Everything You Need to Know About The Hawaii General Excise Tax

QUICK LINKS

Looking for information about the General Excise Tax? Use these links to find what you need.

  • Hawaii Tax Forms. Printable tax forms: G-45 (periodic) or G-49 (annual reconciliation).
  • Pay Hawaii taxes online. Pay your state taxes or general excise taxes online. There is a $1 electronic check fee or a variable fee for paying with a credit card.
  • Register with eHawaii. Register your business in Hawaii online.

general-excise-tax

What is that additional charge on our receipts? It’s none other than our good friend, the General Excise Tax (GET).

 

Updated 5/30/2018

I am slowly making updates to the article. If you post 2 or more links, your comment will be auto-marked as spam by the system. Thanks to DAVID W RISTAU CPA for helping to answer some of the questions in the comments section. There are now over 250 questions and answers combined — you might find your answer in the comments.

Updated 10/18/2014

Disclaimer: I am not a CPA or affiliated with the Hawaii State Department of Tax. If you have questions about taxes, call them at 808-587-4242 or contact them. Do not ask me for tax advice — everything I know about the GET is right here in this article . 

***

Have you ever wondered where states get their money from? Each state has their own methods (sales taxes, lottery, gambling), but for Hawaii, the biggest source of income is the General Excise Tax (GET). The tax is on gross income by businesses, meaning that part of every single business transaction goes to the state, whether it’s you buying a pack of gum at the 7-Eleven, or you constructing an office for someone.

 

Who has to pay the General Excise Tax?

Most businesses that have business transactions occur in Hawaii have to pay the GET. This applies to business that sell goods or provide services.

If you are an independent contractor, a small business owner, a freelancer, a self-employed person, or do “side gigs,” you will need to pay the excise tax, since you are considered a business. Businesses located in another state with a physical presence in Hawaii also have to pay the GET.

There are some business types who are exempt and there are some business types who have a different rate. More on this later.

 

Is the General Excise Tax a sales tax?

No, it is not. Although both have the same purpose (give money to the state), the two are a bit different. The main difference is who pays the tax. In states that have a sales tax, the tax is on consumers who buy retail goods. In those situations, business help the state by collecting the sales tax for the state. With the GET, the tax is on businesses. Furthermore, it’s not just goods getting taxed — services, wholesale goods, and rents are also taxed.

 

How much is the General Excise Tax?

The base rate for the GET is currently 4% of gross sales (as of 4/11/2013). In the City and County of Honolulu aka Oahu, the rate is 4.5%. The extra .5% for Oahu is to help pay for the mass-transit rail project on Oahu. Also, anyone conducting business on Oahu or has a “physical presence” on Oahu has to pay the extra .5%.

For example, if you’re renting out apartments in Oahu and Maui, you’ll be paying 4% GET on the Maui apartments and 4.5% on the Oahu apartments.

But why do I see 4.712% tax on my receipt on Oahu?

The answer is a bit complicated, so pay attention to this example:

You own a lunch truck. Jerry Maguire comes one day and buys a loco moco plate from you. The loco moco plate has a price of $10.

As a lunch truck business, you have 2 choices regarding the GET:

Choice 1: You pay the GET. If you choose to pay the GET, Jerry Maguire will be billed $10 and you will collect only $10 from him. When the time comes to pay your GET to the state tax department, you will pay 4.5% multiplied by your gross sales (on Oahu), which will mean you pay 45 cents of that $10 you collected.

Choice 2: You make the customer pay the GET (the common method). If you want to have Jerry Maguire pay the GET instead, you will add 4.5% to the total bill. So, the $10 loco moco should become $10.45, after tax. But you’ll still have to pay taxes out of your pocket. Why? Because the state considers the 45 cents tax you collected to be income too, so you will pay a tax on that tax you collect (confusing right?). Paying 4.5% tax on the 4.5% tax actually equals 4.7025%, but the state allows you to round up a bit and you end up with a GET rate of 4.712% of the sale amount of that plate lunch. Most businesses force customers to pay the excise tax and then the excise tax on the excise tax, so you’ll see 4.712% on your bill, not 4.5%. On outer islands (no .5% Oahu surcharge), this means a GET rate of 4.166%. Most businesses do this because it’s common and it means that they won’t have to pay GET out of their pocket, as the customers paid it already.

 

Should I make my customers pay the excise tax?

Probably.

People in Hawaii are accustomed to the tax. Furthermore, it is a surcharge, so it’s added onto the bill, but doesn’t make your sticker price higher, meaning people only see if when it comes time to pay. Furthermore, your competitors probably pass the excise tax onto customers, so if you decide to absorb the excise tax yourself, that means you’re at a financial disadvantage compared to them.

For my business, I don’t pass the GET onto my clients because it makes my accounting easier. Also, I think giving a client an invoice of $800 is much more presentable than a bill of $622.83. Round numbers also make it easier for clients to pay me with cash, which is my preferred method of payment. But really, it’s up to you.

Exception: certain industries are not allowed to charge their customers for GET, such as travel agents (see this article for more info).

 

Is it okay to pass the General Excise Tax onto my customers? How about for quotes?

As a business, you can tack on the GET onto your client or customer’s bill or invoice. This is also known as “visibly passing the tax onto the customer.” This method makes your customer pay it instead of you paying it out of the money you collect from the sale. You can also have the tax show up as a surcharge, meaning it shows up on a separate line on the bill/receipt/invoice.

Quoting: If you give quotes in your line of business like me, you can pass the GET to your customer only if you tell them or write that there is a certain % tax in addition to the quote.

Examples:

If I say, “I want to make you an awesome website! Your quote: $50,000!”
>>
 I cannot tack on GET — my bill must be for $50,000 flat.

If I say, “I want to make you an awesome website! Your quote: $50,000 plus tax!”
>> I still cannot tack on GET because I need to be specific about the rate (4%? 4.1666%? 4.5%? 4.712%?).

If I say “I want to make you an awesome website! Your quote: $50,000! (Plus 4.712% tax)”
>> Now I can tack on GET, because it is clear to the customer that they will have to pay tax in addition to the quoted amount.

 

How often do I pay the General Excise Tax? What’s a filing period?

Anywhere from every month to every 6 months – it depends on how much GET you expect to pay. The higher your expected GET, the more frequently you should pay.

If you pay this much in General Excise Taxes per year… You pay this often
less than or equal to $2000 every 6 months
more than $2000, but less than or equal to $4000 every 3 months
more than $4000 every month

Basically, the more money you make, the more often you pay, cause the state wants that tax money!

View original article

The filing period depends on when your tax year begins. Most of us use a calendar year, meaning our tax year starts on January 1st and ends on December 31st. If you pay quarterly, then that means your 4 filing periods will be January to March, April to June, July to September, and October to December.

Note: You need to also file an annual reconciliation. The G-45 is for periodic payments, as mentioned above. However, you will also need to file a G-49, an annual return and reconciliation. It’s basically a form that checks to make sure the GET you paid is accurate at the end of the year. You need to file this to let the state mark you as filed for the year.

Why do you need a reconciliation? Let’s say you sell hula skirts and had $10,000 gross sales in January. You pay your GET that quarter. But then in October, that same customer returns all the hula skirts. You then refund his money. Those $10,000 of hula skirts are no longer a sale, so you should not have to pay GET on them. However, because you already paid GET on those hula skirts, you’ve overpaid GET. So, you then can use the reconciliation to get a refund. Or you can use the reconciliation to find out that you owe more than you’ve paid for the year.

Basically, it works the same way as regular taxes: you or your employer pay taxes periodically, and then at the end of the tax year, you check to see if you owe or if you’ll get a refund.

 

When are General Excise Taxes due?

For period GET (form G-45), your taxes are due 20 days after your filing period ends (as I said before, your filing period depends on how much you make). So if your tax year starts on January 1st, your quarters end on March 31, June 30, September 30, December 31. And then your GET is due on April 20, July 20, October 20, and January 20 respectively.

Here is an example of someone who pays quarterly GET:

Event Due Date
Tax year starts January 1, 2013
Quarter 1 ends March 31, 2013
Quarter 1 GET due April 20, 2013
Quarter 2 ends June 30, 2013
Quarter 2 GET due July 20, 2013
Quarter 3 ends September 30, 2013
Quarter 3 GET due October 20, 2013
Quarter 4 ends December 31, 2013
Quarter 4 GET due January 20, 2014

* this is only an example, you might pay monthly or only 2x a year, depending on your gross income.

For annual reconciliation (form G-49), your taxes are due on the 3 months and 20 days after your tax year ends. So if your tax year started on January 1, 2013, it ended December 31, 2013, and so your G-49 will be due on April 20, 2014.

Event Date
2013 Tax year started January 1, 2013
2013 Tax year ended December 31, 2013
2013 G.E.T. G-49 due date April 20, 2014

 

How do I get a General Excise license and how do I pay my GE taxes?

The business and GET registration process is very easy, thanks to the state making the entire process available online. You can also do it in person or mail in your forms, but it’s much easier to do it all online.

Note: there is a $20 application + $2.50 online charge. You can pay during the online process with a credit card.

Here’s how to get your General Excise Tax license:

  1. Register your business with the state of Hawaii (link here) and you will also apply for a State Tax ID (aka your General Excise Tax License Number) along the way. You need to consider what type of business you want to register as. Sole-Proprietor and Limited Liability Corporation are common choices, but you should talk with a CPA if you want to know the pros and cons of the different choices (scroll to the bottom for my CPA recommendation). If you’re a sole proprietor, you can also apply for a trade name (aka a business alias). Make the one-time registration payment and wait for your license to come in the mail. The registration process is for the purpose of getting your tax license. If your business is already registered with the State of Hawaii but you don’t have a General Excise Tax License Number or State Tax ID, then you can simply go here, search for your business name and then apply for a license number.
  2. Register for e-filing with eHawaii.gov. This will create an online account for you to pay your General Excise taxes online with a credit card.
  3. When it comes time to pay your GET, go to eHawaii.gov’s eFile, select form G-45 (General Excise Payments),  fill in the fields, your tax liability should be calculated automatically, and pay with your credit card.
  4. The business registration directory is public. To view your listing, go to Hawaii’s Business Registration Division or Department of Taxation – Tax Licenses.
This is the tax license the state gives you. Make it visible to show your clients that you are a law-abiding and responsible business owner.

This is the tax license the state gives you. Make it visible to show your clients that you are a law-abiding and responsible business owner.

 

What if I need to make changes to my business or to my payments?

There are a lot of things that can happen to your business. Here are some forms that might be helpful.

Name of Form Why Do We Need This Form?
GEW-TA-RV1 Cancel your GET license
GEW-TA-RV5 Make changes to your license (your name, officers, filing frequency)
ITPS-COA Change of address
amended G-45 Amend/change a previous G-45 filing
amended G-49 Amend/change a previous G-49 filing

Hawaii Tax Form List

 

Who doesn’t have to pay? Are there exceptions?

Here is a screenshot of the exemptions if you file online:

ge-exceptions

snapshot of exemptions during online filing of g45

As you can see, most of these exemptions make a lot of sense. For example, if you have bad debts (aka non payment) that means you never received the income, yet it was included in gross billings, so you need to exclude them. Or reimbursements, which if you buy something for your client at no markup as a matter of convenience, then you should not be paying GE tax on that. Non profit organizations is in there as well.

In general, if you have to ask this question, then you probably aren’t exempt from the GET. Entities like Non Profits, utility companies, and some selling securities/commodities are exempt from the GET. See this long document for details (Hawaii Revised Statute 237-23, 12/31/2012).

Organizations looking for GET exempt status would file G-6 (Application for Exempt Status for General Excise Taxes).

Reimbursements: if you paying for something on behalf of a client and there is no mark-up (meaning that you’re not profiting), then the amount is exempt from GET.

Example: I build a website for a client and it requires a special plugin software for $50. I buy it on behalf of my client then I tack the cost onto his final invoice along with the fee for the website. I don’t pay GET on that $50 reimbursement I get from the client.  If I pay $50 for the plugin and charge my client $150, then it’s not a reimbursement and I have to pay GET on the $150.

Out of state sales: if you’re selling tangible personal property out of the state, like, selling hula skirts to someone in Minnesota, the money you get from the sale is exempt from the GET (section 237-29.5(1), thanks Eva for mentioning this). The purchaser needs to fill out form G-61, “EXPORT EXEMPTION CERTIFICATE FOR GENERAL EXCISE AND LIQUOR TAXES” to cerify that they are out of state.

Wholesale customers pay a special rate of .5%.

Insurance commissions (Chapter 431, HRS) pay  .15%

Nonprofits don’t pay on donations received, but must on goods and services sold through fundraising.

 

Do Nonprofits pay no General Excise Tax?

Yes for donations received, but businesses can still pass their GET onto a nonprofit. Also, update: nonprofits still pay general excise tax on monies received from fundraising events because they are selling goods and services.

Registered nonprofits are exempt from paying GET on their business income. However, if that nonprofit contracts a business, then the nonprofit may be paying that business’ GET.

 

Example:

A church receives a $10,000 donation (that’s business income for them). The church is a registered nonprofit, meaning it’s GET-exempt, so they don’t pay any GET to the state for that donation.

Then the church hires me to build an online store for them for $10,000. I am for-profit and need to pay GET on my business income. I decide to pass the 4.712% GET onto the church as a surcharge. So, in the end, the church ends up paying me $10,471.20 ($10,000 base + GET surcharge). Then I put aside the $471.20 to pay to the state when time comes to pay my GET.

 

What is a wholesaler?

Wholesalers get a special GET rate of .5%.

What’s a wholesaler? Someone who sells goods in bulk to other businesses to sell for retail. An example would be an electronics company, who sell and deliver mass electronics to places like Best Buy, Radioshack, or Walmart. Wholesalers usually have smaller margins than retailers because they make money on large quantities of transactions, which is why the tax rate is lower for them.

If you’re selling to customers or end users, you are not a wholesaler.

Do rates change if you’re a sub-contractor?

If there are subcontractors involved, no there is not an endless tax on every subcontractor in the chain. Rather, the the sub-contractor working directly with the end customer(s) will be charged the full rate, while the transaction between the sub-contractor and contractor is at a lower rate of .5%.

Answer from  DAVID W RISTAU CPA‘s conversation:

Roland: “I am a contractor. I use subcontractors.The build in their 4.5% GET on their invoices to me. I do the same with my invoice to my client, including paying 4.5% GET on the amount of subcontractor cost built into my price. So the state is collecting at least twice (maybe more, since the subs buy materials from local businesses). No wonder the state is bankrupting local businesses.”

David Ristau: “If you’re being charged 4.5% by your subs, something is wrong in the preparation of your returns. The subs should be charging you 0.5% GE tax and you charge your end customer 4.5% and deduct the sub-contractors on your GE filings via Schedule GE to report the subs. State isn’t bankrupting businesses because of incorrectly prepared and filed GE forms…the small business is shooting itself in the foot by not seeking competent help in preparing the GE forms.”

 

Additional Reading

Big article right? If you have more questions, you might want to look at these articles:

Passing On Hawaii’s General Excise Tax Not Possible for Some by Lowell Kapala, Hawaii Reporter

Oahu County Surcharge FAQs by Hawaii Department of Taxation

FAQs by Hawaii Department of Taxation

General Excise Tax License Required for Business Activity by Fred Pablo, Hawaii Tax Director

Tax Facts 96-1: General Excise Tax vs Sales Tax by Hawaii Department of Taxation

Tax Facts 97-3: Starting a Business, Licenses and Taxes by Hawaii Department of Taxation

O’ahu stores can tax up to 4.712% by Greg Wiles

***

Disclaimer / Last Note: I am not a tax professional nor do I work for the Hawaii tax department. If you have more questions, look through the comments or call the State Tax Department.

294 Comments

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Patti Oct 23, 2018

We are a small mainland company doing business with a company in Hawaii. We have three small contracts. I know we owe GET on 2 of the three as we will be providing a deliverable to the Hawaii company. However, the first contract is for work that will be open and completed on the mainland…but paid for by the Hawaii company. Do we owe GET on this first contract?

