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)