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 2/28/2019: Sorry for the issues with this page info going missing and comments not being available  — I was recently hacked and had to deal with it along with a backdoor that would reset the issue until solved.

Updated 1/28/2019: To increase site speed, I’ve had to limit the comments loaded per page to 15 comments (replies don’t count) — click “OLDER COMMENTS” to view older comments.

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 300 questions and answers — you might find your answer in the comments.

Updated 10/18/2014: 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. Please do not contact me for detailed tax advice — everything I know about the GET is right here in this article .

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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 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

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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.

352 comments on “Everything You Need to Know About The Hawaii General Excise Tax

  1. 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%?

    1. @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

      1. 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.

        1. 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.

          1. @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.

  2. 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.

    1. @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.

  3. 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?

  4. 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

    1. @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.

      1. 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!

        1. @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

    2. 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.

      1. @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.

  5. 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.

    1. @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.

  6. 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.

  7. 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

  8. 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.

    1. @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.

  9. 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

      1. 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.

        1. @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

  10. 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

    1. @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

  11. 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?

    1. @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

    2. @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

  12. 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.

    1. @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

      1. 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

        1. @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

  13. 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?

    1. @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.

  14. 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.

    1. @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.

  15. 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!!!

  16. 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?

    1. @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.

  17. 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?

    1. @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.

  18. 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?

    1. @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

  19. 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.

  20. 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.

    1. 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.

    2. 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

      1. 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/

      2. 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?

        1. @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.

  21. 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.

  22. 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?

    1. 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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