Hawaii might subject out-of-state businesses making $100,000 or more in the state to general excise tax.
Legislation passed by the Senate would also:
- add a definition of “marketplace provider”;
- include sales facilitated by marketplace providers in the $100,000 threshold; and
- require some providers of services on behalf of another seller to be subject to tax as sellers.
“Marketplace provider” would mean any person who sells or helps sell tangible personal property for another seller and:
- provides customer service,
- processes payments, and
- controls the fulfillment process.
Services on Behalf of Sellers
Those who might be subject to general excise and use tax as the seller are:
- customer service providers;
- payment processing services; and
- fulfillment control services.
Generally, legislation passed by the Senate would change various definitions to include these service providers when they:
- sell tangible personal property on behalf of another seller; or
- assist in the sale of tangible personal property on behalf of another seller.
Original Seller Would Be Deemed the Wholesaler
Furthermore, the wholesaler subject to a lower tax rate would be the seller on whose behalf the sale is made.
The text of S.B. 2890 is available on the Hawaii Legislature’s website at https://www.capitol.hawaii.gov/session2018/bills/SB2890_SD2_.pdf.
Similar Legislation in the Hawaii House
The Hawaii House of Representatives also passed similar legislation in H.B. 1655 regarding:
- services on behalf of sellers; and
S.B. 2890, as passed by the Hawaii Senate on March 6, 2018