proceeds of sales, or gross income, whichever is specified, as follows:
(1) Tax on manufacturers.
(A) Upon every person engaging or continuing within the State in the business of manufacturing, including compounding, canning, preserving, packing, printing, publishing, milling, processing, refining, or preparing for sale, profit, or commercial use, either directly or through the activity of others, in whole or in part, any article or articles, substance or substances, commodity or commodities, the amount of the tax to be equal to the value of the articles, substances, or commodities, manufactured, compounded, canned, preserved, packed, printed, milled, processed, refined, or prepared, for sale, as shown by the gross proceeds derived from the sale thereof by the manufacturer or person compounding, preparing, or printing them, multiplied by one-half of one per cent.
(B) The measure of the tax on manufacturers is the value of the entire product for sale, regardless of the place of sale or the fact that deliveries may be made to points outside the State.
(C) If any person liable for the tax on manufacturers ships or transports the person's product, or any part thereof, out of the State, whether in a finished or unfinished condition, or sells the same for delivery outside of the State (for example, consigned to a mainland purchaser via common carrier f.o.b. Honolulu), the value of the products in the condition or form in which they exist immediately before entering interstate or foreign commerce, determined as hereinafter provided, shall be the basis for the of the tax imposed by this paragraph. This tax shall be due assessment and payable as of the date of entry of the products into interstate or foreign commerce, whether the products are then sold or not. The department of taxation shall determine the basis for assessment, as provided by this paragraph, as follows:
(i) If the products at the time of their entry into interstate or foreign commerce already have been Bold, the gross proceeds of sale, less the transportation expenses, if any, incurred in realizing the gross proceeds for transportation from the time of entry of the products into interstate or foreign commerce, including insurance and storage in transit, shall be the measure of the value of the products.
(ii) If the products have not been sold at the time of their entry into interstate or foreign commerce, and in cases governed by clause (i) in which the products are sold under circumstances such that the gross proceeds of sale are not indicative of the true value of the products, the value of the products constituting the basis for assessment shall correspond as nearly as possible to the gross proceeds of sales for delivery outside the State, adjusted as provided in clause (i), or if sufficient data are not available, sales in the State, of similar products of like quality and character and in similar quantities, made by the taxpayer (unless not indicative of the true value) or by others. Sales outside the State, adjusted as provided in clause (i), may be considered when they constitute the best available data. The department shall prescribe uniform and equitable rules for ascertaining such values.
(iii) At the election of the taxpayer and with the approval of the department, the taxpayer may make the taxpayer's returns under clause (i) even though the products have not been sold at the time of their entry into interstate or foreign commerce.
(iv) In all cases in which products leave the State in an unfinished condition, the basis for assessment shall be adjusted so as to deduct such portion of the value as is attributable to the finishing of the goods outside the State.
(2) Tax on business of selling tangible personal property; producing.
(A) Upon every person engaging or continuing in the business of selling any tangible personal property whatsoever (not including, however, bonds or other evidence of indebtedness, or stocks), there is likewise hereby levied, and shall be assessed and collected, a tax equivalent to four per cent of the gross proceeds of sales of the business; provided that insofar as certain retailing is taxed by section 237-16, the tax shall be that levied by section 237-16, and in the case of a wholesaler, the tax shall be equal to one-half of one per cent of the gross proceeds of sales of the business. Upon every person engaging or continuing within this State in the business of a producer, the tax shall be equal to one-half of one per cent of the gross proceeds of sales of the business, or the value of the products, for sale, if sold for delivery outside the State or shipped or transported out of the State, and the-value of the products shall be determined in the same manner as the value of manufactured products covered in the cases under paragraph (1)(C).
(B) Gross proceeds of sales of tangible property in interstate and foreign commerce shall constitute a part of the measure of the tax imposed on persons in the business of selling tangible personal property, to the extent, under the conditions, and in accordance with the provisions of the Constitution of the United States and the acts of the Congress of the United States which may be now in force or may be hereafter adopted, and whenever there occurs in the State an activity to which, under the Constitution and acts of Congress, there may be attributed gross- proceeds of sales, such gross proceeds shall be so attributed.
(C) No manufacturer or producer, engaged in such business in the State and selling the manufacturer's or producer's products for delivery outside of the State (for example, consigned to a mainland purchaser via common carrier f.o.b. Honolulu), shall be required to pay the tax imposed in this chapter for the privilege of so selling the products, and the value or gross proceeds of sales of the products shall be included only in determining the measure of the tax imposed upon the manufacturer or producer as such.
