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Any local or out-of-state business or nonprofit organization that plans to sell goods or services to or to contract with the state of Hawaii or its counties under a state or county contract must first obtain federal and state tax clearance certificates. A tax clearance is a certificate that confirms that a taxpayer has filed its tax returns and paid its taxes (including penalties and interest) as of the date the certificate is issued.Without a tax clearance certificate, businesses cannot enter into or bid on state or county contracts. Businesses can apply for the certificates online.(Tax Facts 31-2, Hawaii Department of Taxation, April 2015)


On March 10, 2015, a bipartisan group of senators introduced the Marketplace Fairness Act of 2015. Similar legislation – the Marketplace Fairness Act of 2013 – was previously introduced in February 2013 and passed by the Senate on May 6, 2013. That legislation failed to be enacted. If passed, the Marketplace Fairness Act of 2015 would authorize states meeting certain requirements to require remote sellers that do not meet a "small seller exception" to collect their state and local sales and use taxes. For more information on the previous legislation, visit Federal Government Introduces New Remote Seller Bill. (Marketplace Fairness Act of 2015, March 10, 2015)


UPDATE: This bill failed to pass during the 114th Congressional Session running from January 3, 2015 to January 3, 2017.  Therefore, this bill has died and would need to be reintroduced to be considered and voted on.


On December 16, 2014, President Barack Obama signed the Consolidated and Further Continuing Appropriations Act, 2015, for sales and use tax purposes. The Act includes a provision that extends the Internet Tax Freedom Act (ITFA) until October 1, 2015 with all provisions unchanged.


On January 9, 2015, the House of Representative introduced a bill (un-numbered) that would permanently extend the ITFA, banning states and local jurisdictions from imposing any new tax on internet access. The proposed bill removes the current effective dates of November 1, 2003 through October 1, 2015 and changes the effective date to be effective for new taxes imposed after the date of the enactment.  It is not clear if states that have been grandfathered under the existing provision could retain their current tax on internet access but it appears that may be the case.  No formal legislation has been introduced that would incorporate the Marketplace Fairness Act into this bill. The bill is sponsored by House Judiciary Committee Chairman Bob Goodlatte, among others.


For our previous news item on this topic, see Internet Tax Freedom Act is Extended Through December 11, 2014.


For an update on this news item, see Internet Tax Freedom Act Extended Until December 11, 2015.


(Consolidated and Further Continuing Appropriations Act, 2015; H.R. 235)


President Barack Obama has signed federal legislation extending the Internet Tax Freedom Act (ITFA) through December 11, 2014 as part of the joint resolution which made continuing appropriations for fiscal year 2015. The ITFA was previously set to expire on November 1, 2014. The ITFA bars state and local governments from imposing multiple or discriminatory taxes on electronic commerce and taxes on Internet access.


For an update to this news item, see Internet Tax Freedom Act Extended Until October 1, 2015, Permanent Extension Introduced.


(P.L. 113-164 (H.J. Res. 124), 113th Congress, 2nd Session, Laws 2014)


Hawaii’s House of Representatives has passed legislation that would conform the state’s general excise tax laws to the provisions of the Streamlined Sales and Use Tax (SST) Agreement, generally effective July 1, 2030, or on the date Hawaii becomes a party to the SST Agreement, whichever is later. To conform to the SST Agreement, Hawaii must adopt a single rate for its general excise tax. To achieve the single tax rate, the legislation would: move the 0.5% tax rate for wholesale transactions to a new chapter; add a new chapter on the taxation of imports of property, services, and contracting; move the 0.15% tax on insurance producers to a new chapter; and eliminate the tax on businesses owned by disabled persons. The legislation would also provide for destination-based sourcing and amnesty.(H.B. 2135, as passed by the Hawaii House of Representatives on March 4, 2014)



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