Reply
David W Ristau CPA Oct 24, 2018

@Patti 10-23-18:
I presume your company registered for a GE license number and as an out of state vendor you are voluntarily reporting your sales to customers in Hawaii.

The 2 of 3 sales comment is not clear as to what “deliverable” is being delivered to Hawaii. For now I’ll assume four scenarios for the 2 of 3:

1. The 2 of 3 sales are tangible goods shipped as interstate retail sales. No GET is required to be collected on interstate sale of tangible goods and exclusion item # 08, item 132 is cited on Schedule GE to exclude the sales from HI GET tax.

2. The 2 of 3 sales are tangible goods shipped as interstate wholesale sales to a HI company with valid GE license. GET tax is charged at wholesale rate 0.5% and collected from licensed HI company and then included in your reported GE gross wholesale receipts and you pay GE wholesale tax on sales.

3. The 2 of 3 sales are tangible goods shipped as interstate wholesale sales to a HI company without a valid GE license. GET tax is not charged at wholesale rate 0.5% and is not collected from unlicensed HI company. Exclusion item #01, item #132 is cited on Schedule GE to exclude the wholesale sales from HI GET tax.

4. The 2 of 3 sales are services performed and delivered within Hawaii. GET (including Oahu surcharge, if applicable) is required to be paid by you and you may pass on the GET to your customer visibly shown on your invoice as a separate line item. It is not mandatory to pass on the GET to to your customer, however, if you do so, the GET tax collected is included in your gross receipts for the period and tax is computed on the gross receipt including collected GET tax paid by your customer. Note that this is different than typical mainland sales tax which excludes tax collected when computing sales tax to be paid to the state revenue office.

Item 1 of 3, the last item mentioned in your query: work that is open and completed on the mainland is included in your gross receipts as a revenue source and then excluded as interstate sale as service completed and delivered on the mainland. If the work is completed on the mainland and delivered to Hawaii, and your customer derives benefit from your work within Hawaii, then the work is not excludable from GET and is reported and GET tax paid on it as a service. Be sure to ask your preparer if the services are creating a nexus situation for your company and perhaps also causing an income tax return filing to be due in addition to GET returns.

Regards,
David W Ristau CPA

Reply
jim Oct 30, 2018

Hi David
i have a somewhat similar question.

We a mainland distributor quoting an item to a US Military contractor in HI. They will then supply this product to the US Military end user. Transaction value will be about $85K.

Would we be liable for GET? if so, is it the .5% i read about?

thanks!

Reply
David W Ristau CPA Oct 30, 2018

@jim: As I read your post, you are a mainland company, with no Hawaii presence, shipping to a Hawaii distributor.
Classic interstate sale not subject to GET in Hawaii or sales tax in your state.
If you’re registered with HI DOT and have GE license, then you report your sale in wholesale section of form G-45, listing dollar amount in column A, then deduct entire amount in column B, citing out of state sale for entire amount on Schedule GE to exclude sale from tax.

Distributor in HI has obligation to report landed wholesale inventory cost and pay 0.5% tax on goods shipped into Hawaii AND may or may not have to collect GET from US Military and report it as sale to end user.

No, I don’t think you’re liable for any GET since you’re on mainland and selling to another intermediary located in Hawaii.

Reply
jim Oct 30, 2018

David-
thanks for your reply. That’s what I thought also.

However, it also looks like we become liable if we exceed $100K in HI sales/per year or 200 transactions.

Aloha! (Kalaheo alumni)

Alan Oct 20, 2018

Aloha, I started a handyman business in Hawaii. I purchase materials and then get reimbursed by the customer upon job completion. Do I charge GE tax on just the labor or do I charge it on materials also? Much Thanks!

Reply
David W Ristau CPA Oct 24, 2018

@Alan 10-20-2018: Materials and GET are handled one of two ways:

1. Material invoices you pay to vendor that show full retail GET tax rate (plus Oahu surcharge) can be passed on to your customer WITHOUT MARK-UP for reimbursement and are then excluded from your GET filing and reporting.

2. Material invoices you pay to vendor show wholesale or retail GET tax rate (plus Oahu surcharge) are marked up again by you to higher dollar amount, are included on your invoice to customer and you charge customer GET tax on your invoice amount for services AND materials.

If you choose to mark-up your materials when billing your customer, you should provide to your vendors completed HI DOT form G-17 and then your vendors will charge you wholesale GET tax on your purchases.

HI DOT form G-17 is found online here:

http://files.hawaii.gov/tax/forms/2016/g17.pdf

If you choose option #1, be sure your tax preparer EXCLUDES the reimbursed expense from your gorss receipts for GET purpose AND proovides you a copy of the reconciliation workpaper for your files for future reference.

Regards,
David W Ristau CPA

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Nan Oct 17, 2018

Do I have to pay GET on tips received from my customers? For example, I sell food to a customer for $25. I do not pass the GET to the customer. So my GET liability is 4%, or $1. But the customer includes a $5 tip on the credit card slip. Is my GET liability calculated on the total amount received, $30, for a total GET of $1.20?

Same question but let’s say I do pass the GET onto the customer. Food costs $25. I add 4.166% GET and charge the customer $26.04. The customer leaves a $5 tip. When I pay my GET to the state, what do I pay?

(I do not live/do business on Oahu.)

Reply
Nan Oct 24, 2018

An update to my own query! I was able to confirm with Hawaii Taxpayer Services that tips–when paid to the company– are subject to GET. Tips earned by individual servers are not subject to GET since the company will withhold payroll taxes on that money. But if tips are given to the company or, as in our case, the company is a partnership LLC where the owners do not get a salary, per se, those tips are subject to GET. Maybe this will assist someone else.

Reply
Maths Oct 9, 2018

Maths(?) behind the 4.712% tax, when GET is 4.5%.

B is business cost for an item
T is the tax rate the customer is charged
GET is the state’s GET tax rate

What is the tax, T, that businesses can charge so that they are able to get back business cost, B, and government gets their portion (ie. GET x what the customer pays).

Start with the equation below, then solve for T, and you’ll have the answer for any GET.

The background for this equation is that the left side is what the customer pays and the right side is what the business and government gets. And they got to be equal or else we got tax fraud :)

Customer = Business + Government
Bx(1+T) = B + Customer x GET
Bx(1+T) = B + (Bx(1+T))xGET

Solving for T:
Bx(1+T) = B+(Bx(1+T))xGET
1+T = 1+(1+T)xGET (Note: B no longer involved after dividing out B).
T=(1+T)xGET
T=GET+TxGET
T-TxGET=GET
T(1-GET)=GET
T=GET/(1-GET)
GET cannot equal 1. And if tax T needs to stay positive than GET should be > 0 and < 1.

If GET=4.5%=0.045, then T=.045/.955=.04712042 (Actual Oahu GET is slightly different)

And if GET=4%=0.04, then T=.04/.96=.0416667 (Actual neighbor island GET is slightly different)

Reply
Joe Oct 9, 2018

Note for the newbies like me. When filing paper BB-1 form. For the Taxpayer Legal Name. use the name format, LASTNAME, FIRSTNAME, MIDDLE name. I used FIRSTNAME MIDDLE LASTNAME format and got a business license with legal name MIDDLENAME LASTNAME FIRSTNAME. No where on the form or the instructions indicates the required format, I suppose it is just implied in the tax world.

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Peter Oct 9, 2018

Just got my GET license. Very informative and easy to understand. Mahalo for those involved with this site.

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Luis Alvarez Sep 27, 2018

If I am a small business owner that sells a service but also pay myself for some of the services, do I have to pay GET tax twice?

Reply
David W Ristau CPA Sep 27, 2018

@Luis Alvarez:

If your business is a sole proprietorship, only the business pays GET.

If your business is a LLC taxed as a corporation or partnership, or a corporation, the LLC/Corporation pays GET on services sold through the LLC/Corporation.

It’s highly unlikely you as an individual will be paid for your services by your company other than as W-2 wages or profit distributions, both of which are not subject to GE tax.

You own the small business, so as a shareholder or member-manager, you’re not being issued a 1099-MISC for non-employee services. Thus, you as an individual have no GET reportable income from your small business.

I suggest you speak with your tax preparer for detrailed explanations.

David W Ristau CPA

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Greg Aug 30, 2018

Aloha,

I’ve lived on Oahu for 15 years and have been employed by the same company for those 15 years. This company is domiciled in PA. I’m the only employee in Hawaii and I receive a salary. The company is a consulting firm and charges consulting fees.

I’m a computer tech guy and am not involved in the marketing process. My company does have a client in Hawaii who they do work for once in awhile. Is my company subject to the GET tax for the fees charged to that one client?

Reply
David W Ristau CPA Aug 30, 2018

@Greg from Oahu:
The short answer for GET is yes.
You are their employee on Oahu.
I will presume you “do the work for” the once in a while client.
Your company has nexus with Hawaii due to you being paid wages for work performed within Hawaii.
Nexus creates obligation to collect and pay GE tax.
None of this discussion affects you as their employee since GE isn’t paid for wages received.
I suggest the company talk to its CPA for further guidance.

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Tim Aug 27, 2018

We are an Illinois company. We sold to a company in Hawaii who are also based in Illinois. They are telling us they are exempt in Hawaii but do not have a Hawaii registration number on their multijurisdiction resale certificate. Can they use another state’s registration number for Hawaii?

Reply
David W Ristau CPA Aug 27, 2018

@Tim:
Your sale is an interstate sale by your company.
You have no presence in Hawaii and are not registered for GE tax.
The GE tax is on you, the seller, not your customer.
That said, you’re not registered and you’re sending an interstate sale.
NO TAX OBLIGATION for you to HI.

Reply
Flor Colin Nov 29, 2018

David W Ristau CPA

Would you please let me know the state tax section that specifically talks about interstate sale?

Reply
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Reply
808 Aug 1, 2018

Aloha Ron,

Thanks for all the great info. I own a small tour company and collect GE Tax during the booking process. My question is: Say I collect $70 for a snorkel tour…..$35 of that goes direct to the boat owner who takes the tour out. Do I pay GE taxes on the $70 or $35, considering that the boat owner is paying taxes on his $35 share of the sale? It seems if I am paying on the $70 and he is paying on his $35 we are getting double taxed. :/

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David W Ristau Aug 12, 2018

@808:
If you collect $70 for the snorkel tour WITHOUT showing GE tax as separate line item on customer receipt, then you pay GET on entire amount charged. Doesn’t matter what you pay the boat owner.

However, if boat owner is smart, he/she sends you an invoice for $35 plus 0.5% GE tax as they are a sub-contracted service provider to you that you are charging end customer in full for all services.

At all times you pay GE tax on the full $70 and if boat owner is smart he/she files and pays only the wholesale GE tax rate.

OR:

If boat owner charges you the $35.00 and boat owner pays 4.0/4/5% GE tax, charges and displays it on the boat owner invoice to you and you pass on that exact charge to your customer WITHOUT MARK-UP, then you exclude the boat owner invoice from your gross receipts because it is an expense reimbursement passed on without mark-up, solely reimbursed from you to boat owner. AND you do NOT include the dollars in GE gross receipts amounts you receive that are reimbursed without mark-up.

Which means you report only $35 plus GE tax charged to your customer and displayed on your receipt to your customer.

If boat owner fails to display GE tax as separate line item on the invoice to you, then you pay GE on total $70 and boat owner pays on his/her $35 and state gets almost double tax revenue.

Look at the past 3 years transactions that you reported for GE tax. You may have a refund coming if reimbursed expenses were passed on correctly yet mistakenly included in your gross receipts reported and tax paid.

Remember that if you charged your customer GE on the whole $70 and it was displayed on the customer receipt on the whole $70, then you are obligated to pay to the state the full tax you collected, despite the fact boat owner was actually a reimbursed expense without mark-up. You don’t get to keep the tax you incorrectly collected.

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Reply
Kathy Jul 16, 2018

Hi – we live on the mainland, own condo on Maui that we rent out when we are not on the island. Previously we managed everything on our own. When on the island last February we hired a management company.
Am I correct to understand that now instead of paying both transient and general excise taxes, we now will pay just general excise tax on the monies received from the management company? If that is correct, on the G-45 tax form, are the monies still to be listed under Transient Accommodation Rentals (#13 on form)?

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David W Ristau CPA Jul 21, 2018

@Kathy: NO, Absolutely NO. If your unit is a vacation rental unit you will continue to pay GE and TA taxes same as before when you self-managed. Primary exception that may occur is if you rent the property long-term for 6 months and a day. Then the property is not required to pay TA tax for the rental income.
Assuming you’re continuing short-term rental, then noting changes for reporting on G-45 and G-49 (You list as TA rent, deduct TA tax received and pay GE tax on net gross receipts and include schedule GE to support the TA tax deduction in column B of G-45 and G-49).
If you’re changing to long-term rental, you report the rental as “Other rentals” (line below Transient Accomodation rentals).
You continue to file your TA returns, even if the amount is zero, as long as the account is open.

You didn’t state where your source of mis-information came from re rents received from rental agent, however, it was dead wrong for short-term/vacation rental properties.

David W Ristau CPA

Reply
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Reply
Dylan Jul 13, 2018

Hi Ron, thanks for the useful information.

I noticed an error in the following statement: “Paying 4.5% tax on the 4.5% tax actually equals 4.7025%, but the state allows you to round up a bit and you end up with a GET rate of 4.712% of the sale amount of that plate lunch.”

The state doesn’t allow you to “round up a bit” — the reason it’s 4.712% instead of 4.7025% is because paying 4.5% tax on the 4.5% tax on the 4.5% tax equals 4.712%. Going any further doesn’t increase it beyond that.

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Ryan Jul 8, 2018

Hi Ron,

So from 2012-2015 we sold products to the Hawaii judiciary via a contract award. Product shipped from mainland directly to the end user in the islands. We did 2 training in Hawaii over the 3 years of the contact. No other presence in Hawaii. Also, we did start reporting income tax in Hawaii in 2015 per the advice of our accountant. In 2015 we were given a Hawaiian tax ID number for this income tax. Are we subject to Nexus for that time period and do we owe GET at 4 or 4.5%?

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David W Ristau CPA Jul 21, 2018

@Ryan: 2012-2015 no GE license or account for your company per your posting. Products shipped into Hawaii from outside Hawaii by your company during that time as non-registered for GE seller. Product shipments as interstate sales normally would not be subject to GE tax payable by your company since you didn’t have a GE license at the time the shipments were made.

However, I think that argument fails and you have may have nexus for some or all of that time due to training taught on-island in Hawaii, depending on the length of time of the presence of the teachers and any other services provided within Hawaii. Your post doesn’t have details as to time in Hawaii.

2012-2015 training courses taught and delivered in person on island(s) within state of Hawaii. GE tax owed for the service income earned for the training courses. May have to allocate part of your contract income to the training as it is part of overall contract income.

Tax rate depends on where the services were delivered. Island of Oahu, 4.5%; all other islands 4.0% GET.

2012-2015 INCOME earned from within state of Hawaii is subject to HI filing requirements for income tax return via N-20,N-30 or N-35, allocating income and expenses to amounts related to Hawaii.

Question for your accountant is: why weren’t Hawaii
income tax returns filed for years 2012 through 2015? Must be a good answer, in writing, for you, yes?

I suggest you contact HI Dept. of Taxation for complete answer, using all of your facts and circumstances, to determine if GE tax is owed and if your GE license application needs to be amended to earlier date.

David W Ristau CPA

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Ryan Fitzsimons Aug 6, 2018

Thank you for your response David. So I’m in the thick of it now w/the Hawaii Department of Taxation. They’ve told me, in writing: “If you TRAVELED to Hawaii on business or provided SERVICES, the you are considered doing business or have presence in Hawaii (Nexus). Thus you are required to apply and pay all applicable GET taxes and corporate income taxes.”
They used the capital letters, not me. It’s looking now like I will owe the 4-4.5% tax, plus 25% penalties on the total, plus accruing interest at about 8% a year. On top of that is a debatable willful neglect fee of $2500 per year since 2012. I’m looking at about 60K of of back taxes/fees/interest.

