Hawaii Passes Unique Marketplace Bill

On April 4, 2019,  Hawaii Governor David Ige signed SB 396/Act 2  into law.  The new law, effective January 1, 2020, establishes marketplace facilitators as the sellers of tangible personal property, intangible property, or services. This is not unusual and is demonstrative of a clear national trend.  However, Hawaii has added a unique twist – marketplace sellers are deemed to be making wholesale sales to the facilitators.  This characterization is hugely important as in Hawaii wholesale sales are subject to a 0.5% General Excise Tax (GET). Therefore, under the new marketplace law the state will collect 4% GET from marketplace facilitators and an additional 0.5% from marketplace sellers that meet the Hawaii economic nexus threshold.  In other words, both sellers and facilitators will be liable for reporting and remitting on their Hawaii sales.    

Finally, the new marketplace law requires other persons who provide a forum for listing of tangible personal property and the taking or processing of orders to report information about purchasers to the Department of Taxation.  

Author

Erik Wallin

Erik Wallin is a Senior Tax Counsel on the Tax Research Team at Sovos Compliance. Erik has been with Sovos Compliance since 2011, and his main areas of focus are on U.S. Transaction Tax Law which includes special expertise in the taxation of technology and the taxation mechanisms that apply throughout the Colorado home rule jurisdictions. Erik is a member of the Massachusetts Bar, has a B.A. from York College of Pennsylvania, a J.D. from New England School of Law, and an LL.M. in Taxation from Boston University.
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