HOUSE OF REPRESENTATIVES
TWENTY-NINTH LEGISLATURE, 2017
STATE OF HAWAII
A BILL FOR AN ACT
relating to taxation.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to title 14 to be appropriately designated and to read as follows:
Simplified seller use tax remittance act
§ -1 Short title. This chapter shall be known and may be cited as the "Simplified Seller Use Tax Remittance Act".
§ -2 Definitions. The following definitions apply throughout this chapter unless the context clearly requires otherwise:
"Eligible seller" means an individual, trust, estate, fiduciary, partnership, limited liability company, limited liability partnership, corporation, or other legal entity that sells tangible personal property or a service, but does not have a physical presence in the State or is not otherwise required to be subject to requirements for collecting and remitting state general excise or use tax for sales delivered into the State.
"Remote seller" means an individual, trust, estate, fiduciary, partnership, limited liability company, limited liability partnership, corporation, or other similar legal entity that sells tangible personal property or a service, but does not have nexus in the State.
"Remote use tax" means amounts:
(1) Collected from an out-of-state vendor who, on the effective date of this Act, was or would have been a remote seller; and
(2) Remitted by a taxpayer on the taxpayer's individual tax return for purchases made from a remote seller.
"Simplified sellers use tax" means the tax to be collected, reported, and remitted by eligible sellers who are participating in the program pursuant to requirements and procedures established by this chapter.
"Simplified use tax remittance program" or "program" means the program established by this chapter to provide a mechanism for eligible sellers to collect, report, and remit the simplified sellers use tax.
§ -3 Simplified sellers use tax remittance program. (a) There is hereby established the simplified sellers use tax remittance program, designed to allow an eligible seller who participates in the program to collect, report, and remit the simplified sellers use tax authorized in this chapter in lieu of the general excise or use taxes otherwise due by or on behalf of Hawaii customers who have purchased items from the eligible seller that were shipped or otherwise delivered into Hawaii by the eligible seller. Participation in the program shall be by election of the eligible seller and only those eligible sellers accepted into the program as set out in this section shall collect and remit the simplified sellers use tax. Participation in the program shall not be construed as subjecting an eligible seller to franchise, income, or any other type of taxes or licensing requirements levied or imposed by the State.
(b) The program shall be administered by the department of taxation, which shall develop and make available to the eligible seller an easily accessible, online system by which to collect, report, and remit the simplified sellers use tax. Participants in the program shall be required to collect, report, and remit the simplified sellers use tax for all sales delivered into the State as long as they remain participants in the program. Eligible sellers may continue in the program as long as they comply with all provisions of this chapter and rules adopted by the department for participation in the program.
(c) In order to participate in the program, an eligible seller shall submit an application to the department on a form designed by the department for that purpose. The application shall require, at a minimum, that the eligible seller:
(1) Certifies that the seller is an eligible seller as defined in section -2;
(2) Agrees to collect, report, and remit the simplified sellers use tax for all sales delivered into the State as long as the seller remains a participant in the program;
(3) Agrees to provide the department with information related to sales to Hawaii customers, as required by this chapter or requested by the department; and
(4) Agrees to comply with all program reporting requirements established under this chapter or rules adopted thereto.
Any applicant who falsely certifies on an application that the applicant is an eligible seller with the State shall be subject to the penalties imposed under section 231-36.
(d) The department shall review all applications for participation and, where an applicant is determined to satisfy requirements to participate in the program, shall establish a simplified sellers use tax account for the eligible seller that will allow the eligible seller to report and remit all simplified sellers use tax collected pursuant to this chapter.
(e) A participating eligible seller shall be removed from the program:
(1) If the seller substantially fails to collect, report, and remit simplified sellers use taxes;
(2) If the seller fails to submit required reports on a timely basis;
(3) Upon a determination that the seller is no longer an eligible seller, as defined by section -2; or
(4) If there is any other finding by the department that the seller is not in compliance with the terms authorizing participation in the program.
Any participant who fails to report that the participant is no longer eligible for participation in the program or falsely certifies on any report that the participant is eligible shall be subject to the penalties imposed under section 231-36. Removal from the program or assessment of penalties under section 231-36 shall be subject to appeal rights and procedures established in this title.
§ -4 Collection and remittance of simplified sellers use tax; reporting; statement. (a) The simplified sellers use tax due under the program is four per cent of the sales price on any tangible personal property sold or delivered into Hawaii by an eligible seller participating in the program. The collection and remittance of simplified sellers use tax relieves the eligible seller and the purchaser from any additional state general excise and use taxes on the transaction.
(b) The simplified sellers use tax collected by the eligible seller, at the rate of four per cent, shall be electronically reported in the manner prescribed by the department on or before the twentieth day of the month next succeeding the month in which the tax accrues. The eligible seller shall remit the tax at the required rate or the amount of the tax collected, whichever is greater. The required monthly reporting from the eligible seller shall only include statewide totals of the simplified sellers use taxes collected and remitted, and shall not require information related to the location of purchasers or amount of sales into a specific county. The department shall not require an eligible seller to report and remit the simplified sellers use tax more frequently than is required for other sellers.