Also, unfortunately, they want all of the N20s…which I don’t have for 2012-2015. The 2 accountants that did the returns at the time have retired. So I have to ask them to redo that portion of the taxes to generate those N20s, or have someone new redo our entire returns! What a mess. I really feel like our accountant should have caught this.

On top of all of this, the state is withholding payments that are due to me and will not remove the “non compliant” status until this is fully resolved and paid off.

Reply
Ryan Fitzsimons Aug 6, 2018

Sorry, I see you asked about time in Hawaii. I’d say an average of 2 weeks per year. From what I’ve gathered, even one day on any island for business is enough to trigger nexus for the entire time of doing business.

Reply
David W Ristau Aug 12, 2018

@Ron Fitzimmons:
If you traveled to Hawaii, you did not immediately create a Nexus situation, and HI DOT knows that. One day turn around does not create a nexus scenario. Even two weeks can be a situation of no nexus. Training courses that you supervise and hire people to teach or teach yourself definitely create nexus for your company. The service is provided in person, on site, in Hawaii.
This applies to GE tax AND income tax allocations.

The “willful neglect” argument is absurd for incidental sales to Hawaii by an out of state company not specialized in HI GET law.

You contacted them, albeit a long time after the fact, PRIOR to them contacting you, regarding the situation and asking for their help. DON’T be intimidated by them.

The N-20s can be prepared from your records, and, yes, should be prepared and filed.
For all they or you know, the business in Hawaii may have operated at a loss and you owe zero tax or penalties on income allocated to HI.

As to the GE tax owed for time PRIOR to your registration, I’d argue that it is uncollectible due to status as unregistered shipper to Hawaii.

Further discussion of these items should be with your current CPA, if they are skilled in Hawaii GE and income tax law, or with someone as myself who is competent in these tax laws.

Please contact me directly via email rather than continued discussion on this blog.

Susan Jun 9, 2018

Ron,
Mahalo for such a clear and informative discussion of the GET. It’s useful not only for small business owners but also for consumers like myself. I now finally understand the difference between the GET and a sales tax. I now understand that when it appears on an invoice it is really akin to an itemization. In a sense I, the customer, always get charged for GET because GET is always paid out of funds I provide, whether it’s visible on the sales receipt (or invoice) or not. And I now understand why some companies will not ship to Hawaii no matter what. Or they charge an extra hefty fee. You can blame it all on the GET.

Reply
David W Ristau CPA Jul 21, 2018

@Susan June 9: If GE tax is 4 or 4.5 % and most states on mainland with sales tax charges have rates of 5% to 10.25%, how is it that “hefty fee” is GE tax?

I experience higher prices here in Hawaii due to shipping costs incurred for sending items to Hawaii via airplane or ship…however, having moved from Chicago area, the sales/GE tax rate dropped 61% for me from 10.25% to 4.0% on Maui…

I love the GE tax rate versus IL sales tax rate.

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Joy Jun 5, 2018

Hello,
I’m an individual contractor and I have an LLC filing GE tax, personally I don’t get any W2 like regular employees have. At the end of the year, the LLC company will issue Schedule K so me and my partner can file it in our own personal income tax, in this case, will you get a credit for earning retirement credits?

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David W Ristau Jun 6, 2018

@Joy: Your question isn’t a GE tax question and best answered privately with your tax preparer. Alternatively, you can email me with contact info for yourself so I can answer your non-GET questions.
My email address is david@integercompany.com.

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Andrea May 26, 2018

I am working as an independent contractor for a company in California. I am a resident of Hawaii. Do i need to charge them the GET and apply for a GET license?
Thanks

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David W Ristau CPA May 26, 2018

@Andrea: As an independent contractor, you are required to apply for a GET license. For interstate services performed and delivered outside of Hawaii, you do not charge your client for GET. Rather, you report the gross receipt income for your business and then use Schedule GE to properly exclude the interstate services from GE tax. If you own your own LLC or corporation, be sure to register the GE license in the firm’s name, not you individually.
A reminder to you that any services you provide to customers within Hawaii are subject to GE tax and if delivered on Oahu, also subject to Oahu surtax on retail services.

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Andrea May 29, 2018

Hi David,

After re-reading your first response, I can exclude services performed for a company located on the mainland on the GE form? All services performed are not related to any business in Hawaii or for anyone in Hawaii. I am just physically here.
Thanks again for your help!

Reply
David W Ristau CPA May 29, 2018

@Andrea, reply #3: I believe the issues for determining GE tax on your service income are:
a) where are the services consumed AND b) are the services otherwise subject to tax at the highest rate (retail).

HRS 237-29.53 governs “Exemption for contracting or services exported out of state”, which is what you rely upon for answering the “do I or don’t I have to pay GE tax on my service business” question.

As you’ve described in your post, ALL (my emphasis added) services are delivered to a company at its location in California. Therefore:
Test #1 is satisfied for your services to the company due to delivery and consumption out of state of Hawaii.
Test # 2 is whether or not your services to the California company would be taxed at highest rate (retail) if the service was provided to a similar company located in the state of Hawaii. Again, the answer, based on your narrative is yes, the California company is the end purchaser of your services, and would be subject to highest rate of GE tax on service received.

Because both tests are answered “yes”, the gross receipt you receive from the California company is exempt from Hawaii GE tax.

You still need to have a valid GE license, (available online for one-time $20 fee) and you are required to file periodic form G-45 with Schedule GE to claim the exemption citing Out of State Sales (237-29.5(1)) sale activity code P209 and ED code 132 in appropriate boxes on Schedule GE, Part I. If you file online, both of these are dropdown lists to click and then enter the excluded dollar amount.

Total exemption claimed on Schedule GE must equal total exemption amount claimed on form G-45 column “B”.

As long as all of your service sales are to California, the exemption amount is equal to your gross receipts, resulting in $-0- taxable receipts. At year end you also must file annual reconciliation form G-49 to summarize the year’s receipts, exemptions and taxes paid

Reminder that returns are prepared on cash basis, same as your personal income tax returns, with cash receipt date being day you received payment from the California company.

IF you sell and deliver the same type of services within the state of Hawaii, you will have to allocate the in-state receipts and pay GE tax on the gross receipt delivered in Hawaii.

This a detailed explanation and I hope it answers your questions. If not, please post again.

Best Regards,
David Ristau CPA

Reply
Andrea May 26, 2018

Thanks for the reply, ron.
The company in California is the only company i ever have or ever will work for as a 1099. Is there any other way other than applying for a GET license? It’s doing admin work and remote training of employees.

Reply
David W Ristau CPA May 26, 2018

@Andrea #2: My name is David Ristau, not Ron. I am a CPA. Ron has allowed me to answer queries on this site.
The only alternative to your situation is to work as an employee of the California company. Otherwise, as an independent contractor based in Hawaii you are required to have a GE license and report the gross receipts of your independent business.

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Parsh May 15, 2018

Aloha Ron,

Looking for advise on late filing of GET for two years worth real state rental. Should I use G-45 to cover past two years and 2018.

Thanks in advance.

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David W Ristau CPA May 26, 2018

@Parsh: Use annual reconciliation form G-49 to report prior years’ late GE taxes. Use G-45 for year 2018. Register online and file and pay your taxes electronically rather than paper filings… HI DOT takes a long time to process paper returns and payments and electronic filing and payment ensures your account is updated within hours instead of months.

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Clifford May 12, 2018

I have a rental condo for which I do pay GET for gross rents received. When I do sell the condo, do I have to pay GET on the gross sales amount?

Thanks.

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David W Ristau CPA May 13, 2018

@clifford: Short answer: NO, you do not pay GET on sale of your investment condo. You only report and pay GET/TAT on the rental income received.

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Peter Apr 29, 2018

Thanks for the great information!

I’m an independent contractor and just filed my G-45, but when trying to file my G-49 form, I end up being charged the same amount. Shouldn’t the G-49 be for reconciliation only and not require additional payments (if no changes)?
Not sure why I have to pay double, but I’m sure I’m doing something wrong so any insight would be greatly appreciated!

Thanks,
Peter

Reply
David W Ristau CPA May 7, 2018

@Peter: You need to list the G-45 payment on the G-49 form. Read the G-49 form carefully….you won’t double pay if you enter the G-45 payment on the G-49 form.

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Peter May 7, 2018

Thanks Gary! Was an oversight on my part, and I’ve now filed it correctly. Appreciate the help!

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roland Apr 6, 2018

I am a contractor. I use subcontractors.

The build in their 4.5% GET on their invoices to me. I do the same with my invoice to my client, including paying 4.5% GET on the amount of subcontractor cost built into my price. So the state is collecting at least twice (maybe more, since the subs buy materials from local businesses). No wonder the state is bankrupting local businesses.

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David W Ristau CPA May 7, 2018

@Roland: If you’re being charged 4.5% by your subs, something is wrong in the preparation of your returns. The subs should be charging you 0.5% GE tax and you charge your end customer 4.5% and deduct the sub-contractors on your GE filings via Schedule GE to report the subs. State isn’t bankrupting businesses because of incorrectly prepared and filed GE forms…the small business is shooting itself in the foot by not seeking competent help in preparing the GE forms.

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gpc Mar 18, 2018

If someone sells a business for $50k with $20k for assets ($10k fully depreciated), $25k for goodwill, and $3k for consulting and $2k for a non-compete, what of these amounts are subject to GE tax and what line on the G-45 is it reported on? Thanks

Reply
David W Ristau CPA May 7, 2018

@Peter: You need to list the G-45 payment on the G-49 form. Read the G-49 form carefully….you won’t double pay if you enter the G-45 payment on the G-49 form.

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tammy Aug 21, 2018

I have done the same thing now that Hawaii changed to this new site from the old one. Before, for many, many years, I only sent the vouchers, with no payment, then I sent the total amount due when the G-49 return was done. It is confusing now if you use the online system. I have a credit, but don’t know WHERE to add the G-45 info when amending my G-49 return so that I can get the money back. Can some one tell me what line it is that this G-45 info should go on? Please help.

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David W Ristau Aug 21, 2018

@tammy:
The G-49 is the annual reconciliation.
Ideally, the gross receipts and subtractions will be the sum total of amounts you reported on your G-45 filings.

The entry screens for the annual G-49 are almost identical to the periodic G-45 entry screens except for annual payments entries.

I suggest you create a spreadsheet for yourself of your G-45 filings and payment information from each G-45 you filed for the year to calculate an annual sum total for each item.

You enter the total G-45 tax payment, G-45 penalty and G-45 interest payment sums online on the “Tax Summary” input page in following order:
“Amounts Assessed on Periodic Returns”:
Penalty-enter your total penalties paid on all of the G-45s.
Interest-enter your total interest paid on all of the G-45s.

“Total Payments Made Less Any Refunds Received for the Tax Year”: Enter the sum of total G-45 tax paid plus total penalties paid plus total interest paid.

If you have exactly matched your G-45 return totals then you don’t owe any additional money nor are you due a refund.

If you have a different number for gross receipts on your G-49 or different subtraction for exemption/deductions, then you will either owe additional tax with the G-49 or have a refund coming back to you.

You mentioned that you have a refund coming back to you.
Using the sum totals of the G-45s and payment info should match to the refund shown on the screen.

David W Ristau CPA

Reply
David W Ristau CPA May 7, 2018

@GPC: None of the items listed in your post are reportable items for GET purposes. All of them are income tax related items..

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Beth Feb 19, 2018

I sold a condo on Kauai in March of 2017 which I had a license for. I didn’t cancel the license. I now have purchased a condo on Molokai and wonder if I can use the same license in the new location.
Mahalo

Reply
David W Ristau CPA Feb 19, 2018

@Beth Kauai to Molokai condo change:
Your license is to you, not locations An active license remains active until cancelled by the taxpayer.
You may have noticed the “-01″ after your GE license number. That is a sub-account number for your primary license number.
Since you own only one condo and either manage yourself or one rental manager, then no need to complicate things with new sub-account number for new condo unit.
I highly recommend to my clients with multiple properties and multiple managers to assign different sub-accounts to the units or managers to prevent tax filing nightmares.
Each sub-account triggers a separate tax return filing requirement, so 2 units in 2 sub-accounts means 2 separate GE + TA(if ST rental) returns each filing cycle.
Best Regards,
David W Ristau CPA

Reply
Melissa Feb 17, 2018

Hi Ron and David,
I am a new small business and am learning a lot, thank you for the informational article and the responses the the questions below.
My question is regarding the “reimbursements example”. My business is in direct sales, when I purchase the goods from corporate I purchase the item at retail, $13, and they charge me 4% tax (I’m on big island). From this purchase I earn 25% commission $3.25. The item I purchased at $13, I turn around and sell it to my customer at $13. My question is, do I need to pay GET to the state for selling it at the same price I purchased it at? I am submitting my $3.25 commission to the state and paying the GET on that “income” right?

Reply
David W Ristau CPA Feb 19, 2018

@Melissa 02-17-2018: As I read your post, it appears your corporate seller is collecting and reporting retail GET on sale to you, or to your customer on your behalf.
Who is receiving client’s payment: you or corporate?

If payment is to you, then report the gross receipt and claim deduction for passed on expense reimbursement without mark-up.
ANY sale you make with a changed invoice amount (mark-up) results in the entire sale subject to retail GE tax even though it’s been charged and paid once already.

Your commission is reported on separate line of G-45 and taxed as retail commission received.

If payment is direct from client to corporate, then you do not report the invoiced amount for delivered purchase because corporate is invoicing, collecting and paying the tax on sale direct to your client. You still report your commission income on G-45.

If you are buying from your corporate seller, taking title to the purchased goods and then issuing your own invoice for sale to your customer, as described for the old (current example sales) sales, I believe you should file Form G-17 with your corporate seller and declare the sale to you as a wholesale, rather than a retail sale.
You then invoice your customer for whatever sales price amount you choose plus applicable GE tax you choose to pass on to your customer. Reminder to you that GET is a tax on the seller, not the buyer and not necessarily passed on to the customer.

Here is link to HI DOT current form G-17 certificate:

http://files.hawaii.gov/tax/forms/2016/g17.pdf

It’s a fill and print form. You complete and give signed copy to corporate and you keep a copy in your files.

Best Regards,
David W Ristau CPA

Reply
David W Ristau CPA Feb 23, 2018

@Melissa: Reimbursed invoices passed through to the customer are not included on GE tax form as long as you do not add any additional fee to the expense reimbursement request. In your example, you purchased retail at $13 and paid retail GET on the purchase, passing on the expense to your customer at exact same amount paid. This is excluded from GE tax form, both as reported gross receipt and deduction.

You do pay GE tax on the commission income you received.

If you purchase from corporate and then mark up the sales price to your customer you will pay GE tax on the full sale price to your customer even though you already paid retail GE tax when purchased from corporate.

If it is your intention to mark up the items purchased from corporate or any other vendor, you should file form G-17 Resale Certificate for Goods General Form 1 with your vendor so that instead of paying 4% GE to your vendor you pay 0.5% GE on your wholesale purchases.

G-17 is available at files.hawaii.gov/tax/forms/2016/g17.pdf

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Steven Jan 31, 2018

After pouring through pages of Hawaii tax law it was really nice to find this helpful site. I’ve done my best to answer my question by reading all the posts on this site but I hope I can get some clarification.

I am a mainland contractor who provides contract marketing research and management services to marketing research firms. I have a contract with a Hawaiian marketing research company for my services on an hourly basis.

They have advised me that I am required to obtain a GET license and pay GET taxes on my billings. Their product is marketing research reports in electronic and possibly paper formats and their customers are all over the world.

I will have limited or no physical presence in the state. Our agreement has no provision for passing the tax through to them.

Are they correct? I’m going to have to pay a 4.712% tax on every hour I bill? Their office is quite near the Ala Wai Harbor which, I think, has a surcharge.

