Bill Text: HI HB1407 | 2022 | Regular Session | Introduced
Bill Title: Relating To The General Excise Tax.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2022-02-15 - Re-referred to ECD, FIN, referral sheet 16 [HB1407 Detail]
Download: Hawaii-2022-HB1407-Introduced.html
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
1407 |
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THIRTY-FIRST LEGISLATURE, 2022 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO THE GENERAL EXCISE TAX.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that, under the general excise tax law, wholesalers who sell goods for resale are not taxed at the typical four per cent rate. Instead, they are taxed at a lower rate of one-half of one per cent. However, some wholesalers are improperly claiming the lower tax rate even when the wholesaler has knowledge that the resale will not be taxed at the four per cent rate.
Accordingly, the purpose of this Act is to clarify that a sale only qualifies for the wholesale tax rate if the resale will be taxed at the highest rate under the general excise tax law.
SECTION 2. Section 237-4, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a)
"Wholesaler" or "jobber" applies only to a person
making sales at wholesale. Only the
following are sales at wholesale:
(1) Sales
to a licensed retail merchant, jobber, or other licensed seller for [purposes
of] resale; provided that the resale is subject to the tax imposed under
this chapter at the highest rate;
(2) Sales
to a licensed manufacturer of materials or commodities that are to be
incorporated by the manufacturer into a finished or saleable product (including
the container or package in which the product is contained) during the course
of its preservation, manufacture, or processing, including preparation for
market, and that will remain in such finished or saleable product in such form
as to be perceptible to the senses, which finished or saleable product is to be
sold and not otherwise used by the manufacturer;
(3) Sales
to a licensed producer or cooperative association of materials or commodities
that are to be incorporated by the producer or by the cooperative association
into a finished or saleable product that is to be sold and not otherwise used
by the producer or cooperative association, including specifically materials or
commodities expended as essential to the planting, growth, nurturing, and production
of commodities that are sold by the producer or by the cooperative association;
(4) Sales
to a licensed contractor, of materials or commodities that are to be
incorporated by the contractor into the finished work or project required by
the contract and that will remain in such finished work or project in such form
as to be perceptible to the senses;
(5) Sales
to a licensed producer, or to a cooperative association described in section [[]237-23(a)(8)[]]
for sale to a licensed producer, or to a licensed person operating a feed lot,
of poultry or animal feed, hatching eggs, semen, replacement stock, breeding
services for the purpose of raising or producing animal or poultry products for
disposition as described in section 237-5 or for incorporation into a
manufactured product as described in paragraph (2) or for the purpose of
breeding, hatching, milking, or egg laying other than for the customer's own
consumption of the meat, poultry, eggs, or milk so produced; provided that in
the case of a feed lot operator, only the segregated cost of the feed furnished
by the feed lot operator as part of the feed lot operator's service to a
licensed producer of poultry or animals to be butchered or to a cooperative
association described in section [[]237-23(a)(8)[]] of such
licensed producers shall be deemed to be a sale at wholesale; and provided
further that any amount derived from the furnishing of feed lot services, other
than the segregated cost of feed, shall be deemed taxable at the service
business rate. This paragraph shall not
apply to the sale of feed for poultry or animals to be used for hauling,
transportation, or sports purposes;
(6) Sales
to a licensed producer, or to a cooperative association described in section [[]237-23(a)(8)[]]
for sale to the producer, of seed or seedstock for producing agricultural and
aquacultural products, or bait for catching fish (including the catching of bait
for catching fish), which agricultural and aquacultural products or fish are to
be disposed of as described in section 237-5 or to be incorporated in a
manufactured product as described in paragraph (2);
(7) Sales
to a licensed producer, or to a cooperative association described in section [[]237-23(a)(8)[]]
for sale to such producer; of polypropylene shade cloth; of polyfilm; of polyethylene
film; of cartons and such other containers, wrappers, and sacks, and binders to
be used for packaging eggs, vegetables, fruits, and other agricultural and
aquacultural products; of seedlings and cuttings for producing nursery plants
or aquacultural products; or of chick containers; which cartons and such other
containers, wrappers, and sacks, binders, seedlings, cuttings, and containers
are to be used as described in section 237‑5, or to be incorporated in a
manufactured product as described in paragraph (2);
(8) Sales of tangible personal property where:
(A) Tangible
personal property is sold upon the order or request of a licensed seller for
the purpose of rendering a service in the course of the person's service
business or calling, or upon the order or request of a person subject to tax
under section 237D-2 for the purpose of furnishing transient accommodations;
(B) The
tangible personal property becomes or is used as an identifiable element of the
service rendered; [and]
(C) The
cost of the tangible personal property does not constitute overhead to the
licensed seller; and
(D) The resale of the service or tangible personal
property is subject to the tax imposed under this chapter at the highest tax
rate;
(9) Sales
to a licensed leasing company of capital goods that have a depreciable life,
