Hawaii Enacts Sales Thresholds for Sales Tax

Hawaii enacted sales thresholds which, if met, will subject businesses general excise tax. The thresholds create an economic/sales presence test similar to that at issue in South Dakota v. Wayfair, Inc. A decision in Wayfair is expected from the U.S. Supreme Court by the end of June 2018.

Economic Sales Thresholds for Sales Tax Nexus

Under the legislation, a person does not need a physical presence in Hawaii to be liable for excise tax in two situations:

1. The person has gross income or gross proceeds of $100,000 or more from:

    • the sale of property delivered in Hawaii,
    • services used or consumed in Hawaii, or
    • intangible property used in Hawaii.

2.  In 200 or more separate transactions, the person sold:

    • property delivered in Hawaii,
    • services used or consumed in Hawaii, or
    • intangible property used in Hawaii.

Act 41 (S.B. 2514), Laws 2018, effective July 1, 2018, and applicable to taxable years beginning after 2017

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