It's hard to believe, but Hawaii's tax code appears to be even more
convoluted than that of the IRS, and their website considerably less
user-friendly. I didn't think either of these was possible!
However, with some persistence, I was able to find the documentation
that appears most appropriate to your situation, and that also
indicates that sales to out-of-state customers are NOT subject to the
General Excise Tax.
The most relevant document is this:
June 23, 1998
TAX INFORMATION RELEASE NO. 98-5
RE: General Excise Tax Exemption for Tangible Personal Property,
Including Souvenirs and Gift Items, Shipped out of the State
and the key excerpts from this document are as follows:
...The place of delivery of tangible personal property determines
whether a sale is subject to the general excise tax
...The general excise tax...is applicable to the gross income received
from the sale of tangible personal property only where the place of
delivery is in the State.
...Applicable Law -- The value or gross proceeds arising from the
manufacture, production or sale of tangible personal property
(property) which is shipped by the manufacturer, producer, or seller
(Taxpayer) to a place outside the State, where such property is
resold, consumed, or used outside the State is not subject to the
general excise tax. Haw. Rev. Stat. section 237-29.5(a)(1) (Supp.
The above document also indicates that there are paperwork
requirements for documenting the sales to out-of-state customers, but
also says there are exemptions or alternatives to filing forms, when
you have, e.g., a receipt or order form from a customer with an
out-of-state address. The language isn't too clear on this, and the
advice of an accountant certainly seems warranted here.
The state seems to adamantly avoid giving an example of the
out-of-state exemption as pertaining to internet sales...why provide
anything so obviously helpful?
However, there is a "Tax Facts" sheet that comes close:
Revised July, 2000
GENERAL EXCISE VS. SALES TAX
Tax Facts 96-1
14. If an out-of-state buyer comes to Hawaii, orders goods from a
Hawaii seller, and then has the seller ship the goods out of Hawaii,
is the sale subject to the general excise tax?
Whether the sale is taxable or not depends on the facts and
circumstances regarding that transaction.
IF the buyer selects the goods and enters into an agreement with the
seller for the delivery of the goods at a location outside Hawaii, and
if the goods will be shipped at the seller's risk and expense
(although the seller may add an additional charge to cover the
shipping and handling expenses), then the sale is not subject to the
general excise tax.
EXAMPLE 1 - Tourist T from California comes to Hawaii and selects a
large vase from Business F. Rather than risk breaking the vase during
travel, T has F pack and deliver the vase to T's home for an
additional shipping and handling charge, with the assurance that F
will replace the vase if it is lost or damaged in shipping. F is not
subject to the general excise tax on the gross income from this sale.
IF the buyer purchases the goods from a seller in Hawaii and leaves
the store with the purchased goods, then the sale is subject to the
general excise tax even if the buyer subsequently ships the goods to a
location outside Hawaii.
EXAMPLE 2 - Tourist U from Japan comes to Hawaii and purchases
souvenirs from Business G. G puts the purchased souvenirs in a bag and
gives them to U. G is subject to the general excise tax on the gross
income from this sale.
Lastly, the actual instructions for filing GET returns can be found here:
GENERAL INSTRUCTIONS FOR FILING THE GENERAL EXCISE/USE TAX RETURNS
and includes the following exemption:
Out of State Sales: The value or gross proceeds received by a
manufacturer, producer, or seller of tangible personal property
shipped to a point outside of the State where it is resold or
otherwise consumed or used outside the State are exempt. Report and
explain these amounts. For more information, see Tax Information
Release No. 98-5. (Section 237-29.5(1).)
Well...there you have it. I think the language is pretty clear that
out of state sales are not subject to the GET (and as far as I can
tell, are not subject to much paperwork either, as long as you keep
regular records). But as a reminder, I'm not a tax expert, nor do I
play one at Google Answers, so please consult with an appropriate
professional as you see fit.
I hear Hawaii is paradise. Enjoy!
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