Hawaii has enacted legislation with marketplace nexus and notice and reporting requirements provisions, effective January 1, 2020. Per the legislation, a marketplace facilitator is considered the seller of tangible personal property, intangible property, or services for Hawaii sales and use tax purposes. The seller on whose behalf the sale is made shall be deemed to be making a sale at wholesale and subject to the wholesale rate of tax (0.005%). A marketplace facilitator’s gross income or gross proceeds include receipts from sales on behalf of other sellers.
Per the legislation, “marketplace facilitator” is defined as any person who sells or assists in the sale of tangible personal property, intangible property, or services on behalf of another seller by:
Effective January 1, 2020, any person other than a marketplace facilitator who provides a forum, whether physical or electronic, in which sellers list or advertise tangible personal property, intangible property, or services for sale and takes or processes sales orders can elect to be deemed the seller or comply with the following notice and reporting requirements:
Anyone who fails to comply with the notice and reporting requirements and has not elected to be deemed the seller will assessed a penalty of $1,000 if the failure is not for more than one month, with an additional $1,000 for each additional month or fraction thereof during which the failure continues, not to exceed $12,000 total.
The legislation also amends the definition of “import” to include the sale of tangible personal property, intangible property, or services by a marketplace facilitator with a valid license on behalf of an unlicensed seller for delivery to or use by a purchaser in Hawaii. (Act. 002 (S.B. 396), Laws 2019)
UPDATE: The Hawaii Department of Taxation has issued updated guidance on the state’s marketplace nexus legislation that takes effect January 1, 2020. Per the guidance, all marketplace facilitators and marketplace sellers engaged in business in Hawaii must register for General Excise Tax (GET) licenses prior to January 1, 2020, or prior to starting business activities, whichever is later. Marketplace facilitators and marketplace sellers that do not have a physical presence in Hawaii are deemed engaged in business in the State if they meet the state’s economic nexus thresholds of gross income of $100,000 or more or 200 or more separate transactions in Hawaii.
Marketplace facilitators that are engaged in business in Hawaii are subject to GET at the retail rate for:
Marketplace facilitators are also subject to use tax at the wholesale rate for:
Marketplace sellers that are engaged in business in the State are subject to GET at the retail rate for:
Marketplace sellers that are engaged in business in Hawaii are also subject to GET at the wholesale rate for:
The updated guidance also states that the marketplace nexus legislation requires any person who provides any type of forum for sellers to list or advertise products, but who do not collect payment from the purchaser directly or indirectly, to either:
(Tax Information Release No. 2019-03 (Revised), Hawaii Department of Taxation, December 13, 2019)