I do quite a bit of mail-order purchasing, namely with U.S. Purchasing Exchange, California; Seta Corporation, Florida; and Lindenwold Jewelers, Ohio. Are we subject to a 4 percent sales tax on all the purchases? Purchasers must pay
on untaxed mail ordersMany Hawaii residents probably don't know they are required to pay the state a 4 percent use tax for "imported" items purchased from out-of-state sellers, such as mail-order companies, who are not licensed to do business in Hawaii.
States prefer that mail-order companies collect and pay that tax, said Taxation Department spokeswoman June Yamamoto. If not, the purchaser is responsible for paying the state.
Depending on their activities and presence in Hawaii, mail-order companies may or may not be obligated to collect and pay the tax under current interpretations of the U.S. Constitution, Yamamoto said. Still, many have voluntarily agreed to do so.
The three companies you name aren't among the 550 companies (not solely mail-order businesses) already registered. Thus, you are required to pay taxes on the "landed" value of each item, which is generally its price, plus shipping and handling. However, any sales tax paid to another state may be taken as a credit to offset the Hawaii tax, Yamamoto said.
Asked what monitoring there is on this, she said, "We rely primarily on voluntary compliance." But the department also makes continuous checks and has targeted certain areas in special projects.
The department is working with other states and the Direct Marketers Association in Washington, D.C., to secure a national voluntary use tax collection agreement from out-of-state vendors and also is seeking federal legislation to require mail-order vendors to collect the tax for all states.
For information, call 587-4242.
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