Tax; Pre-Pd Ph Calling Svc

Provides that the sale of prepaid telephone calling services are
subject to taxation under the general excise tax law.  Applies to
gross proceeds from sale of prepaid telephone calling services
received after August 31, 2000.  (SD2)

THE SENATE                              S.B. NO.           S.D. 2
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  Chapter 237, Hawaii Revised Statutes, is amended
 2 by adding a new section to be appropriately designated and to
 3 read as follows:
 4      "237-     Sales of telecommunications services through
 5 prepaid telephone calling service.  (a)  For the purposes of this
 6 section, "prepaid telephone calling service" means the right to
 7 exclusively purchase telecommunication services, paid for in
 8 advance, that enables the origination of calls using an access
 9 number or authorization code, whether manually or electronically
10 dialed.
11      (b)  If the sale or recharge of a prepaid telephone calling
12 service does not take place at the vendor's place of business, it
13 shall be conclusively determined to take place at the customer's
14 shipping address; or if there is no item shipped, then it shall
15 be the customer's billing address.
16      (c)  When a person licensed under this chapter sells prepaid
17 telephone calling services to a licensed retail merchant, jobber,
18 or other licensed seller for purposes of resale, the person shall
19 be taxed as a wholesaler selling tangible personal property.  All

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 1 other sales of prepaid telephone calling services shall be taxed
 2 as retail sales of tangible personal property.
 3      (d)  For purposes of prepaid telephone calling services
 4 only, all such services shall be taxed under this section and
 5 shall be in lieu of taxation under chapter 239." 
 6      SECTION 2.  Section 238-1, Hawaii Revised Statutes, is
 7 amended by amending the definition of "property" to read as
 8 follows:
 9      ""Property" means tangible personal property[,] and prepaid
10 telephone calling services but does not include newspapers or
11 other periodical publications purchased on the subscription plan,
12 issued at stated intervals as frequently as four times a year,
13 and of the class admitted to the United States mails as second
14 class matter under the laws and regulations governing the postal
15 service on January 1, 1965."
16      SECTION 3.  Statutory material to be repealed is bracketed.
17 New statutory material is underscored.
18      SECTION 4.  This Act shall take effect on September 1, 2000;
19 provided that section 1 of this Act shall apply to gross income
20 and gross proceeds after August 31, 2000, and section 2 of this
21 Act shall apply to all taxes accruing after August 31, 2000.