Reply
David W Ristau CPA Feb 1, 2018

@Steven:
You’re on the mainland.
Your work is performed on the mainland.
Your client is in Hawaii and receives your work product and invoices from the mainland.
If all 3 of the above are true, then you do not need a GE license and you do not charge your client GE tax.
Hawaii GE tax is a gross receipts tax on the seller, not sales tax charged to a purchaser as is most sales tax on the mainland.
Contact me via my email address if there are more factors to consider than 3 listed in this answer.
With aloha,
David W Ristau CPA

Reply
Steven Feb 1, 2018

Thank you David! Very clear. I’ll forward your reply to my client and we’ll see what develops.

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Noel Feb 25, 2018

Hello David,

My question is similar to Steven’s, however, slight difference, my work is remote computer services to Hawaii clients, although I am on the mainland.

Would I still meet the exemption of GE Tax or no?

1. You’re on the mainland. YES
2. Your work is performed on the mainland. YES
3. Your client is in Hawaii and receives your work product (services) and invoices from the mainland. YES, remotely

aloha Noel

Reply
David W Ristau CPA Feb 25, 2018

@Noel: As long as you aren’t registered with HI Dept of Taxation for a GE license, you have no obligation to pay GE tax on services you deliver to Hawaiian clients as it is considered interstate commerce. Until Congress changes the laws for collecting sales tax (GE tax in Hawaii), as an out-of-state vendor with no nexus with Hawaii you can’t be forced to collect or pay GE tax on goods or services you deliver to Hawaii that are produced out of state.
Sort answer:
YES you meet the eemption of GE tax as long as you do not register for a license number with State of Hawaii.
And no customer can force you to register, either…
Regards,
David W Ristau CPA

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Noel Feb 25, 2018

Thank you David for your reply.

I appreciate your response.

Aloha Noel

Steven Jan 31, 2018

Hi Ron,

I am considering to hire a freelance business consultant located on Hawaii. My business is based in France. Do I have to expect GET added to the bill and if so is there any way for my business to claim the tax back?

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David W Ristau May 29, 2018

@Steven in France: Your business is located in France. Definitely an out of state business from Hawaii.
NO, you do not pay GE tax on payments to your Hawaii based business consultant.
If the consultant mistakenly charges you GE tax, my suggestion is to pay the sub-total before GE tax visibly shown on the invoice and send your consultant a note to remove from all future invoices and look up HRS 237-29.53 regarding service sales delivered outside of Hawaii and how to exclude interstate service sale from tax via Schedule GE.

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Bob Jan 22, 2018

Aloha Ron,
I have a media buying business and my client hired me to buy TV and Radio. He spent $50,000 plus GET $2,356, he cut me a check for $52,356. I placed $50,000 worth of media on different TV stations and Radio stations. Each media outlet gives me an agency discount of 15% and that’s my profit. so in this case I booked $50,000 in gross media but was billed $42,500 plus GET $2,002.60 total expense to the media $44,502.60. I profited $7,853.40. At the time my business has to file my GET taxes would I only pay 4.712% on the $7,853.40 I made since $44,502 was “passed through” my firm. Or would I be double taxed meaning I paid the media 4.712% GET tax?

2nd question. If I hire a freelance consultant for a project with my client paying me $10,000 plus tax so I collect $10,471.20. I pay my freelancer $5,000 plus GET tax so I cut her a check for $5,235.60. Do I ow the state GET of $471.20 or $235.60 since I passed along $235.60 to the freelancer?

Mahalo for your help.

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David W Ristau CPA Jan 24, 2018

@Bob: Answering your 01-23-2018 questions:
Q1. The invoices from the TV and radio stations have to plainly display GET charged to you or your customer in order to be considered expense reimbursements. You then invoice your client plainly stating the TV and radio invoices are being reimbursed WITHOUT MARK-UP. You then invoice your client for $7,483.38 professional service and add $370.02 for GET on your service. If the TV and radio invoices do not display GET as a separate line item then you report the total gross you received from your client ($50,000) plus GET $2,356.

Q2. Ask your HI based freelance consultant for their GET number (or look them up on HI Dept of Taxation Website). If consultant has GET number, then you deduct payment to them on your GET return. Since you are billing your client for freelance work, freelance consultant bills you wholesale GET rate rather than retail professional services GET rate. GET charged by freelance consultant is based on freelance consultant’s island location (may not be on Oahu therefore not subject to Oahu surtax). At most GET for freelancer to you is 1%, NOT 4.712%. You in turn invoice your Oahu client for $10,000 plus GET $471.20. You also pay the full $471.20 because you are delivering the completed contract work to your client.

Hope this helps. Any additional questions please call me directly. I’m on Maui.

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elen Jan 21, 2018

Aloha Ron,
Mahalo Nui !!!!!
I have a small company that i didn’t make much with last year as i started working for a company and get a pay check from it every 2 weeks.
Do i have to pay GET of the pay check?
I am a photographer for the company but i don’t seel directly to the client or end user. They do.
I make a commission out of the sale and some tip.
Am I correct to conclude that i don’t need to pay GET of my “salary” / commission?
mahalo again!!!

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David W Ristau CPA Jan 22, 2018

@Elen: You don’t pay GE tax on your salary or wages.
You do pay GE tax on the “small company” gross receipts you received as a self-employed person prior to going to work for your employer.

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Cristi Dec 26, 2017

Hi Ron,
We live in WA and have a business license to do handyman things. If we do work while visiting HI for a few months do we need a license and then also need to pay GET?

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David W Ristau CPA Jan 16, 2018

@Cristi:
Assuming you want to follow the law, then, yes, you register for a GE license, yes, you charge for your services and add GE tax if you want your customer to pay it and yes, you file a GE tax return and pay the tax.

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Dave Dec 13, 2017

I turned in a leased car and they are charging me excise tax for the damage on the car. As I read the blog I questioned if they could do so legally since there is no sale taking place, it’s to compensate them for the loss of value. Am I correct?

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David W Ristau CPA Jan 16, 2018

@Dave:
Sounds to me that you’re being charged for the service of repairing the vehicle to original condition and GE tax owed on the repair is being passed on to you to pay. Since you caused the damage, you pay the repair bill, including GE tax on the repair invoice.

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Sandy Nov 13, 2017

Aloha, If a Hawaii business hires a Hawaii attorney and uses their services to buy a property out of state, are those services subject to Hawaii GET?

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David W Ristau CPA Nov 19, 2017

@Sandy: From your comment, it appears the legal service is being performed within Hawaii for a Hawaii based business. Since the service is performed in Hawaii, the service is subject to Hawaii GET tax on service delivered in Hawaii.
David W Ristau CPA

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Elaine Pope Oct 12, 2017

Hi, I would like to share my experience with you guys on how I got a loan to pay the duty tax of my bank draft and to start up a new business. I was at the verge of loosing all my belongings due to the bank draft I took to offset some bills and some personal needs. I became so desperate and began to seek for funds at all means. Luckily for me I heard a colleague of mine talking about this company, I got interested. Although I was scared of being scammed, I was compelled by my situation and then I began to look online and ran into their email at: (r_nelsonfinanceltd@yahoo.com ) where I was given a loan within 72hrs without knowing what it feels like to be scammed. So I promised myself that I was going to make this known to as many that are in financial stress to contact them and not fall victim of online scam in the name of getting a loan.

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John Oct 9, 2017

Aloha Ron,
I am a Hawaii resident and have been for over 7 years. If I were to take a lump sum payment from a pension I earned 20 plus years ago in CA, is this considered income today and will I be expected to pay GET on the distribution? If so, will the GET be based on the total amount of the pension, or just the amount I receive (after withholding 25% for Federal taxes) Mahalo.

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David W Ristau CPA Oct 9, 2017

Aloha John,
You don’t pay GE tax on pension income, regardless of state of origin.
However, the pension may be exempt from Hawaii tax if it was an employer funded plan and not a 401-k or 403-b employee contribution plan via salary reduction.
If you contributed to the plan and there is an employer match to your contribution, the employer’s matching contribution is exempt from Hawaii income tax.
You’ll need to trace the contributions to the pension plan to determine what portion, if any, of your lump sum distribution is non-deductible.

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Matt Oct 10, 2017

I am a washington resident about to buy a large catamaran in Oahu. If correct, I will pay no sales tax on the purchase, neither will the seller, but the broker will have to pay 4.5% GE on his commision. Is that right? and can he charge me for his GE tax? or the seller for that matter? Also, can an out of state person license the boat in Hawaii and keep it there? If so, do you know of any taxes due to me if I do that. Boat Tabs, use taxes? we get charged for use tax w current yacht in Wa. Thanks

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David W Ristau CPA Oct 10, 2017

To Matt from Washington:
Your post isn’t clear as to where the boat will be delivered upon sale.

If the boat is delivered in Oahu, the GE tax is 4.5% on the purchase price.

The seller has the obligation to report the sale and pay the tax on the transaction, not you as the buyer.

If the invoice does not show the GE tax on the purchase price as a separate line item on the invoice, then the tax has not been visibly passed on in the transaction and you pay only the invoice amount to your seller.

If the sales invoice includes GE tax as a separate line item, then the seller has visibly passed on to you the GE tax on the transaction and will collect purchase price plus GE tax shown on the invoice. Seller is allowed to collect 4.712% GE tax for a sale in Oahu.

The broker is responsible for his own GE tax payment on his commission income. He may also pass on visibly his GE tax owed on his invoice to the seller of the boat for broker services rendered and delivered in Oahu. (I am presuming there is not a buyer broker).

If you are paying a broker as buyer, the same rule applies: your buyer broker may pass on visibly to you as a separate line item 4.712% for a sale delivered in Oahu.

Licensing your boat in Hawaii is a separate issue and I suggest you contact the Division of Boating and Ocean Recreation here:
http://dlnr.hawaii.gov/dobor/vessel-registration-fees/

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J.C. Oct 18, 2017

HI, I’ve come across your website and hope this is the place to ask my question. Good blog, BTW.
I’ve moved to another state but I send items to Hawai`i. I have a HI GET License since 70s, and I pay HI GET quarterly. Do I file HI Individual State Taxes because I have income from Hawai`i even though I live out of state? Do I show this income in the state I live in, as well?

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David W Ristau CPA Nov 21, 2017

@J.C. regarding income tax return filing with State of Hawaii:
The short answer is yes, you should file an income tax return to Hawaii for the income earned from sales to Hawaii reported on GE tax returns. You will also allocate expenses to the Hawaii sales to determine net income from Hawaii sales. Any income tax you pay to Hawaii will be shown on tax credit computation for the state you reside in and pay tax as a resident of that state. I suggest you contact a competent tax preparer, most likely a CPA or EA to help you with the required computations and filings.

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Moana Jul 30, 2017

Thank you for the information about how to cancel a license. I had emailed the tax office asking how to cancel, but, not unsurprisingly, did not receive a reply from them.

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vance Jul 11, 2017

Do we owe GET on goods or services from international vendors? Correct me if I am wrong, but it should not matter if the vendor is international or in another state. If the vendor does not have a GE License in Hawaii we still owe GET for services provided?

example: Magazine printing production services in the Philippines?

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David W Ristau CPA Oct 4, 2017

Vance:
GE tax is computed on taxable gross receipts.
However, you may owe use tax on the landed value of the printed materials that stay within Hawaii.
Your post isn’t clear as to where the printed items are being delivered or if items are resold to wholesale buyers.

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john D'souza Mar 19, 2017

Your article is extremely well-written. This is great informational content from my point of view. You also make many valid points with compelling, unique content.

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Belinda Pate Mar 8, 2017

RON, where have you been all my life?? Seriously, it’s people like you that make the word go round. You do NOT have to do any of this.
Ok, so I read and read and read. I ALMOST found my answer. So close! Here is the question: I have an S corporation as an RN in California ( I provide Botox injections). I want to give Botox parties in Hawaii. If I make myself an independent contractor and give myself a 1099 for the work in HI ( yes, my own hours and own supplies), for those brief times I give nursing services (i.e. Botox) in HI, do I pay local taxes? (yes, I wil be legal as I will have my Hawaii Nurse Practitioner license). This one may just be the most confusing of all!

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David W Ristau CPA Oct 3, 2017

Belinda Pate: The nursing services delivered to (provided to) patients within the state of Hawaii while you are physically present in Hawaii delivering those services are subject to GET at either 4.0% tax rate or 4.5% tax rate if on Oahu.
Separate issue for you is attempting to treat yourself as an independent contractor for a corporation that you are the sole corporate shareholder. Not allowed for tax purposes.

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Georgia LP Mar 7, 2017

I was hired as a independent contractor at a grooming salon/doggy daycare. My earnings with the company came to a total of $2,600. I am a military spouse as well. Am I still required to pay taxes on these earnings?

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David W Ristau CPA Oct 3, 2017

Georgia LP:
If you invoice the grooming service for your services as an independent contractor you pay wholesale GET rate 0.5%. If you live on Oahu, you also pay surcharge 0.5%, for a total of 1%. You should consider adding this as tax passed on and state it separately on your invoices to the grooming service.

If you invoice the pet owner directly, rather than the grooming service, you pay retail GET rate 4.0%. If you live on Oahu you also pay surcharge 0.5% fora total of 4.5%.

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Mel Feb 23, 2017

Hi Ron. I need a lot of help. If you can help me or refer me to someone who can help me, that would be great. I’ve started an online business where I sell children’s apparel. Some of my items are handmade and some are bought wholesale, then sold. I need help on deductions, exemptions, etc. Most of my customers are out of state, am I supposed to pay GET for out of state sales? Or just the sales that are made in Hawaii? I am also very clueless when it comes to inputting information for my quarterly G45. Please get back to me or please refer me to someone who can help me. I need it. Thank you.

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David W Ristau CPA Oct 3, 2017

Mel,
You do not pay GET for items delivered out of state of Hawaii.
If your online business is a retail business, then you pay 4% for sales delivered on all islands except Oahu. Oahu delivered sales you pay 4.5%.
I can prepare your GE tax returns. Please contact me in Lahaina.

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Indi walter Dec 29, 2016

Hi!

I had a question. I own a small online business that I run independently. I am still a resident of Hawaii (I have not finished becoming a resident of Nebraska), however I do not live in the state, nor have I sold anything in Hawaii since I started my business. Do I still need to pay the GE tax?

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David W Ristau CPA Oct 3, 2017

Indi Walter:
Your comment doesn’t mention whether or not you have a Hawaii GE license.
If you do not have a Hawaii GE license, then you do not file a GE tax return since you have no sales in the state of Hawaii to report.
However, if you have a Hawaii GE license, then as long as your Hawaii GE license is still open you are required to file all periodic GE tax returns, including annual reconciliation form.
GE tax is not a function of your status as resident or non-resident for income tax purposes.
With zero sales within Hawaii, there is no GE tax owed and you file returns reporting zero sales and zero tax owed.

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Michael D Ullman Dec 27, 2016

Hi Ron:
I will save you the history. I am a consultant who lives in Michigan and writes reports for a non-profit in Oahu. The reports themselves are for a federal grant where the non-profit is the recipient. I have no physical presence in Hawaii. I come there once a year to meet some people.

I haven’t been paying for several years – but now the HI Tax office says that I am required.

Before I pay the back taxes – I wanted to check to see what you had to say. I was once told by the tax office that because I didn’t have a physical presence, I was exempt.

Thank you
Michael

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Andy Oct 6, 2016

Hi, I am always confused by this. Do we need to pay GE Tax AND HI State Income Tax?

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Andy Sep 30, 2016

This was an enormously helpful article, Ron. Thank you so much for doing this. I just finished reading through all of the comments from the last 3 years too and there’s a bunch of great information in there as well. Do you still recommend the same CPA (www.windwardaccountant.com) for tax advice? Any business coaches or legal advisors you would recommend as well? Mahalu nui

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Joseph Williams Aug 27, 2016

Ron Aloha:

I am selling my used car to a friend. Do I have to charge her the GET or pay it myself.

I live on Kauai but am buying a car in Honolulu and having shipped over. Do I have to pay the Oahu GET which is higher than the Kauai GET?

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Ray Sep 28, 2016

Only if the seller chooses to charge you GE tax. If the seller has a store on Kauai then he can ship it there before you purchase it and he will only be allowed to Kauai’s GE tax rate.