(D) When a manufacturer or producer, engaged in such business in the State, also is engaged in selling the manufacturer's or producer's products in the State at wholesale, retail, or in any other manner, the tax for the privilege of engaging in the business of selling the products in the State shall apply to the manufacturer or producer as well as the tax for the privilege of manufacturing or producing in the State, and the manufacturer or producer shall make the returns of the gross proceeds of the wholesale, retail, or other sales required for the privilege of selling in the State, as well as making the returns of the value or gross proceeds of sales of the products required for the privilege of manufacturing or producing in the State. The manufacturer or producer shall pay the tax imposed chapter for the privilege of selling its products in the State, and the value or gross proceeds of sales of the products, thus subjected to tax, may be deducted insofar as duplicated as to the same products by the measure of the tax upon the manufacturer or producer for the privilege of manufacturing or producing in the State; except that no producer of agricultural products who sells the products to a purchaser who will process the products outside the State shall be required to pay the tax imposed in this chapter for the privilege of producing or selling those products.
(E) A taxpayer selling to a federal cost-plus contractor may make the election provided for by paragraph (3)(C), and in any such case the tax shall be computed pursuant to the election, notwithstanding this paragraph or paragraph (1) to the contrary.
(F) The department, by rule, may provide that a seller may take from the purchaser of tangible personal property a certificate, in such form as the department shall prescribe, certifying that the sale is a sale at wholesale. If the certificate is so provided for by rule of the department:
(i) Any purchaser who furnishes such a certificate shall be obligated to pay to the seller, upon demand, if the sale in fact is not at wholesale, the amount of the additional tax which by reason thereof is imposed upon the seller; and
(ii) The absence of such a certificate, unless the sales of the business are exclusively at wholesale, in itself shall give rise to the presumption that the sale is not at wholesale.
(3) Tax upon contractors.
(A) Upon every person engaging or continuing within the State in the business of contracting, the tax shall be equal to four per cent of the gross income of the business; provided that insofar as the business of contracting is taxed by section 237-16, which relates to certain retailing, the tax shall be that levied by section 237-16.
(B) In computing the tax levied under this paragraph or section 237-16, there shall be deducted from the gross income of the taxpayer so much thereof as has been included in the measure of the tax levied under subparagraph (A) or section 237-16, on:
(i) Another taxpayer who is a contractor, as defined in section 237-6;
(ii) A specialty contractor, duly licensed by the department of commerce and consumer affairs pursuant to section 444-9, in respect of the specialty contractor's business as such; or
(iii) A specialty contractor who is not licensed by the department of commerce and consumer affairs pursuant to section 444-9, but who performs contracting activities on federal military installations and nowhere else in this State,
if the tax on the amount so deducted has been paid by the other person, or has been withheld by the taxpayer and shall be paid over by the taxpayer to the assessor at the time of filing the return, such withholding being authorized by this paragraph; but any person claiming a deduction under this paragraph shall be required to show in the person's return the name of the person paying the tax on the amount deducted by the person or from whom the tax was withheld, and shall issue a receipt for any amount of tax withheld, which upon filing by the other taxpayer with the taxpayer's return, shall relieve the other taxpayer of liability for the amount of tax withheld.
(C) In computing the tax levied under this paragraph against any federal cost-plus contractor, there shall be excluded from the gross income of the contractor so much thereof as fulfills the following requirements:
(i) The gross income exempted shall constitute reimbursement of costs incurred for materials, plant, or equipment purchased from a taxpayer licensed under this chapter, not exceeding the gross proceeds of sale of the taxpayer on account of the transaction.
(ii) The taxpayer making the sale shall have certified to the department that the taxpayer is taxable with respect to the gross proceeds of the sale, and that the taxpayer elects to have the tax on such gross income computed the same as upon a sale to the state government.
(D) A person who, as a business or as a part of a business in which the person is engaged, erects, constructs, or improves any building or structure, of any kind or description, or makes, constructs, or improves any road, street, sidewalk, sewer, or water system, or other improvements on land held by the person (whether held as a leasehold, fee simple, or otherwise), upon the sale or other disposition of the land or improvements, even if the work was not done pursuant to a contract, shall be liable to the same tax as if engaged in the business of contracting, unless the person shows that at the time the person was engaged in making the improvements it was, and for the period of at least one year after completion of the building, structure, or other improvements, it continued to be the person's purpose to hold and not sell or otherwise dispose of the land or improvements. The tax in respect of the improvements shall be measured by the amount of the proceeds of the sale or other disposition that is attributable to the erection, construction, or improvement of such building or structure, or the making, constructing, or improving of the road, street, sidewalk, sewer, or water system, or other improvements. The measure of tax in respect of the improvements shall not exceed the amount which would have been taxable had the work been performed by another, subject as in other cases to the deductions allowed by subparagraph (B). Upon the election of the taxpayer, this paragraph may be applied notwithstanding the improvements were not made by the taxpayer, or were not made as a business or as a part of a business, or were made with the intention of holding the same. However, this paragraph shall not apply in respect of any proceeds that constitute or are in the nature of rent; all such gross income shall be taxable under paragraph (10).