(c) No eligible seller shall be required to collect the tax at a rate greater than four per cent, regardless of the combined actual tax rates that may otherwise be applicable. Additionally, no sales for which the simplified sellers use tax is collected shall be subject to any surcharges from any county levying a surcharge on state general excise or use taxes with respect to the purchase or use of the property, regardless of the actual tax rate that might have otherwise been applicable.
(d) The participating eligible seller shall collect the tax on all purchases delivered into Hawaii unless the purchaser furnishes the eligible seller with a valid exemption certificate and general excise tax license issued by the department. The eligible seller shall retain all exemption certificates and general excise tax licenses in its files, or in any other manner as directed by the department.
(e) The eligible seller shall provide the purchaser with a statement or invoice showing that the simplified sellers use tax was collected and is to be remitted on the purchaser's behalf. The statement shall be in a manner prescribed by the department and shall include the eligible seller's program account number issued by the department upon the eligible seller's approval as a participant in the program.
§ -5 Discount. Eligible sellers may deduct and retain a discount equal to two per cent of the simplified sellers use tax properly collected and then remitted to the department in a timely manner. No discount shall be allowed for any taxes that are not timely reported and remitted to the department pursuant to program procedures.
§ -6 Rulemaking authority; recordkeeping. (a) The department may adopt rules pursuant to chapter 91 related to the implementation, administration, and participation in the program. The department shall have exclusive responsibility for reviewing and accepting applications for participation and for the administration, return processing, and review of the eligibility of sellers participating in the program. Eligible sellers participating in the program shall not be subject to audit or review by any county.
(b) Eligible sellers shall maintain records of all sales delivered into Hawaii, including copies of invoices showing the purchaser, address, purchase amount, and simplified sellers use tax collected. These records shall be made available for review and inspection upon request by the department.
§ -7 Refund of excess taxes paid. (a) Any taxpayer who pays a simplified sellers use tax through this program that is higher than the actual state general excise or use tax applicable to the sale may file for a refund of the excess amount paid to an eligible seller participating in the program. All petitions for refund shall be filed on forms and in the manner prescribed by the department. The petition for refund may only be filed once per year. If the amount due to be refunded in a year is less than $25, payment of the refund may be deferred by the department and combined with amounts due to be paid pursuant to subsequent annual refund petitions for a period of up to three years.
(b) Any taxpayer seeking a refund of excess taxes paid to an eligible seller participating in the program shall maintain records documenting the amount of simplified sellers use tax paid. Refund requests shall require proper documentation of amounts paid by the taxpayer and shall be submitted to the department with the petition for refund.
(c) Notwithstanding any other provision of law, interest due on any refund of taxes paid directly to the department under this chapter shall be paid beginning ninety days after the receipt date of the properly documented refund petition with interest accruing beginning on the ninety-first day.
§ -8 Taxes state realizations. All taxes collected under this chapter shall be state realizations.
§ -9 Applicability. If federal legislation is enacted that authorizes the states to require a seller to collect taxes on sales of goods to in-state purchasers without regard to the location of the seller:
(1) This chapter shall be inapplicable as to any eligible seller who is not registered with the department as a participant in the program at least six months prior to the effective date of the federal legislation; and
(2) This chapter shall continue to apply to any eligible seller who has been approved by the department as a participant in the program at least six months prior to the effective date of the federal legislation and to any taxpayer who has paid or pays the simplified sellers use tax authorized under this chapter; provided that the eligible seller continues to collect, report, and remit the simplified sellers use tax and otherwise complies with all procedures and requirements of the program.
Eligible sellers participating in the program pursuant to this section may continue to receive a discount of two per cent on all simplified sellers use taxes properly remitted under the provisions of this chapter and shall continue to report sales under the conditions set out in section -4.
§ -10 Amnesty for certain uncollected remote use tax. (a) Subject to the limitations in this section, an eligible seller participating in the program shall be granted amnesty for any uncollected remote use tax that may have been due on sales made to purchasers in the State for the twelve-month period preceding the effective date of the eligible seller's participation in the program.
(b) The amnesty shall preclude assessment for uncollected simplified use tax together with any penalty or interest for sales made during the twelve-month period prior to the effective date of the eligible seller's participation in the program.
(c) The amnesty provided pursuant to subsection (a) shall be granted to any eligible seller who applies to participate in the program, following acceptance into the program by the department.
(d) Amnesty is not available:
(1) To an eligible seller with respect to any matter for which the eligible seller has received notice of the commencement of an audit and the audit is not yet finally resolved, including any related administrative and judicial processes; or
(2) For any simplified sellers use tax already paid or remitted to the State or for taxes collected by the eligible seller.
(e) Amnesty is fully effective, absent the eligible seller's fraud or intentional misrepresentation of a material fact, as long as the eligible seller continues the eligible seller's participation in the program and continues to collect, report, and remit applicable simplified sellers use tax for a period of at least thirty-six months.
(f) Amnesty is applicable only to simplified use tax due from an eligible seller in the eligible seller's capacity as an eligible seller and not to remote use taxes due from a seller in that seller's capacity as a buyer."
SECTION 2. This Act shall take effect on July 1, 2017.
Simplified Seller Use Tax Remittance Act
Establishes a voluntary program to allow out-of-state vendors to collect, report, and remit a simplified sellers use tax to the State.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.