are purchased by the leasing company for lease to its customers, and are
thereafter leased as a service to others;
(10) Sales
of services to a licensed seller engaging in a business or calling whenever:
(A) Either:
(i) In the context of a service-to-service transaction, a service is
rendered upon the order or request of a licensed seller for the purpose of
rendering another service in the course of the seller's service business or
calling, including a dealer's furnishing of goods or services to the purchaser
of tangible personal property to fulfill a warranty obligation of the manufacturer
of the property;
(ii) In the context of a service-to-tangible personal property
transaction, a service is rendered upon the order or request of a licensed
seller for the purpose of manufacturing, producing, or preparing tangible personal
property to be sold;
(iii) In the context of a services-to-contracting transaction, a service
is rendered upon the order or request of a licensed contractor as defined in
section 237-6 for the purpose of assisting that licensed contractor; or
(iv) In
the context of a services-to-transient accommodations rental transaction, a
service is rendered upon the order or request of a person subject to tax under
section 237D-2 for the purpose of furnishing transient accommodations;
(B) The
benefit of the service passes to the customer of the licensed seller, licensed
contractor, or person furnishing transient accommodations as an identifiable
element of the other service or property to be sold, the contracting, or the
furnishing of transient accommodations;
(C) The
cost of the service does not constitute overhead to the licensed seller,
licensed contractor, or person furnishing transient accommodations;
(D) The
gross income of the licensed seller is not divided between the licensed seller
and another licensed seller, contractor, or person furnishing transient
accommodations for imposition of the tax under this chapter;
(E) The
gross income of the licensed seller is not subject to a deduction under this
chapter or chapter 237D; and
(F) The
resale of the service, tangible personal property, contracting, or transient
accommodations is subject to the tax imposed under this chapter at the highest
tax rate.
(11) Sales
to a licensed retail merchant, jobber, or other licensed seller of bulk
condiments or prepackaged single-serving packets of condiments that are
provided to customers by the licensed retail merchant, jobber, or other
licensed seller;
(12) Sales
to a licensed retail merchant, jobber, or other licensed seller of tangible
personal property that will be incorporated or processed by the licensed retail
merchant, jobber, or other licensed seller into a finished or saleable product
during the course of its preparation for market (including disposable,
nonreturnable containers, packages, or wrappers, in which the product is
contained and that are generally known and most commonly used to contain food
or beverage for transfer or delivery), and which finished or saleable product
is to be sold and not otherwise used by the licensed retail merchant, jobber,
or other licensed seller;
(13) Sales
of amusements subject to taxation under section 237-13(4) to a licensed seller
engaging in a business or calling whenever:
(A) Either:
(i) In the context of an amusement-to-service transaction, an amusement
is rendered upon the order or request of a licensed seller for the purpose of
rendering another service in the course of the seller's service business or
calling;
(ii) In the context of an amusement-to-tangible personal property
transaction, an amusement is rendered upon the order or request of a licensed
seller for the purpose of selling tangible personal property; or
(iii) In the context of an amusement-to-amusement transaction, an
amusement is rendered upon the order or request of a licensed seller for the
purpose of rendering another amusement in the course of the person's amusement
business;
(B) The
benefit of the amusement passes to the customer of the licensed seller as an
identifiable element of the other service, tangible personal property to be
sold, or amusement;
(C) The
cost of the amusement does not constitute overhead to the licensed seller;
(D) The
gross income of the licensed seller is not divided between the licensed seller
and another licensed seller, person furnishing transient accommodations, or
person rendering an amusement for imposition of the tax under chapter 237;
(E) The
gross income of the licensed seller is not subject to a deduction under this
chapter; and
(F) The
resale of the service, tangible personal property, or amusement is subject to
the tax imposed under this chapter at the highest rate.
As used in this paragraph, "amusement"
means entertainment provided as part of a show for which there is an admission
charge; and
(14) Sales by a printer to a publisher of magazines or similar printed materials containing advertisements, when the publisher is under contract with the advertisers to distribute a minimum number of magazines or similar printed materials to the public or defined segment of the public, whether or not there is a charge to the persons who actually receive the magazines or similar printed materials."
SECTION 3. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.
SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 5. This Act shall take effect on July 1, 2022.
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INTRODUCED BY: |
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Report Title:
General Excise Tax; Wholesale Sales
Description:
Clarifies that, under the general excise tax law, sales to a licensed retail merchant, jobber, or other licensed seller for resale are only eligible for the wholesale tax rate if the resale is subject to the highest general excise tax rate. Adds a similar requirement for sales of tangible personal property to a service provider or for the purpose of providing transient accommodations.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
