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Kokua Line June Watanabe |
No state taxes on online
sales to nonresidentsQuestion: Do I have to pay the 4 percent general excise tax on items sold over the Internet to out-of-state buyers?
Answer: No.
A specific exemption is made for sales to out-of-state buyers for use out of state, said Cathleen Tokishi, spokeswoman for the state Department of Taxation. But you need to fill out state tax Form G-61.
You can get more information on the department's Web site, www.state.hi.us/tax; by calling Taxpayer Services at 587-4242 or (800) 222-3229; or by e-mailing taxpayer.services@hawaii.gov .
This is a good opportunity to point out to readers that under Hawaii law, anytime you purchase goods, services or contracting from out of state, via catalogs or the Internet, you should be paying a state use tax.
The use tax would be comparable to what you would pay as excise tax if you had bought the item in Hawaii, Tokishi said.
For example, if you bought a computer in Hawaii, the seller would be subject to the state's 4 percent general excise tax, which is generally passed on to the consumer.
If you buy a computer from out of state and bring it into Hawaii for your own use, you would have to pay a comparable 4 percent use tax on the landed value of that computer.
The problem is collecting that tax.
"Most consumers are unaware of the tax and even if they are aware of it, most don't pay," Tokishi acknowledged. "Enforcement is a very difficult issue because of a lack of resources."
It's a matter of setting priorities and "that's just not really a high priority on our list, to go after everybody who's buying a lot of these little things or whatever over the Internet, one sale at a time," she said. "That's not an efficient use of our resources."
Although some out-of-state companies do assess the state tax, in many cases, it boils down to an honor system.
"It would be up to the consumer to come forward and report the importation and pay the tax that is due," Tokishi said.
What Hawaii and many other states want to do is make out-of-state sellers collect the tax for them instead of relying on purchasers to pony up.
To that end, they have come together in the Streamlined Sales Tax Project to try to make it easier for online sellers to do that by developing a simpler, uniform system of charging and collecting taxes.
"The way the laws are now, on a national level, states cannot make these out-of-state sellers that don't have a presence in those states collect the state's tax for them," Tokishi said. "For example, if a business is not doing business in Hawaii, we can't make them collect our tax for us."
The sellers argue that if they sell in multiple states, it's difficult to know what to charge.
For Hawaii, it's easy, Tokishi said, because it would be 4 percent all the time. "But in other states, depending on where the purchaser is, there could be multiple levels of local taxes as well, not just a state tax," she said.
However, before the states can do anything, Congress must first pass a law allowing them to charge sales taxes on interstate online transactions.
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