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nena Aug 13, 2016

Hi
I am a clothing sales rep– i know i pay GE tax on all my commissions/income but do i also have to pay as a wholesaler? i m think no ut not sure? i wanna make sure I’m paying for everything so they don’t stick it to me later
mahalo for any input

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nena Aug 13, 2016

meaning so i log the sales and pay tax on that as well as commission?

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David W Ristau CPA Oct 4, 2017

To Nena:
Are you taking delivery of clothing products and reselling them to Hawaii vendors or retail customers?
Or is clothing manufacturer or out of state distributor invoicing and delivering the products directly to an end customer and you’re earning only a sales commission?
If you take delivery of the goods and then sell them, or if you are invoiced and the goods are drop-shipped and you invoice the customer for the goods drop-shipped directly to end purchasor, then you file and pay either wholesale or retail GE tax on your clothing sales as well as your non-employee sales commissions earned.

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Ray Sep 28, 2016

I’m in a similar situation. I do not pay GE tax on my commission if the the company I work for charges the customer GE tax. That is double taxation, assuming the employer pays the GE tax. If the clothing company doesn’t pay the GE tax then they must pay you the GE tax that applies to your commission or they are breaking the law by charging customers a tax they aren’t paying to the state. Also if you are an employee, not a 1099 contractor, then you don’t have to pay the GE tax unless you make tips. In which case you will only need to pay GE tax on the tips. Feel free to email me at Raytenks2@aol.com. I am not a CPA, just a Financial Planner, and all of this should be verified with a licensed tax specialist.

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Frans Simon van Leeuwen Feb 7, 2016

The 4.712% is a legal limit for visibly passing the 4.5% (for Oahu) GET (General Excise Tax) on to customers.

Essentially the 4.712% finds the amount over which 4.5% would pay for the whole GET amount, since it is calculated over the gross amount.

So for $10,000.00, the gross amount would be $10,471.20; and 4.5% of that is $471.20.

The same can be done for any rate by calculating backwards. Replace “GET” with the desired percentage to get the percentage to visibly pass on to the customer:
1 / ( 1/GET – 1/100)

Example: 1 / ( 1/4.5 – 1/100) = 4.71204188

Remember though, that 4.712% is the legal limit.

It would be interesting to know what the best way would be to calculate this for GET and TAT (Transient Accommodations Tax) and how to file it in an acceptable manner.

I would assume having a rental proceeds amount before GET and TAT (9.25%); and adding the visible GET and visible TAT (10.1928%) to it.

So for $10,000.00, the visible GET is $471.20, and the visible TAT is $1,019.28. Total: $11,490.48

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David W Ristau CPA Oct 4, 2017

To Frans:
Last total in your post, $11,490.48 is incorrect. Correct dollar amount is $11,396.20.

Explanation of the $11,396.20 total amount, using current G-45 tax form:

If the TA tax is visibly passed on as separate line item on the customer’s receipt, the rate in your example remains at 9.25% and is taxed on the $10,000 for TA tax owed $ 925.00.

There is no “tax on tax ” factor on the TA tax as in GE tax.

The $ 925 TA tax visibly passed on and collected is included in Gross receipts for GE tax purposes and GE gross receipts column A is $ 10,000.00 + $ 925.00 + $ 471.20 = $11,396.20.

Since the TA is visibly passed on as separate item on the customer’s invoice, a deduction for the TA tax is entered on Schedule GE, activity 13, “Transient Accommodations Rentals” Deduction “Taxes Passed On” , Amount $ 925.00.

This deduction is then entered on the G-45 return on Page 1, Part II, Transient Accommodation Rentals, Column B and deducted from GE gross receipts entered in Column A on same line to arrive at net GE gross receipts in column C, $11,396.20 – $925.00 = $ 10,471.20.

Total tax percentages collected in your example are 4.712% GE tax plus 9.25% TA tax equals 13.962% for Oahu.

Remember, to compute the total GE tax owed for Oahu, the same dollar amounts from form G-45 Page 1, Part II are also entered in Part IV columns to compute Oahu surcharge.

Page I Part II items are entered in Part VI on line “Part II Total tax” and GE tax is computed at 4% tax rate.

Completing your example:
Oahu surcharge Tax = $ 10,471.20 x 0.5% = $53.36
GE Tax at 4% = $ 10,471.20 x 4.0%= $418.85
$53.36+$418.85 = $472.21 tax paid with G-45 filing.

Remember, that in order for the TA tax to be allowed as a deduction for GE tax computation. the TA tax must be visibly stated as a separate line item on the customer receipt.

If the TA tax is not visibly stated as a separate line item, GE tax is computed in your example as follows:

Form G-45, Page 1, Part II, Transient Accommodation Rentals, Column A = $11,396.20
Form G-45, Page 1, Part II, Transient Accommodation Rentals, Column B = $ -0-
Form G-45, Page 1, Part II, Transient Accommodation Rentals, Column C = $11,396.20
Form G-45, Page 2, Schedule GE List Detail item 13 is not stated or claimed and exemption amount is left blank.

The remaining entries to form G-45:

Form G-45, Page 1, Part IV, Oahu Surcharge, Column A = $11,396.20
Form G-45, Page 1, Part IV, Oahu Surcharge, Column B = $ -0-
Form G-45, Page 1, Part IV, Oahu Surcharge, Column C = $11,396.20

Form G-45, Page 1, Part VI, line “Part II Total Tax” column (a) = $ 11,396.20
Form G-45, Page 1, Part VI, line “Part II Total Tax” column (b) = .04 (4%)
Form G-45, Page 1, Part VI, line “Part II Total Tax” column (c) = $ 455.85

Form G-45, Page 1, Part VI, line “Part IV Total Tax” column (a) = $ 11,396.20
Form G-45, Page 1, Part VI, line “Part IV Total Tax” column (b) = .005 (0.5%)
Form G-45, Page 1, Part VI, line “Part IV Total Tax” column (c) = $ 56.98

Form G-45, Page 1, Part VI, line “Total Taxes Due” column (c) = $455.85 + $56.98 = $512.83

GE tax increase is $40.62, the GE tax paid on the $925.00 TA tax not separately stated on customer invoice.

Thus, it is important to state the TA tax separately on the customer invoice and visibly pass it on to avoid paying GE tax on TA tax collected.

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MAK Feb 3, 2016

I know this article is from ages ago, but I’m trying to wrap my head around this GE Tax issue for the first time and so far this has been the best resource I’ve seen.

I don’t think anybody asked this question yet:

Say you have a blog/website/YT channel/etc where you earn money from ads being shown. Let’s just say they are Google AdSense ads if we need a specific ad provider involved (not sure if we do).

Do you need to pay the HI GE tax on the income you get from google in this manner (which google gets from airing ads alongside your content)? I’m confused because technically the “use” of the ad is nearly exclusively happening outside of Hawaii, in terms of the people generating money by watching/clicking the ads and the companies themselves who are placing the ads.

Some help on that issue would be great.

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Micki Apr 14, 2016

Hi Mak – Just wondering if you got any answers? I have the same question as you about whether you need to pay GE taxes on income from google adsense.

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David W Ristau CPA Oct 4, 2017

To Mak + Micky:

Does Google Adsense or similar vendor provide you with a report as to location of where ad was “clicked on”?

If yes, I believe the click income from within Hawaii is subject to GE tax based on island location of the income and all other income is exempt from GE tax as interstate sale income.

If no report with location of clicks or revenue source, then it doesn’t seem possible to determine if any of the clicks are located in Hawaii and thus entire revenue stream is exempt from GE tax as interstate sale income.

It’s on you as the taxpayer to be able to show how you determined taxable vs non-taxable sales in the event of a tax audit.

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K Klosson Jan 27, 2016

Hi,

I am a Virginia-based LLC and I have a prospect customer in Hawaii – a police department. My product is software as a service. Nothing delivered or installed Hawaii anywhere. Will I pay GET?

Thanks!

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Anon Jan 22, 2016

I’m a web designer and web service provider and just found out about HRS §237-29.53(a) which can be used on SCHEDULE GE (FORM G-45/G-49) to claim “export exemption” for websites created and sold and website-related services that are used by my clients outside of Hawaii. To do so, I must send each client FORM G-61 at the close of the tax period**. The client signs and sends back FORM G-61 to me and I keep it on file. (In my case, there are two tax periods for which I must file FORM G-45: Jan 1 – Jun 30, and Jun 30 – Dec 31. Remember, G-49 is additional and for the purpose to reconcile, meaning that usually it involves no payment.)

At first glance, one may not recognize this fact, since SCHEDULE GE has a check box for “Out of State Sales (§237-29.5(1))”, and when you look this up it says for “tangible property”; however, just down from HRS 237-29.5 in the statutes is 237-29.53 which covers “Exemption for contracting or services exported out of State.” If you look at the bottom of SCHEDULE GE, Section II, you’ll see a spot for “Other” and “HRS§” – bingo.

**The instructions at the bottom of FORM G-61 say “This form must be a part of each order or contract of sale between the provider and purchaser, consumer, or user…”. Well, they obviously didn’t have web designers in mind here, because it would be ridiculous if I requested a form and signature with each invoice for technical support or maintenance service on a website. Multiply that by many ongoing clients and it would be totally impractical. I’m just going to send my clients one FORM G-61 prior to each periodic payment I make with G-45, which in my mind is consistent with the letter and spirit of the law, §237-29.5(1), which states, “…the seller or person rendering the contracting or services exported and resold, consumed, or used outside the State shall take from the customer, a certificate [FORM G-61] or an equivalent, in a form the department prescribes, certifying that the contracting or service purchased is to be otherwise resold, consumed, or used outside the State.”

Well, there you have it. As stated in the above article, Hawaii excise tax really amounts to a sales tax, with the burden of collecting the tax placed on the seller. I haven’t before, but I am now going to start adding “4% Hawaii Excise Tax” to my invoices.

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Anon Jan 22, 2016

CORRECTION:

Above I said, “I’m just going to send my clients one FORM G-61 prior to each periodic payment I make with G-45″. I meant to revise that to say: “I’m just going to send my clients one FORM G-61 at the close of each tax period.”

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Anon Jan 22, 2016

2nd CORRECTION:

Oh geez, sorry about this. Above I said, “the letter and spirit of the law, §237-29.5(1)”. That’s a typo – I meant “237-29.53(a)”. Ron, maybe you can make these edits to my comment… and thanks for writing this blog article which has been very helpful.

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Sarah Jan 15, 2016

I managed a condo from July 1 to Oct 2015 and collected the ge and tat taxes. Another company took over the condo in Nov and managed it from Nov and Dec 2015. Do we file 2 separate filings or should we file only one filing with one payment. The owner is v on semiannual payments.

Thanks
Ssrah

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Linda Rawson Oct 28, 2015

I have a business in Utah. I routinely buy and ship things to a government agency in Hawaii. Several times, but not all, I have been charged a GET of 4.5%. Can I get a physical address in Hawaii and apply for a re-sellers certificate to get out of this tax?

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sole proprietor Oct 15, 2015

Hi Ron

I will be getting a GET Lic. next week after 5 years of doing window cleaning side jobs, i didnt realize it was required so i will be paying a lot of back tax.

I have a client retail store that I been servicing for 2 years. Every year I have been sending them my w9 with my soc.sec# bcause im a sole proprietor.

They recently been hounding me for my GET lic. I told them everything they need from me is in the w9 form. I also been really busy picking up better paying clients so i had dropped them a few months ago.

They keep insisting that i send them my GET# even though i dont service them any more. No other company that i did work for asks me for my GET#. What do they need my GET for other then a feel good feeling that they are dealing with legitimate/compliant vendors? but like i said im not servicing them anymore so its not like I care about what they think of me anymore.

Are they being audited ?

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Blake Jul 11, 2015

Hi Ron, I’ve greatly appreciated this webpage – I’ve used it as an invaluable resource for my small side business as a handyman.

I’ve got a question:
On my invoices, I break down the charges for labor, and the receipts for materials. I don’t mark up for any of the materials, I just ask my customer to reimburse me for the actual cost. I add the GE tax for my labor charges only (so the customer isn’t paying GE tax twice on the materials).
SO – when I file my G-45, do I need to enter in my total income (which includes my materials reimbursement) or can I enter only my labor totals?

(If I enter my total income, then the amount of GE tax that I’m paying to the state is more than the amount that I’m charging my customer! – is that just the cost of doing business?)

Thanks again for maintaining your website!
Aloha!

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John Jul 9, 2015

Aloha Ron,
I have been a tax preparer in Pennsylvania for close to 30 years. I converted my business to a 100% paperless environment over the previous 4 years in anticipation of moving to Hawaii. During this past tax season (Jan. – April, 2015) I prepared approx. 200 tax returns. 195 of them were from Pennsylvania clients. The would scan there tax documents, email them to me, I would then prepare the tax return, file it electronically, email them a passworded copy of the return for their records, tthen they would either pay me by credit card or some of them mailed me a check. So, we have a client initiating business with me from Pennsylvania. They don’t have a physical presence in this state. I understand that I have to pay the GEt tax on the 5 Hawaii clients but I don’t believe I have to pay the GET tax on the out of state clients. Am I looking at this correctly?
Mahalo,
John

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Lisa Jul 6, 2015

Ron, thank you for making this so easy to understand! I’ve been browsing through the SBA website, HI’s Business Action Center, etc… and this is the best answer I’ve received. Thank you for helping starting business owners understand this and holding our hand.

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Joop Kaashoek Jun 22, 2015

Thanks for all the info. If you are a company in California, and have no physical presence in Hawaii and do some consulting work via the internet for a Hawaii company, you are not required to pay excise tax due to having no Hawaii nexus, is that correct?

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Joe Jun 21, 2015

Can anyone assist me with this? I have recently been designated as a property manager for one residence and the owner is an absentee military owner. I know that GET has to be paid on the property. Since I collect the rent checks, should I pay the GET for him or does he need to establish an electronic account to pay the tax himself. Upon his recent move to the mainland, he is no longer a Hawaii Resident. I would greatly appreciate any type of assistance with this. Of note, I intend to create my own property management company in six months from now so it may benefit me to start paying his GET now.

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David W Ristau CPA Oct 4, 2017

Taxpayer is required to have his own GE tax license and if it’s a short term rental property to also have his own TA tax account too.
You can prepare, file and pay the GE and TA taxes as a verified practitioner or agent electronically or paper on behalf of the taxpayer.
Taxpayer’s current state residency does not affect GE and TA filing and paying liability for the rental property located in Hawaii. The rental is located and delivered in Hawaii and the gross income is subject to GE tax and possibly TA tax.

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Eric Jun 11, 2015

Re: Reimbursements: if you paying for something on behalf of a client and there is no mark-up (meaning that you’re not profiting), then the amount is exempt from GET.

Question then… If I rent a house, I pay GET on gross income. The tenant damages the floor and the cost to repair is $1,000. I keep $1,000 of the security deposit to cover the repair. I then have an invoice from a contractor for exactly $1,000. (Why) Do I have to pay GET on this money as income? I understand that if I keep, say, $1,200 vs. a $1,000 repair, it would be.

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Ron Lum Jun 16, 2015

I can’t give a 100% accurate response bc I’ve never seen any definitive rule for GET on security deposits. However, general tax law suggests …

the security deposit is not considered “income” if you will be returning it to your tenant.

If there are damages, the deposit reimburses you (like your example). The reimbursement would include any GET your repairman puts on the bill.

The only way the security deposit is income to you is if your lease agreement states the deposit is the last month’s rent or if your tenant disappears and you get to keep the deposit.

http://www.irs.gov/taxtopics/tc414.html

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JUDY Jun 2, 2016

QUESTION: IF I BUY HONOLULU CONDO FOR RENT, BUT I AM NOT RESIDENT IN HI, DO I NEED TO PAY GE TAX ?
THANK YOU

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David W Ristau CPA Oct 4, 2017

To Judy:
Yes, you need to pay the GE tax and TA tax if the condo is a short term rental property.
You also need to file a Hawaii income tax return to report the Hawaii rental income and expenses for state tax purposes.
Consult with your tax preparer to ensure you report properly GE, TA and income tax purposes.