(4) Tax upon theaters, amusements, radio broadcasting stations, etc: Upon every person engaging or continuing within the State in the business of operating a theater, opera house, moving picture show, vaudeville, amusement park, dance hall, skating rink, radio broadcasting station, or any other place at which amusements are offered to the public, the shall be equal to four per cent of the gross income of the business.
(5) Tax upon sales representatives, etc. Upon every person classified as a representative or purchasing agent under section 237-1, engaging or continuing within the State in the business of performing services for another, other than as an employee, there is likewise hereby levied and shall be assessed and collected a tax equal to four per cent of the commissions and other compensation attributable to the services so rendered by the person.
(6) Tax on service business. Upon every person engaging or continuing within the State in any service business or calling not otherwise specifically taxed under this chapter, there is likewise hereby levied and shall be assessed and collected a tax equal to four per cent of the gross income of any such business; provided that where any person engaging or continuing within the State in any service business or calling renders such services upon the order of 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 subjected to the tax at the rate of one-half of one per cent and all of the gross income received by the intermediary from the principal shall be subjected to a tax at the rate of four per cent; and provided that where any person is engaged in the business of selling interstate or foreign common carrier telecommunication services within and without the State, the tax shall be imposed on that portion of gross income received by any such person from service which is originated or terminated in this State and is charged to a telephone number, customer, or account in this State notwithstanding any other state law (except for the exemption under section 237-23(a)(1)) to the contrary. If, under the Constitution and laws of the United States, the entire gross income as determined under this paragraph of a business selling interstate or foreign common carrier telecommunication services cannot be included in the measure of the tax, such gross income shall be apportioned as provided in section 237-21; provided that the apportionment factor and formula shall be the same for all persons providing such services in the State.
(7) Tax on insurance solicitors and agents. Upon every person engaged as a licensed solicitor, general agent, or subagent pursuant to chapter 431, there is hereby levied and shall be assessed and collected a tax equal to .15 per cent of the commissions due to such activity.
(8) Professions. Upon every person engaging or continuing within the State in the practice of a profession, including those expounding the religious doctrines of any church, there is likewise hereby levied and shall be assessed and collected a tax equal to four per cent of the gross income on the practice or exposition.
(9) Tax on receipts of sugar benefit payments. Upon the amounts received from the United States government by any producer of sugar (or the producer's legal representative or heirs), as defined under and by virtue of the Sugar Act of 1948, as amended, or other acts of the Congress of the United States relating thereto, there is hereby levied a tax of one-half of one per cent of the gross amount received, provided that the tax levied hereunder on any amount so received and actually disbursed to another by such producer in the form of a benefit payment shall be paid by the person or persons to whom such amount is actually disbursed, and the producer actually making any such benefit payment to another shall be entitled to claim on the producer's return a deduction from the gross amount taxable hereunder in the sum of the amount so disbursed. The amounts taxed under this paragraph shall not be taxable under any other paragraph, subsection, or section of this chapter.
(10) Tax on other business. Upon every person engaging or continuing within the State in any business, trade, activity, occupation, or calling not included in the preceding paragraphs or any other provisions of this chapter, there is likewise hereby levied and shall be assessed and collected, a tax equal to four per cent of the gross income thereof. In addition, the rate prescribed by this paragraph shall apply to a business taxable under one or more of the preceding paragraphs or other provisions of this chapter, as to any gross income thereof not taxed thereunder as gross income or gross proceeds of sales or by taxing an equivalent value of products, unless specifically exempted.
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HRS Section 237-13.5 Assessment on generated electricity.
Any other provision of the law to the contrary notwithstanding, the levy and assessment of the general excise tax on the gross proceeds from the sale of electric power to a public utility company lot for resale to the public, shall be made only as a tax on the business of a producer, at the rate assessed producers, under section 237-13(2)(A).
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HRS Section 237-14 Segregation of gross income, etc., on records and in returns.
The imposition of taxes and the application of tax rates do not depend upon the business in which the taxpayer is primarily engaged. One business may be subject to two or more tax rates. If a business is within the purview of two or more of the paragraphs of section 237-13 or other provisions of this chapter all of them apply, each provision being applicable to the appropriate item of gross income, gross proceeds of sales, or value of products. However, any person engaging or continuing in a business having gross income, gross proceeds of sales, and value of products, or any of these as the case may be, taxable at different rates, shall be subject to taxation upon the aggregate amount of the gross income, gross proceeds of sales, and value of products of the business at the highest rate applicable to any part of the aggregate, unless the person shall segregate the parts taxable at different rates upon the person's records and in the person's returns, and shall sustain the burden of proving that the segregation was correctly made.
HRS 237-1 to 237-14 | HRS 237-15 to 237-29 | HRS 237-30 to End
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