Sales Tax Registration and Filing in Hawaii

Introduction

Navigating the intricacies of sales tax registration and filing in Hawaii is crucial for businesses operating within the state. Unlike many other states, Hawaii does not impose a traditional sales tax. Instead, it levies a General Excise Tax (GET) on all business activities, including retail sales, services, and rentals. Understanding the nuances of this tax system is essential for compliance and efficient business operations. This guide will walk you through the registration process, filing requirements, state-specific rules, and answer frequently asked questions about sales tax registration in Hawaii.

Registration Process

How to Register for Sales Tax in Hawaii

To conduct business in Hawaii, you must register for a General Excise Tax (GET) permit. This permit is essential for collecting and remitting the GET on your business transactions.

1. Online Registration: The most convenient way to register is through the Hawaii Tax Online portal. This platform allows you to complete the registration process digitally.
2. In-Person Registration: Alternatively, you can register in person at any Hawaii Department of Taxation District Office.

Required Information

When registering for a GET permit, you will need to provide:

• Personal identification details (e.g., Social Security Number, address)
• Business identification details (e.g., Employer Identification Number, business address)
• Corporate entity type (e.g., S-Corp, sole proprietorship)
• Your accounting period (calendar or fiscal year)
• Your accounting method (cash or accrual)
• Additional information specific to your business operations

Registration Fees

The cost to apply for a Hawaii GET permit is $20. Additional business registration fees may apply depending on your business structure and activities.

Filing Process

Filing Frequency

Hawaii assigns a filing frequency based on the amount of GET you collect. You may be required to file monthly, quarterly, or annually. The due date for filing is the 20th of the month following the reporting period. If the due date falls on a weekend or holiday, the deadline is extended to the next business day.

Steps to File Sales Tax

1. Calculate Tax Owed: Determine the amount of GET you owe based on your business transactions. Tools like Cove's Hawaii state sales tax report can simplify this process by calculating the tax collected across various sales channels.
2. File a Sales Tax Return: Submit your sales tax return through the Hawaii Tax Online system.
3. Make a Payment: Payments can be made online through the same portal. Alternatively, you can use services like Cove's AutoFile to automate the filing and payment process.

State-Specific Rules

General Excise Tax (GET)

Hawaii's GET is a tax on the privilege of doing business in the state, levied on the seller rather than the buyer. It applies to a wide range of activities, including:

• Wholesaling and retailing
• Farming and services
• Construction contracting
• Rental of personal or real property
• Business interest income and royalties

Economic and Physical Nexus

• Physical Nexus: Businesses with a physical presence in Hawaii, such as an office or employees, are subject to GET.
• Economic Nexus: As of July 1, 2018, businesses with over $100,000 in sales or more than 200 transactions in Hawaii in the previous or current calendar year are required to collect GET.

Taxable and Exempt Items

Most tangible products and services are subject to GET. However, certain items, like medical devices and prescription medicine, are exempt. Software as a Service (SaaS) and computer services are taxable under Hawaii's GET.

FAQs

What is the General Excise Tax rate in Hawaii?

The statewide GET rate is 4%. However, Oahu imposes an additional 0.5% surcharge on non-wholesale transactions to fund local mass transit projects.

Do I need to collect GET on shipping charges?

Yes, if you are shipping to a customer within Hawaii, you must include GET on the total gross proceeds of the sale, including shipping charges.

How do I know if I need to register for GET?

You need to register if you have a physical or economic nexus in Hawaii. This includes having a business presence or exceeding the economic thresholds for sales or transactions.

Can I pass the GET onto my customers?

Yes, while the GET is levied on the seller, you can pass the cost onto your customers, which is why it often appears as a line item on receipts.

What happens if I miss a filing deadline?

If you miss a filing deadline, you may incur penalties and interest on the unpaid tax. It's crucial to adhere to the assigned filing frequency and due dates to avoid these additional costs.

By understanding and adhering to Hawaii's sales tax registration and filing requirements, businesses can ensure compliance and avoid potential penalties. For more detailed guidance, consider consulting with a tax professional or utilizing online resources like Cove.