Hawaii Sales Tax Filing Update January 2020: Marketplace Facilitator Laws

Hawaii  passed a law requiring Marketplaces to collect and remit sales tax on sales facilitated through the marketplace effective January 1, 2020.

• Amazon, eBay, Etsy and Walmart began this collection on January 1, 2020.

In this article, we summarize Hawaii's state guidance on the following questions:

I've never registered for a Hawaii license. Do I need to register for a sales tax license in Hawaii now?

If you have physical or economic nexus In the state you must register for the General Excise Tax.

• If you are a retailer with a physical presence in Hawaii or you are a remote seller who has crossed the economic nexus threshold for Hawaii ($100,000/year in gross revenue, or more than 200 separate sales transactions in Hawaii in the previous or current calendar year), then you will need to register for a Hawaii sales tax license. 
• If you've imported your sales across all platforms into your TaxJar account, you can determine if you have economic nexus in the state by running the Sales & Transactions Checker.

If you do not meet any of the criteria that create nexus in Hawaii (physical, economic or otherwise), you won't need to register for a sales tax license in this state.

I have already registered for a license in Hawaii and all of my sales are Marketplace-only sales. Should I cancel my existing registration?

If there is no presence in the state and the economic threshold is not met, then the marketplace seller does not need to remain registered.

• We always recommend checking directly with the state or a sales tax consultant who can provide more detailed advice specific to your business scenario prior to canceling your registration. 

Do I need to collect taxes on my Hawaii sales on other platforms?

Yes--if you have nexus in the state (physical or economic) and you make sales to customers in Hawaii on platforms outside of the marketplace that is automatically collecting and remitting, you will also need to collect tax on your end on the Hawaii orders that are processed on the other platforms.

Do I still need to file returns in Hawaii?

Yes. Returns must be filed if there is economic/physical presence in the state and marketplace facilitator sales are made.

• If physical or economic nexus is present, and marketplace sellers directly ship into Hawaii, then the wholesale general excise tax rate must be paid on those to the marketplace transactions.  Shipments into Hawaii from the marketplace facilitator are not subject to the wholesale rate.
• A zero return may be required only if physical presence is met but there are no sales.

I still need to file returns in Hawaii.  How do I do this without paying double tax on the sales that were collected and remitted by my Marketplace?

When filing your Hawaii sales tax return, your "Marketplace Sales" are excluded from "Gross Sales" on your TaxJar Report. 

• For Hawaii, Marketplace sales are treated the same as Wholesale sales and can be found under the line item "Sales Subject to Wholesaling Tax". I've included a screenshot below to highlight this.
  

  

If you make sales on other platforms in addition to the Marketplace, you'll need to make sure you remit the tax you collected for those sales when you file.

• If you have both marketplace and non-marketplace sales, our Report will show the jurisdictional breakdown for only the non-marketplace sales. 
• If you're enrolled in AutoFile for Hawaii, our system will handle the Marketplace sales deduction process automatically.