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November Apr 17, 2015

Are monies received for gratuity, or tips, treated just like a sale & subject to the normal GE tax obligation?

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Ron Lum Jun 16, 2015

If you’re a waiter at a restaurant, hotel staff, or regular bartender, then NO — you’re an employee and your gratuity and tips are part of your wages as an employee. YES if you are a freelance waiter/bartender/service person.

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Lorraine Mar 26, 2016

What about independent hairstylist? Do we pay General Excise Tax on tips?

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Biba Jul 10, 2016

Are tips from acupuncture services reportable for GE tax purposes? Where are tips reported on form G45?

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Tyrah Jun 15, 2017

how do you go about starting a freelance business as a bartender? you know, adverting bartending services for private parties and such. Do you have any information on getting that started? I know there are liquor laws to abide by…thanks, any information would be greatly appreciated. if not, thanks anyway for the article as it has very useful information!

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Larry Apr 12, 2015

It’s that time of year again…

Hawaii charges GET on consulting income (for example). So now, when I file my federal 1040 form, is it allowed to deduct the amount paid to Hawaii for GET? I can’t see where to plug it in. There’s place for the state income tax paid in the previous year, but although the GET is a tax on income, it is not an income tax…

Thanks

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David W Ristau CPA Oct 4, 2017

Larry:
Hawaii GE tax is a deduction on your Schedule C you prepare to report the income and expenses of your consulting business. You can include the tax paid on the line for “taxes” or you can include it as one of the “other expenses” with a description of “Hawaii GE Tax paid”.

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Holan Apr 6, 2015

How about other commissioned sales?

1099 for Travel Agent Commissions
1099 for Network Marketing Commissions

Would it be better to move to another state?

The GET is on the Gross

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Allie Mar 25, 2015

I did paralegal work for a company in California. They sent me a 1099-MISC. Do I need to file a G-49?

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Peter G Mar 19, 2015

Hi, Ron:
Very informative blog. A question for you that I don’t see addressed: student summer internship income. My son received a 1099-MISC with an amount in box 3 “other income” from UH for a summer internship he did last summer. This does not seem like a “business” that he required a GET license for, nor will it be an ongoing thing.

Do you think the state views student internship income as being subject to GET?

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Jennifer Mar 15, 2015

Thanks for the great info. I do have a question. I got a GET license in June of last year in preparation for starting a small soap-making business. I spent the final months of 2014 still making preparations for starting the business (filing for a business license, starting a website, etc), but didn’t actually sell any soap or make any money. I suppose I did have some business expenses (purchasing the domain name, buying raw materials for the soap making process, etc) but it was pretty minimal (less than $1000). What do I do about filing GET for 2014? I haven’t filed anything so far. Do I just file a G-49? If so, do I claim those expenses? Where do I put them on the form? I plan to actually “open for business” sometime this spring – but it will be a very small, etsy-type business. And then what about my Federal taxes for 2014? (I filed as a LLC, I’m the only person involved in the business). Thanks for any input!

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David W Ristau CPA Oct 4, 2017

To Jennifer:
Your post doesn’t state exactly when your GE license was originally granted in 2014.
HI DOT requires GE filing for period beginning from the license date.
Even though you didn’t have any sales in 2014, you’re required to file GE tax returns.
I’m answering your post in 2017.
If you filed G-49 for 2014 with zero sales and zero tax owed, then you’re all set.
If you didn’t file G-49 for 2014, file the form now with zero sales and zero tax owed to complete your filing obligation. There is no penalty for a late filed return with zero tax liability.

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Barbara Feb 18, 2015

Thanks so much for this info….makes much more sense than the actual government websites. I’m curious….I only registered my business to secure the name and of course check off the blocks…I barely made any money in 2014 with my “business”…I’d say roughly less than $500. Do I still need to file?

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Elizabeth Feb 20, 2015

Hi Ron,
I am about to start an internet dropship business. I live in Hawaii but 100% of my customers will live in other states. In addition, the items I will sell are manufactured in another state and will not ship from Hawaii, but from the manufacturer. Do I pay get??
Thanks for your help.
Elizabeth

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Curtis Feb 9, 2015

I moved to Oahu 7 years ago, and did some business as a financial advisor (securities sales), until retiring in 2012. Received a letter from Department of Taxation last week asking to audit me for GET payments that I never made. Your blog says securities sales are exempt, but I can’t find any other resource that supports that. Where should I look and what hope do I have in the audit?
Thanks
Curtis

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Jeanene Jan 22, 2015

Hello Ron,
I’m wondering if we start a business and hire a live-in domestic worker to take care of my grandfather in Hawaii if we are subject to the GET. They would be paid as an employee, not a contractor. Thanks so much for your help.

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Ron Feb 5, 2015

the GET is only for income. your domestic worker, an employee is an expense. if however your grandfather is paying your business money in exchange for supplying the domestic worker, then the money is business income and subject to GET.

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Dawn Jan 18, 2015

Hi Ron,

My question is on the “physical presence” in Hawaii if a consultant is in another state. I was advised that this included periodic business trips rather than having an established office or address in Hawaii.

Have you run across this? I’ve been trying to find a definition or description on what constitutes a physical presence – but no luck yet.

Thanks in advance.

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Ron Feb 5, 2015

sorry, but “physical presence”, aside from what the state describes in their tax documents (live in hawaii, have an office in hawaii, etc), is not 100% defined. i would have no idea how to classify a person who briefly visits hawaii.

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Al Dec 24, 2014

Hi Ron does having a GET allow you to have discounts on merchandise?

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Al Dec 21, 2014

I had a GET about 20 yrs ago, is it still active or expired, I haven’t heard anything from the IRS about it

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Ron Lum Dec 27, 2014

GET is Hawaii Tax Department’s responsibility, so it does not concern the IRS. If yours is from 20 years ago… that means 20 years of 0 GET paid, so they probably cancelled it already. Or there’s a form you can cancel with to make sure.

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Al Dec 20, 2014

Hello Ron, thank you for your advice, when someone gets a GET license, is he allowed to by things like car parts, food and so forth at a much cheaper or discounted price?
thanks for your reply

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Randi Nov 15, 2014

If you charge the customers a surcharge for the GE tax, do you list your gross income including what you collected for GE tax on your state and federal taxes and then write them off as an expense, or do you simply only claim what you made (not including the tax you collected and already paid to Hawaii)?

I am not really sure if it even makes a difference, considering you called it a wash, but if it is a surcharge I don’t know if it is considered an expense.

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Paul Davidson Oct 27, 2014

If anyone needs to fill out a form 1099-MISC, I found a blank form here http://goo.gl/BjM4EW. This site PDFfiller also has some tutorials on how to fill it out and a few related tax forms that you might find useful.

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Christine Sep 16, 2014

Hi Ron,

Thanks for your helpful information. I live in Hawaii and I am starting a business as an internet affiliate marketer, meaning I get a percentage commission from every sale that I bring to a company. I work mainly with large mainland-based companies, like Amazon and Bed, Bath & Beyond.

Since I am not selling products directly to customers (and therefore, will not be collecting any sales tax), will I need a GE tax license?

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Ron Lum Oct 18, 2014

It sounds like “no.” The GET is all about business transactions in Hawaii. For you, those transactions are happening outside the state. However the affiliate commissions would be part of your regular taxes as part of “wages, commissions, tips, etc”. But keep up with Hawaii tax news because online transactions are tricky and not all states have come up with a way to deal with them yet.

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Aungki Oct 22, 2014

Hi Ron,
I’m a bartender, work on tips and get paid by cash daily. Do I need to get an GE lincese in order for me to pay tax?

Mahalo

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Ron Oct 23, 2014

The main point here is to see if you’re an employee or an independent You get w2s? If so you’re an employee not a business so you do not pay general excise taxes

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TaxesBoo Sep 8, 2014

For services I perform as an indep. contractor & where I’m paying my own GET, you said the GET is a deductible business expense for Federal purposes… does Hawaii State also let you deduct it as an expense when you file for income tax purposes?

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Simone Sep 2, 2014

I received my ge tax liscence in maui in spring 2012 but never used it. Am I going to be in trouble & if so what to do? Sign, very confused girl.

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Rene Aug 20, 2014

Hi Ron,

Thank you for the informative information. If you pay GET on a rental, do you still have to claim the total rental fee on your income taxes (as earnings) and pay taxes on it again with your year end tax return? (This will also bump up your tax bracket I’m assuming…) Mahalo!

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Daniel Jul 22, 2014

We have changed the name of our business and I’m having trouble finding all the forms I should file with the state and feds. Any recommendations? Thank you

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Trevor Alt Jul 18, 2014

Thank you Ron.

This is a summary of my understanding after just completing my first set of Hawaii tax returns for my vacation rental condo. I emailed this to myself so I can find it whether or not I’m at home when I have to prepare my next returns. While this may be useful to others at least in gathering information, I’m not very confident that my understanding is entirely correct, and nothing can substitute for the advice of a qualified Hawaii tax professional. If it turns out I’ve made a mistake, I can file amended returns.

The Hawaii tax structure for vacation rental proceeds is complicated and confusing and there of current information available online is sparse. Much of what is out there on the internet (perhaps even on the State of Hawaii’s own website) is incorrect and/or outdated. Some information given to me by a well meaning person who answered the phone when I called the Department of Taxation turned out to be incorrect. Be careful. It pays not to try to figure it out and prepare your returns at the last minute – there are severe penalties (5% per month on unpaid liabilities) and interest involved if you aren’t on time. I had until July 20 to get my returns for the period ending June 30 postmarked.

I registered my business and obtained my Hawaii state tax ID number right away, in fact I filed the application electronically 2 weeks before I closed escrow on my Maui condo. Hawaii law requires the Hawaii tax ID number to be visible in all advertisements and in contracts. If someone needed to register their business with the State, here is a link: https://hbe.ehawaii.gov/BizEx/home.eb.

Here is the state guideline for completing the Transient Accommodations Tax (TAT) Return: http://files.hawaii.gov/tax/forms/2013/ta1ins.pdf – GET and TAT taxes visibly passed on to paying guests are EXCLUDED from gross rental proceeds for purposes of the TAT, so those amounts do not appear anywhere in the TAT return.

Here is the fillable PDF form for the TAT Return (Form TA-1): http://files.hawaii.gov/tax/forms/2010/ta1_f.pdf

Here is the best guideline for the General Excise Tax (GET) that I’ve found so far: http://www.ronswebsite.com/blog/hawaii-general-excise-tax/ – GET taxes at 4% are included in gross “transient accommodations rentals” that are claimed on the GET return. The effect is that you are paying GET taxes on GET taxes. This is very confusing. It means the effective GET rate is actually 4.16%. GET and TAT taxes visibly passed along to renters (itemized and not just lumped in with a total charge) are an “exemption/deduction” from the gross “transit accommodations rentals”.

Here is the fillable PDF form for the GET Return (Form G-45) http://files.hawaii.gov/tax/forms/2008/g45_f.pdf

Here is the fillable PDF form for the GET Exemption form (Schedule GE) that MUST be filed with the GET Return to avoid disallowance of the exception for GET and TAT taxes visibly passed along to renters: http://files.hawaii.gov/tax/forms/2013/g45ge.pdf

Here is the fillable PDF form for the tax payment voucher – you must fill one out for the GET payment check and another one for the TAT payment check: http://files.hawaii.gov/tax/forms/2012/vp1_f.pdf

Owners can register to file all the forms electronically and make payment by bank debit for $1 (credit card has a 2.4% fee + some additional fixed dollar fee): https://dotax.ehawaii.gov/efile/html/FAQ.html

Here is the link to the Hawaii Department of Taxation alphabetical list of tax forms: http://tax.hawaii.gov/forms/a1_1alphalist/

Here is the form to change the filing frequency for GET or TAT – frequency of filing depends on the annual tax liability (e.g. you file quarterly for GET if your annual GET tax liability will be more than $2,000 but less than $4,000. You file monthly for TAT if your annual TAT liability will exceed $4,000): http://files.hawaii.gov/tax/forms/2009/gewtarv5.pdf

You must file an annual TAT return/reconciliation – here is the state instructions http://files.hawaii.gov/tax/forms/2013/ta2ins.pdf
Here is the annual TAT return/reconciliation fillable form: http://files.hawaii.gov/tax/forms/2011/ta2_f.pdf

You must file an annual GET return/reconciliation.
Here is the annual GET return/reconciliation fillable form: http://files.hawaii.gov/tax/forms/2008/g49_f.pdf

NOTE: I (and apparently most Honua Kai owners that advertise on VRBO) have been listing the sum of TAT and GET taxes on our ads as 13.416% (which represents 9% TAT and the effective GET rate of 4.16% and that is the amount I am actually passing on to guests. However, the actual TAT rate is in fact 9.25% which means that I’m eating that .25% at least on my first set of returns mailed 7/18/2014)

My GET return, payment voucher, and check were mailed to:
Hawaii Department of Taxation
P.O. Box 1425
Honolulu, HI 96812-1425

My TAT return, payment voucher, and check were mailed to a different address:

Hawaii Department of Taxation
P.O. Box 2430
Honolulu, HI 96812-2430

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Ron Lum Jul 21, 2014

Trevor, thanks for the info. I as well as other people that read this article appreciate it. I plan to make some needed updates to this article soon and maybe also tackle a TAT article, because it seems to be a big area of confusions as well.

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P Kauai Sep 26, 2014

Hi Ron,

What deductions are allowing for GET? I received 1099s with the amount of $ I spent on supplies…was not my income…just got reimbursed for supplies I bought for the client. Can I deduct those? It doesn’t seem fair that I have to pay GET on an amount that was clearly not income at all.

Thanks!

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Ron Lum Oct 18, 2014

Hey P, reimbursements are exempt. I am adding it into my article now. If you file online, there’s a column for exempt amounts.

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P May 11, 2017

Hi Ron,
Thanks for all the great information!
Does money for notarial services get taxed?

Thanks

tlynnk Oct 17, 2014

I love your blog Ron. It is very informative.

Do I have to pay tax on my TAT like I do on my GET? If so, what is my combined GET and TAT rate on Oahu?

T

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Kaori Jul 17, 2014

I want to file my GE. I am a bartender and I get paid with tips. (No hourly wage/no paycheck) I work at a bar but am considered a sole proprietorship. How would I file my taxes? Thanks

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Ron Lum Jul 21, 2014

Kaori, for federal taxes, the money you make as a freelance bartender flows through onto your 1040. Same idea for state taxes. You might get requests for W-9 filling, which your clients file with the IRS to track the money you make. For general excise tax, you have to register yourself and then file it, separately from the above 2.

So… I can get a free drink next time I’m at your bar? K thanks eh.

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Abby Jul 17, 2014

If i am supposed to pay GET semi-annually and i started receiving income from renting my condo in Feb. Do i still need to pay at the June and Dec time periods, or do i pay the end of the 6 month period from when i started earning income?
If anyone can answer this question, i would appreciate it.

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Ron Lum Jul 21, 2014

It’s based on when your tax year starts. Many people use the calendar year aka January 1 is the start of the tax year.

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katrina Jul 16, 2014

I have a spa whereby which I contract with Independent contractors. I collect on their behalf the payments. Contractually, we have agreed that I will pay 4% on my gross commissions and they will pay 4% on their gross or their 1099. For instance, if an ic makes $10,000 gross, then they will owe $400 GET. Some of the Ic’s insist that they are wholesalers, and as such are only obligated to pay .005 GET. Of course, this is after the fact, after signing the contract, after working under this agreement for many years, in some cases. This is a source of great contention. What constitutes a wholesaler?

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Ron Lum Jul 21, 2014

You should ask a CPA for the best answer… but I “wholesaler” status is for a person with a certificate or license in the state they want to distribute in. Try look up form g17, g18. I think it might also be called “seller’s permit.” So that’s something you’ll need to ask them for and to fill out to verify that they are indeed wholesalers.

Even though you folks have a contract in place, you folks can amend it if there is an area of mutual agreement, namely if you decide that the tax numbers changing. In terms of the general tax liability, each party should have their own, unique tax liability based on their own gross receipts during their own respective tax periods — their tax liability is their own responsibility.

