Hawaii Steps Closer to Amazon Tax Law
- Mar 20, 2014 | Gail Cole
Update: Hawaii HB 1651 died in committee.
Hawaii lawmakers have taken another step towards enacting online sales tax legislation. House Bill 1651 passed its first reading in the House on March 6 and is now under review in the Ways and Means Committee.
The bill seeks to redefine what it means to be engaged in business in the State of Hawaii:
“Unless preempted by federal law, [HB 1651] requires the collection of use taxes by sellers of tangible personal property who enter into agreements under which a person in the State refers potential purchasers to the seller, including by an internet link or web site, or performs related services in the State on behalf of the seller.”
The tax would not apply to just any remote vendor. Sellers would have to meet the bill’s definition of “commonly controlled group,” “engaged in business in the State,” and so forth. In addition, the following conditions would have to be met:
- The total cumulative sales price from all of the seller’s sales, within the preceding twelve months, of tangible personal property to purchasers in the State that are referred pursuant to all of those agreements with a person or persons in the State, is in excess of $10,000; and
- The seller, within the preceding twelve months, has total cumulative sales of tangible personal property to purchasers in the State in excess of $10,000.
The bill provides for a federal solution to the problem of online sales tax. The director of taxation is required, prior to the convening of the 2015 regular session, to “certify in writing to the governor and the legislature whether any federal law has been enacted by December 31, 2014, authorizing the states to require a seller to collect taxes on sales of goods to in-state purchasers without regard to the location of the seller.”
Federal lawmakers in Congress are currently considering the Marketplace Fairness Act of 2013 (MFA), legislation that would allow states to require certain remote sellers to collect sales tax. The House Judiciary Committee held a hearing on MFA last week. As yet, no further action has been made public.
Supporters of online sales tax might find the Hawaii bill encouraging. Then again, maybe not. As written, the bill would not take effect until July 1, 2030.
Switching to an automated sales tax solution makes collecting and remitting in multiple sales tax jurisdictions a cinch.