Hawaii Sales Tax Collection and Reporting Update

If you're using TaxJar to power your sales tax calculations: 

You can control the tax rate you charge your buyers in Hawaii. 

• Hawaii's General Excise Tax (GET) model has the vendor charge consumers a reimbursement for tax at the time of sale (unlike traditional systems where the vendor charges tax and passes it onto the state).   This reimbursement is included in the Gross Sales subject to GET and can be thought of as a "tax on tax."
• Hawaii sales tax can be collected either at the "Maximum Pass-On Rates" or at a standard rate.  The Maximum Pass-on Rate is greater than the standard rate, because businesses are taxed on their gross receipts including the standard GET that is charged to customers. (Hawaii State Documentation)

How do this update affect you? 

• Your sales tax calculations for Hawaii now default to collect according to the maximum pass-on rate. This limits the potential scenario of paying out-of-pocket.
• If you prefer to return to collecting the standard rate, you can adjust this in your TaxJar account's state nexus settings for Hawaii.

If you're using TaxJar for Reporting and Filing:

Hawaii's General Excise Tax (GET) model has the vendor charge consumers a reimbursement for tax at the time of sale (unlike traditional systems where the vendor charges tax and passes it onto the state). 

• As mentioned above, this reimbursement is included in Gross Sales subject to GET (essentially a tax on tax).