Note: I am not a qualified tax expert. My opinion is not substitute for professional tax advice.

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Melody Loudin Jul 14, 2014

Is a physical location in Hawaii required if we offer consumer loans via the internet in Hawaii.

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Kim Jul 2, 2014

Quick and easy question, I think. We are located in Texas. We only have one client in Hawaii. We invoiced this client in March, but have not yet received payment. We file GET every 6 months. Do I have to pay tax on the invoiced amount or do I wait and pay tax when we receive payment from client? Thanks!

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Ron Jul 3, 2014

Nah, the GET is based on gross receipts, as in, you actually got paid and sent them a receipt of payment.

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Molly Jun 27, 2014

Hi, On your state taxes, can you write GE taxes off as a business expense?

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jlo Jun 11, 2014

i am a consultant giving advise to a client who owns a rental community in waikiki. They are paying my corporation in Texas. Do i have to collect the GET tax from them ?

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Ronson Jun 20, 2014

If your business is located in Texas, then Texas state tax laws would apply, not GET. The Hawaii GET is for businesses registered to do business in Hawaii. Your client would probably have to pay GET on the rent money she collects though. Makes sense, right?

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victoria ayala May 21, 2014

aloha ron!

i just wanted to say THANK YOU!!! After seemingly countless hours of trying to locate all the information presented here, i found u!!! i don’t even need to ask anymore questions because they were already answered here! i truly appreciate the clarity u provide and the easy to understand terminology, not to mention ur polite humor and straight forward attitude.

THANK YOU!!!

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marrisa May 7, 2014

GET is very confusing, thank you for this article! If I pass on GET to clients (4.712% 4.166%) when I file & pay G-45 form I pay ONLY the amount that was passed on to the client correct? Some articles make it sound like I have to pay tax on top of tax! If that is the case, wouldn’t it be better to not pass on GET to client so gross income is less and just pay the 4% and 4.5% rate? Thank you so much in advance!

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Ron Lum May 28, 2014

Marrissa, you actually do pay GET on GET. If you charged your customers 4.5% for GET (Oahu), then you’d still have to pay 4.5% on that 4.5% GET. But people simplify by either charging customers 4.712% OR by not adding a GET but instead paying GET out of the money from the sale.

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Joy Jul 16, 2014

Hi Ron, I am filing my G-45 for the first time. My rental management company charged the customer %4.166 of the total revenue. However, when I enter the total revenue in the e-file form it automatically fills in a GET rate of %4. Any suggestions? Who would’ve thought it would be so complicated. Your site is the most informative I have seen. Thanks, Joy

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tiffany davis-shaw Apr 23, 2014

Ron, I am non resident and was told that the tax my landlord charges me on my rent could be reimbursed on n-15 form for state taxes. Smile, n Smh. I am having issues with getting my money- any suggestions

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Jon Apr 18, 2014

Ron.
I am not sure how to get this answer back to you (I promised I would) so I am just posting it here. Feel free to reformat and repost if needed.

QUESTION (to you and to State):
“I am an independent professional consultant (scientist) reporting my GE Tax taxable consulting income on Form-45. I have been reimbursed for travel at no mark up cost to my customer which I have been told is GE Tax exempt since it was separately invoiced and at no mark up.
Question: How do I report this reimbursement on my Form 45? Do I include it in Column A (Gross) and then take the exemption in Column B and file Schedule GE? If so, under what HRS paragraph does that fall with respect to the Schedule GE categories?”

RESPONSE from the SoH:
“Aloha,
Please reference to HAR 18 at http://files.hawaii.gov/tax/legal/har/har_237.pdf, it provides that “the reimbursement of a cost or advance made for or on behalf of one person by the taxpayer shall not constitute gross income to the taxpayer, unless the taxpayer receiving such reimbursement also receives additional monetary consideration for making such cost or advance.”
The department of taxation issued regulations interpreting this change as Hawaii Administrative Rules section 18-237-20. The Reimbursement exemption applies when:
1) Taxpayer pays a cost or advance to Thrid Party;
2) For or on behalf of Reimbursing Party; and
3) Taxpayer is repaid the cost or advance and receives no additional monetary consideration for making the cost or advance.
Mahalo
Jenny
Taxpayer Services”

So, that’s the answer! Critical part is “…receives no additional monetary consideration for making the advance.” I fortunately invoiced my customer separately for the travel stating that no markup was added so it is clearly an “advance” as defined by the SoH GET law.

Thanks for the wonderful site.
Jon

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Ron Lum Apr 22, 2014

Hey thanks a lot Jon. I’m going to include this useful bit of info in my next update.

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TEEC Apr 17, 2014

I went and got my General Exersice license about 4 years ago and
never did anything with it. Is it still good or do i have to get another one? I looking in to trying to start up my business full time now. What do i need to do?

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Kavika Apr 16, 2014

I live in Hawaii, but do research and writing for a single client in New York. I’m paid as a contractor. Since all off this work is for someone out of state, whom I only communicate with via Skype, email, and phone, is this different from the commenter below who teaches guitar to people on the mainland by Skype? Is what I do subject to GET?

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Rebecca Blackburn Apr 9, 2018

I have the same situation and am trying to figure this out! Any help would be amazing!
I have one main client in CA that pays me as a contractor. All work is done virtually, just emails and organizing things kind of like a virtual assistant.

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Dave Apr 15, 2014

Ron,
Your information is excellent and clears up a lot of the confusion about this tax.
I have one very simple question. When it says that the (quarterly) tax is “due” on, say, April 20, does that mean actually received by the tax dept. or simply post-marked by that date?
Thanks for your reply.
Dave

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Ron Lum Apr 22, 2014

Hey Dave, just do things ahead of time…and you will never have to worry about the answer :).

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Judy Apr 3, 2014

Hi Ron,

This is one of the most helpful article about GET out there. Thank you for sharing. I got my GET license last year as a requirement to be a registered interpreter. I was so busy with my full-time, I ended up didn’t take any translation job. Do I need to file GET tax? Will there be a penalty fee for late filling even if I didn’t have any business income? Thank you.

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Ron Lum Apr 3, 2014

Judy,

The late penalty is a % of what you owe. SInce your business made $0, well

$0 x (whatever the late fee % is) = $0 you owe

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Jon Mar 31, 2014

Ron,
I was vague with my the previous question.
The question should have been written as:
“Do I record all income (Gross) in Column A and report this reimbursement as an ‘exemption’ in Column B to get my taxable income (Column C)? “

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Jon Mar 31, 2014

Ron,
I did some consulting work (I have license, etc.) and got reimbursed for travel costs (invoiced at cost, no markup). I’ve been told that this reimbursement is exempt from GET since there is no markup. How do I report this on my filing?
Do I just not report this income on the G45? (doesn’t seem correct)
OR
Do I take record all income in column A and report this income as an “exemption” (Column B) to get my taxable income (column C)? (Columns A, B C form G45). If I claim an exemption I need to file Schedule GE (Schedule of Exemptions and Deductions) … but under what HR237 paragraph do I claim this exemption?

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Ron Lum Apr 3, 2014

Jon,

Large reimbursements are usually associated with employees. The fact that they reimbursed you for a flight essentially translates to them paying you an amount (in addition to your work fee) equivalent to your travel expenses. It’d be the same if you were to buy a car and then have them reimburse you for it as part of a work negotiation. Well, basically, that car is part of your payment and thus needs to be considered part of your income. This is a key difference in employee vs contractor determination — bosses take care of employees’ stuff, but an independent contractor is expected to provide their own things (supplies, tools, software, travel expenses, classes, etc). However, the instructions for GE45/49 do not mention reimbursements for independent contractors, so I am just hypothesizing here. Best to call the State tax department… and hope they have a tax expert that has a firm stand on the issue.

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Jon Apr 4, 2014

Ron,
Thanks. I already have a call into them.
From past experience in the 1980s and 90s when I served on committees for NASA, etc., and got paid honoraria and reimbursement for airfare back to where ever, I reported only the honoraria, if I ever got that, but I can’t remember the who, what, why and how of the justification. I would never have bothered to go if I had to pay 4% just for the honor of traveling away from HI – NASA was not going to reimburse me for a GE Tax line added onto the travel reimbursement request. Anyway, when I find the answer I’ll let you know. There must be others out there with the same issue, unless they just tack 4.5% onto the cost of the ticket and their customers are OK with that.
Jonathan

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Ron Lum Apr 4, 2014

Couple things I want to add:

1. Reimbursements have no real effect on federal income tax, as the expense and reimbursement amount offset.

2. The Ge tax is only for doing business in Hawaii. If they flew you out to California to consult with a client there, then your earnings on that outside-of-Hawaii project would not be taxable by GET (though you’d still have state taxes as a resident of HI).

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Jon Apr 4, 2014

Ron,
Good point about the out-of-state aspect w.r.t. reimbursements and GE tax. Maybe that’s what the rational was years ago. I’ll still research and let you know.
The income tax/business deductions is pretty straightforward/common sense as you point out.
Great blog!
Jon

Andy Mar 30, 2014

How do i look up what I owe if i didn’t pay GET for a couple years?

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Ron Lum Apr 3, 2014

You don’t look it up. You calculate it yourself. It’s based on what you made (gross).

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maureen Mar 29, 2014

Hi ron,
I was wondering how to change paying GET from 3 months to 6 months? My husband just got his GE license and while signing up he chose the 3 months. Are we able to change it online or is there someone we have to contact? Pls help.
Thank you.

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Ken Mar 26, 2014

Hi Ron, thanks for the article. I just signed up for a sole proprietor license from your link.

My question is if the amount of GET I owe is small, do I still have to pay semi-annually (they didn’t have an “annual” choice during the signup)? Or can I just pay once a year using whatever the annual form (G49?) is?

Mahalo

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Tiki Mar 17, 2014

4.5% Tax on the 4.5% tax business collects for the State!?!?
WTF
And why is Insurance rate so low…Funny how they and the State have a similar racket.
“The General Excise Tax (GET) is levied against a business’s gross receipts for the privilege of doing business in Hawaii.”
Yeah. Privilege to make a living and eat!
Thank you my overlords.
King & Queens didn’t die…they just changed clothes.

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Ron Lum Mar 18, 2014

LOL. Thanks Tiki for cheering up my day with your rant/commentary.

The 4.712% is pretty steep. It’s also on gross receipts, so businesses with low margins are absolutely gutted. But that’s the cost of doing business in Hawaii. I think we all either have to accept it, move to another state (hellooo Nevada) or do business “off the books.”

With that said, have you heard the news that Hawaii mayors want the option to slap on another 1% for the GET? Time for me to either become an employee or plan to move states…

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Jeffrey Thomas Mar 14, 2014

Hey Ron, good article and a painful subject for some. I just found out from a tax accountant that my business is one that would be exempt from GET.

I teach guitar, bass and ukulele on skype and do not have a single transaction from a student located in Hawaii.

I plan to reside on Oahu and was told that since the “sale” of my lessons is happening to a student not on Hawaii I am exempt. This is great news and I feel the GET is very uncool.

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Robyn Mar 10, 2014

I started off my business paying taxes semi-annually. Now that the business is growing, am I able to change to quarterly, or do I have to keep it at semi-annual? (I still pay less than $500 in taxes semi-annually but it’s still a lot for my small budget)

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Jim Mar 9, 2014

Ron,

My wife and I recently purchased a condominium that we are renting to occasional tenants for which we will be responsible for paying a Transit Accommodation Tax and a General Excise Tax. We pass through both the TAT and the GET, as well as the expenses for the cleaning serve we use after each rental.

In reading materials from the State, it appears that we can deduct the passed through TAT and GET amounts, as well as the passed through cleaning fees when we file out TAT return. However, while it appears that we can deduct the passed through TAT tax when filing out GET return, I do not see that we can deduct the amount of the passed through GET or the passed through cleaning fee (although we pay passed through GET to the cleaning service). As an aside, we have not been charging our tenants this additional passed through GET surcharge that we pay to our cleaning service.

Is there a deduction that I am missing, or are we only allowed a deduction for the TAT that is passed through to our tenants. From your excellent explanation, I can wrap my head around not being able to deduct the passed through GET, but I am having trouble understanding why we may not be able to deduct the passed through cleaning fee.

Thank you for any guidance you can give us.

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Jim Mar 9, 2014

Ron,

As an addendum to my query, above, in the alternative, is the passed through cleaning fee to our tenants considered income at all for purposes of calculating our GET on our condominium rentals? It appears that it clearly is considered income for purposes of filing the TAT, because we can deduct it from our gross proceeds. However, it now occurs to me that perhaps it is not income at all for purposes of determining our GET.

Can you shed any light on that angle as well?

Thank you.

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Ron Lum Mar 15, 2014

Sorry Jim, but your question is complex and expands far beyond the scope of my article. If you need a referral to a CPA who knows the GET, I can help, but otherwise, you should contact the appropriate tax departments.

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Melanie Legaspi Mar 4, 2014

This is awesome information Ron! I’m thinking of starting a retail website but I wasn’t sure about the rules. Is having a GE license all I need to get started? And what about paying taxes, should I pay for it or charge the customer?

Thanks a lot!

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Ron Lum Mar 7, 2014

Melanie,

Registering your business and getting that license are the biggies. If you plan to do business as something other than a sole-proprietor, choosing the right type and filing the right papers would be important too.

As for who to pay the GET, read the section “Should I make my customers pay the excise tax?” It’s in big, bold letters, just for you sistah!

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Jon Mar 3, 2014

Ron,

I have loaned money personally to my c corporation of which I own 100 % of the stock at the minimum required interest. When it is returned to me, am I required to pay Hawaii GET on the interest or is that just ordinary interest income taxed at whatever my current tax percentage is? I am not in the business of loaning money. Thank you.

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Ron Lum Mar 7, 2014

Jon,

That’s a difficult series of questions to which I do not have the answers to. I would recommend consulting with a CPA. Let me know if you one. I could refer you to a knowledgeable one.

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Jasmine Mar 2, 2014

Hi Ron,

I applied for a GE license few month ago for a marketing business but since things have changed, I will be doing computer teaching class instead. Can I use the same GE License?

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Ron Lum Mar 7, 2014

The license is assigned to a business. If you are a sole-proprietor (a person-business), then you can use the same license. A business can make money doing many things.

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Harrison Feb 28, 2014

Do I still need to filled Taxes if we never make any income from our business for the parts of 2012 and the whole 2013. We started having income from the beginning of this Month February 2014.

Mahalo

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Ron Lum Mar 7, 2014

Yes, you need to at least fill out the G49, the annual, and let them know you made 0.

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Jacqueline Feb 25, 2014

Hello,
So I talked to one CPA on kauai and he told me just to get a get license for tax purposes. He said that I didn’t need to start a business, just to have a seperate checking account for keeping track. We own a second property and are planning on renting it out. Is this correct and do I need a business?

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Ron Lum Feb 25, 2014

You can operate as a sole-proprietor, which means that you and your business are one and the same and that your income from your rentals just go on your regular, individual tax return (except you fill out a schedule.. I think A? to report rental income). Meanwhile, someone who creates an LLC for his rentals would have to file a return for himself and another separate return for his LLC.

Also, Jaqueline, you should follow your CPAs advice. Afterall, he does taxes for a living. Me, I’m a guy on the internet. CPA > guy on internet. If you do need another CPA in the future for taxes or bookkeeping on Oahu, let me know and I could refer you to someone.

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shaun Feb 22, 2014

Ron,
I have a ge tax license from doing real estate in hawaii about 7 years ago, but I now need to pay ge tax for a rental property i own there. Can I use the same ge tax license i already have or do i need to file for a new one since it is a different business?

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Ron Lum Feb 25, 2014

The licenses are assigned to businesses or individuals. If you are operating under a new business, you’ll need a new license. If the license was assigned to your name and not a business, then you can use the same one. If you are the same business but your details have changed, like address or filing period, you can fill a form to amend your license info.

