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Hawaii Supreme Court: OTCs Must Pay GET

  • Mar 20, 2015 | Gail Cole

 Waimea Canyon, Kauai.

In 2013, the Hawaii Tax Appeal Court ruled that a number of online travel companies owed the state close to $250 million in back general excise taxes (GET) for the period 2000 through 2011. The OTCs paid the assessment and appealed to the Hawaii Supreme Court. Now the high court has ruled that the Hawaii GET does apply to charges for Hawaii hotel rooms made by nine out-of-state online travel companies (OTCs), including some of the biggest: Expedia, Orbitz, Priceline and Travelocity.

According to a news release issued by the Attorney General’s office, “the Supreme Court upheld the very broad reach of Hawaii’s general excise tax and stated that general excise tax applies to ‘virtually any economic activity imaginable.” It highlighted the following passage from the opinion:

“[I]t is clear the occupancy rights that [these companies] are selling to transients are wholly consumable and only consumable in Hawaii. Even though an [online travel company’s] agreement with a transient may take place outside of Hawaii, the agreement is effected with the intent that performance would occur entirely in Hawaii.'”

Deputy State Attorney General Hugh Jones says that it now falls upon the Tax Appeal Court to recalculate any additional penalties owed (Hotel Online). Read the Supreme Court opinion for further details.

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photo credit: Waimea Canyon via photopin (license)

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.