Hawaii ~ Sales and Use Tax: Simplified Seller Use Tax Remittance Act Introduced

CCH Tax Day Report

Legislation introduced in the Hawaii House of Representatives, the Simplified Seller Use Tax Remittance Act, would establish a simplified sellers use tax remittance program designed to allow eligible remote sellers to voluntarily collect, report, and remit a simplified sellers use tax, instead of the general excise or use taxes otherwise due. Collection and remittance of the simplified sellers use tax would relieve the seller and purchaser of liability for any additional general excise or use taxes due on the transaction.

To participate in the program, remote sellers would apply to the Hawaii Department of Taxation and would agree to collect, report, and remit the simplified sellers use tax for all sales delivered into Hawaii for as long as they participate in the program; agree to provide the department with certain information related to sales to Hawaii customers; and agree to comply with all program reporting requirements.

Rate

The simplified sellers use tax would be imposed at the rate of 4% of the sales price on any tangible personal property sold or delivered into Hawaii by an eligible seller participating in the program. No eligible seller would be required to collect the tax at a rate greater than 4%, regardless of the combined actual tax rates that may otherwise apply. Furthermore, sales for which the simplified sellers use tax is collected would not be subject to any county surcharge.

[Note: Hawaii’s general excise and use tax rate is generally 4% on retail sales. In addition, Honolulu imposes a 0.5% county surcharge on the island of Oahu.]

Exempt Purchases

Participating eligible sellers would be required to collect the simplified sellers use tax on all purchases delivered into Hawaii unless the purchaser provides the seller with a valid exemption certificate and general excise tax license.

Collection Discount

Eligible sellers would be authorized to deduct and retain a collection discount equal to 2% of the simplified sellers use tax properly collected and timely remitted.

Amnesty

With certain restrictions, eligible sellers participating in the program would be granted amnesty for any uncollected remote use tax that may have been due on sales made to purchasers in Hawaii for the 12-month period before the effective date of the seller’s participation in the program.

Other Provisions

Other provisions in the proposed legislation include definitions and provisions regarding administration of the simplified sellers use tax, an online reporting and remittance system, refunds, applicability of the Simplified Seller Use Tax Remittance Act provisions in the event federal remote seller legislation is enacted, and removal of a seller from the program for failure to collect and report the tax.

Subscribers can view the introduced legislation.

HI HB 1413, introduced 1/25/17

H.B. 1413, as introduced in the Hawaii House of Representatives on January 25, 2017

AUTHOR

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