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Ron Lum Feb 25, 2014

Hawaii has no sales tax. In it’s place is the general excise tax. It serves a similar purpose (taking a cut of business transactions), but it works a bit differently. So you don’t charge your customers any sales tax.

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Carrie Feb 4, 2014

Hi Ron,

If our company is selling some tangible goods to a customer located in California and they are tax exempt (resellers) but the goods are shipped to Hawaii, should we charge/collect the general excise tax from them? Are they still tax exempt on the goods like when the goods are shipped to other states?

Thanks very much for your help.

Regards,

Carrie

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ron Feb 25, 2014

theres an exemption for out of state exports for tangible goods. they have to fill g61 form though to verify that its out of state.

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Jon Feb 3, 2014

I did occasional consulting for many years back in the “last century”. From 2000 to 2007 my GE Tax was “$0″ (no consulting income) which is the last year I filed. I’ve been asked to do some consulting (starting Jan 2014) and need to catch up on my GE Tax filings – my check of myGE Tax license number online says my tax license is “open” which I assume means still active.
Question 1: Do I need to file a return for each year ’08 – ’13 or just one return for 2013?
Question 2 (assuming I need to file each past year separately): Do I need to file the semi-annual as well as the annual return & reconciliation, that is, 3 separate returns for each of those years?
Thank you a great blog!

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ron Feb 25, 2014

if you go by the book,you need to at least file an annual g49 for your get. even if its zero, cause not filing suggests that you may have getaxes owed and are late with payments. filing the annual lets themknow you filed and, made zero.

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Joni Jan 31, 2014

Tangible item sales seem to be exempt from resale transactions to the Dept of Defense in Hawaii properties but are professional services also exempt from the .5%. Can you tell me which tax announcement I should review to understand these tax exemptions?

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steve Jan 30, 2014

Hi Ron. Thanks for the excellent explanation about the GET. I have a question that I think I already know the answer to: I have a Utah company that performs IT consulting work for clients all over the country. Two of its primary employees reside in Hawaii and provide consulting services to non-Hawaii clients (through the Colorado company) while in Hawaii. Is the Company required to collect GET for the services provided by these employees?

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Elizabeth McDonald Jan 30, 2014

HI there,
My husband is an “independent” contractor. He is a charter boat captain who gets 1099′ed from the company he works for. the company pays him and not the customers. does this count as a business does he need to pay the GE

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Ron Lum Feb 3, 2014

Yes. 1099s are what companies file when they work with freelancers or independent contractors, both of which are considered businesses, so yes, he needs to pay GET.

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Fred Apr 17, 2016

Would Elizabeth’s husband be considered a wholesale services provider and pay general excise taxes at a rate of 0.5% since he is selling his to a business that would then be paying the full excise tax rate on what the customer pays?

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Ben Jan 29, 2014

Hi Ron,
I just noticed that the link you have for business registration is no longer working (Page Not Found). Any idea what the new one is?

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Laura Jan 28, 2014

My husband and I are looking into starting an etsy shop with things we both make online. If I have a GE license does he need one too?

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Ron Lum Jan 29, 2014

Laura,

Depends on your business classification. If you’re a “sole proprietorship”, he’d need to be an employee and then wouldn’t need a license. Or if he’s an independent contractor for your business, he’d need his own license. A lot of husband/wife businesses operate as a partnership, in which case there’d be a single license for their business and not for any 1 person. Or you might qualify to be a “joint venture”… see the IRS link below.

http://www.irs.gov/Help-&-Resources/Tools-&-FAQs/FAQs-for-Individuals/Frequently-Asked-Tax-Questions-&-Answers/Small-Business,-Self-Employed,-Other-Business/Entities/Entities

If you’re thinking about the best tax situation / business classification for a married couple, you should definitely consult with a CPA.

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Monica Wessinger Jan 27, 2014

I and my busness reside in CA. I received a purchase order for installation of cabinets in Oahu from a company located in New York. I sent my men to Oahu, they installed the cabinets and I were paid from the company in New York. Do I pay GET taxes on that income?
I apprecite your help,
Monica

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Ron Lum Jan 29, 2014

Monica,

That is a super difficult question and I recommend you consult with a CPA. Reason is this: although it sounds like a simple cross-state, CA-NY transaction, the same was thought of mainland travel companies selling Hawaii hotel bookings to mainlanders planning a Hawaii vacation. Those businesses and their customers were not in Hawaii, but the hotels were. The state of Hawaii eventually sued those travel companies for excise taxes not paid and won.

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Gino Jan 13, 2014

Thank you for all this info!

I’m from California and I received a bill from a local freelancer who performed services for me while on a job in Hawaii. That invoice includes an excise tax. As a general rule, we don’t charge sales or income tax on freelance invoices- work is usually done at a flat daily rate. Am I required to pay this excise tax?

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Ron Lum Jan 14, 2014

Gino,

The GET is not a sales tax. It is applied to business transactions in Hawaii. Some businesses pay it out of their own gross sales but most tack it onto their client’s invoices as a surcharge (meaning the client pays the GET).

You were in Hawaii and hired a local to do work for you? If so, then yes, that excise tax is something that needs to be paid. It’s the same as you paying excise tax on your hotel fee, car rental, or when you bought food in Hawaii.

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Caramiagurl Jan 5, 2014

Hi Ron,

I wish your blog on this topic was around eight years ago! About eight years ago, I spent hours on the phone and in person at their windows to get the same answers and make sure I understood the process, obligations, and requirements.

So now that I have established a small business under services for independent contract work, my question is, can I use the same GET license for a different type of “service?” For example, say I’m using my current GET license to do massages (service). But, now I want to teach massage as an independent contractor or be a presenter (on a different topic) hired as an independent contractor. Can I use the same or will I need to open a new one?

Thank you in advance for any light you can shed on my situation.

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Ron Lum Jan 5, 2014

Caramia,

I honestly believe that if tax instructions were more clear, then more people would be paying taxes. Cause when things are easy, people are more likely to do them.

As for your question, the license is assigned to a business. A business can have many streams of income. Me for example, I develop websites, but I also do website tutoring, consulting, and a couple times I’ve helped clients with computer problems. It’s different stuff, but all of that money goes towards my business.

So, if you are making money as the same business in both cases, then you only need 1 license. In fact, I’ve seen some companies register a business alias (DBA) and they do several things that are not related at all. Same company though.

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Kauaisteve Apr 18, 2014

I was at the State Dept Taxation yesterday and was told that I needed to file the form GEW-TA-RV5 to change the NAICS business code to reflect the nature (type) of my business. So, one cannot change their nature of business and just assume all is pono with the tax authorities. That makes sense since GET tax rates vary as you have noted. It is #5 on the form. If in doubt, consult a tax professional.

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Richard Dec 17, 2013

do you charge tax on online purchase from customer in and shipped to another state.
We are in Waimea Kauai and want to sell a t shirt to someone online in California

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Ron Lum Dec 19, 2013

Richard,

Yes, you will be paying GET if you are selling T-shirts. If you are doing business in Hawaii, the GET is simply a percentage of your gross sales, no matter where your customers are from.

What you’re thinking about is sales tax. GET is not a sales tax. How cross-state sales tax would work is if you had a store in California (legally referred to as a “physical presence”), then you would be collecting sales tax from that customer’s sale.

Hope this helps.

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Eva Feb 1, 2014

I have a feeling that’s this is incorrect. Form G-45 has an exemption for out of state sales, code 237-29.5(1) which specifies goods will be shipped and used out of state. I’ve been selling online for 3 years and I’ve never had to pay GET from out of state sales.

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Ron Lum Feb 1, 2014

Thanks Eva. I’m going to be doing an update to the article soon when I have time. Appreciate your insight… you even pointed out the clause!

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Eva Feb 1, 2014

You’re welcome. I would be very interested in your update! I know about Hawaii getting money back from companies like Expedia, but ultimately those tourists came here, versus when you ship out of state the goods leave the state altogether. Great article Ron. Mahalo.

Mom Dec 17, 2013

My friend has a very small one man business. His business got slow and he got behind in paying his GE taxes because he wasn’t bringing in very much money and after he paid rent, his phone and gas, there was nothing left to pay the tax. What would the procedure be for him to try and catch up on his GE tax?

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Ron Lum Dec 19, 2013

Hi “Mom,”

Before I answer, I just want to say that your question points out a problem with the GET: it’s a tax on gross sales, and not profit, so that means even if you lost money, you still have to pay GET.

Moving on… one thing about falling behind on taxes is that the tax guys expect payment. So if you suddenly stop paying, they’ll notice and they might come after you. I say “might” because some businesses don’t pay enough GET for the tax guys to care. If your friend was paying a lot of GET and he suddenly stops paying, then he should be worried a bit.

One of my clients, a restaurant, fell behind on their GET. The client was grossing a lot per month, so they were required to pay GET monthly. When they stopped paying due to hard times, the state then revoked their liquor license and that messed things up for their business.

So, my suggestion is to catch up ASAP. He will also need to pay interest on late payments as well.

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Chris Dec 6, 2013

Hi Ron , Thank you for the useful info. I have a rental where I live on the Big Island . I did not know I had to pay get . This goes back 2 years . Any advice on how to amend this ? Aloha Chris

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Ron Lum Dec 7, 2013

Chris,

I’m sure many people doing business or running rentals in Hawaii don’t know that they have to pay the GET. Have you heard the news of the state going after Online Travel Agents for hundreds of millions in unpaid taxes (link)?

I can’t say for sure what would be the best approach here. Here’s my suggestion:

1. Register for a license (instructions are in this article).
2. Pay the back taxes you owe. You may also have to pay interest or late fees on the balance you owe.
3. Start incorporating the GET into your accounting.

Talk to my CPA friend Jack (site) if you need more guidance.

-RON

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Jane Dec 2, 2013

Thanks so much for your helpful info. Couldn’t find it anywhere else! Do you happen to know how much I would have to charge in GE tax if I rent my condo on Maui short term?
Thanks!

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Eileen Oct 21, 2013

Thanks for the 411. It’s very clear. My husband has a small business, a single-member LLC with the fiscal year ending in 9/30. The business has been operating at a loss since it started last year. This year I’m doing his bookkeeping and filing his G45. I would like to change the fiscal year to the calendar year. Do you think I can get away with deviating from the business application and change to a calendar year without changing paperwork?

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Ron Lum Oct 23, 2013

Eileen,

I’m glad that it’s clear for you. As for your question, I suggest that you formally request a change of information with the tax department. It’s likely you’ll have to fill out a form and wait for them to approve. I don’t recommend changing without notice because if you change your FY dates, that changes when your payments would be due (both GET and regular taxes). And if the state tax dept expects payment at a certain date because of the FY they have on file and they don’t payment, that might raise a flag with them.

The above is just my opinion. If you really want more insight on the topic, you should consult with my CPA friend, Jack (http://www.windwardaccountant.com/).

Also, here is a bit on due dates on the G45 instructions:

Due Dates
Form G-45 is due on or before the 20th day of the calendar month following the end of the filing period. For example, if your filing period ends on January 31st, then your return will be due on February 20th.

Form G-49 is due on or before the 20th day of the 4th month following the close of the tax year. For taxpayers on a calendar year, this return will be due on April 20th.

NOTE: If any due date falls on a Saturday, Sunday, or legal holiday, substitute the next regular work day as the due date.

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Lorel Lee Oct 17, 2013

Hey Ron, since you do online services for clients I have a quick question for you. Let’s say someone from California or Arizona wants you to build their website and you receive income from those clients. Do you have to pay state taxes in CA and AZ? I just moved to Oahu and I’m trying to figure this out.

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Ron Lum Oct 17, 2013

Lorel,

Good question. I think cross-state business is always a confusing topic and thus, a good topic to discuss.

To answer your question, we follow the flow of money. If I reside in Hawaii and a CA person hires me, their money comes to me, and thus, that business transacts in Hawaii, thus it’s tax money for Hawaii (GET). If I hire someone in CA, then the money goes to them, that business transacts in CA, thus it’s subject to California state tax (I think ~7%), but not the Hawaii GET.

In terms of state taxes, you pay taxes to whichever state you are technically a resident of. Those resident laws are super confusing so you should definitely consult with a CPA familiar with cross-state or cross-country commerce and have them assess your unique situation.

-RON

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Shelli Oct 8, 2013

mahalo plenny for the useful info…and the recommendation for the tax person. I want to start a small business but have little knowledge about how all this works, so this really helped me :)

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Ron Lum Oct 13, 2013

You’re welcome Shelli. Small business owners need to wear a lot of different hats , but it’s still a good idea to consult with a CPA or other professionals like lawyers or business coaches who can help give you a head start on doing business. I actually wishes I had hired a business coach when I first started… instead I just started from scratch and that’s really doing things the hard way.

-RON

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Danielle Sep 26, 2013

Aloha Ron,
My husband is law enforcement, but sometimes he is offered “off duties”, which are jobs where he is paid by check by the company hiring him to do things like traffic control. He is not being paid by they county like his paychecks so there are no taxes taken from his check, does he need to get a GET ID?

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Ron Lum Sep 26, 2013

Hi Danielle,

The answer is probably “yes.” Here’s why:

If you’re an employee (you work for someone), your employer automatically takes care of the tax stuff for you, so you only need to file your taxes once in April. As for the General Excise Tax, it doesn’t affect employees, because it’s aimed at business transactions.

If you’re an independent contractor (you work for yourself), no one takes care of the tax stuff, so you have to do it yourself. An independent contractor (aka self-employed aka freelancer) is a business, so that means each business transaction (selling goods or providing services for money) are taxed by the state via GET. The GET is separate from regular taxes on gross income, by the way.

I hope this helps. Contact a CPA or call the State Tax Department if you need more help.

- RON

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Danielle Sep 27, 2013

That’s what I thought. Mahalo for your help and your awesome site!

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Mike Aug 23, 2013

Ron,

This is one of the clearest explanations of an opaque tax. I finally understand why businesses add 4.712% to most sales, even when the GET is set at 4.5% (on O’ahu).

Just one thing: “Jerry Maguire” ordered the chicken katsu, not the loco moco :) Since the lunch truck provided him with loco moco (not katsu) and he will most likely return the purchase for a refund, does that mean the business will return 4.5% or 4.712% in tax surcharge? If the former, does the business have to pay GET on the difference?

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Ron Lum Aug 23, 2013

Mike,

The GET is part of the sale. A refund would negate the sale. The money from the purchase would be refunded, including the GET surcharge. And you would not longer need to pay the state GET on that refunded item.

Oh, and thanks for catching that mistake. I must’ve been hungry for Zippy’s when I wrote that example.

-RON

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david Aug 10, 2013

hi! thanks for the helpful info!

do you know how to close/cancel your g.e.t. license permanently?

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Ron Lum Aug 12, 2013

David,

I believe that these tax licenses expire naturally. This also means that they can expire and that people need to renew them.

Otherwise, if you’re wanting to close your license and get off the tax registration database, then you should call the Department of Taxation at (808) 587-4242. I’m sure there’s a wonderfully painful process for you to go through to close the license.

-RON

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richard odiorne Aug 8, 2013

I sent in my GE tax obligation but have not received my cancelled check. I do not want to be charged late fees. I want to know if you have processed it or are running late. My tax ID #
is 00040242-01

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Ron Lum Aug 12, 2013

Richard,

I don’t work for the tax department – I’m just a regular contractor that wrote this article to educate people.

You need to call the State Tax Department at (808) 587-1540.

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Billy Aug 3, 2013

Anyone know if we have to pay fed taxes on the GET as it does appear as Gross Income

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Ron Aug 5, 2013

In terms of taxable income, GET should have no effect if you’re having your customers pay the max GET.

Let’s say you sell $60,000 worth of goods (not including GET) and you tacked on 4.712% GET for your customers. That means you’ve collected an additional $2,827.20 from sales. However, you have to pay all this additional money to the state as GET. So…

$60,000 (gross sales)
+ $2,827.20 (GET surcharge)
- $2,827.20 (GET expense)
= $60,000

It’s a wash, Billy.

However, if you pay GET yourself and not as a surcharge to your customers, then that’s going to be business expense which will lower your taxable income.

Reply

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