HB2507 HD1.DOC

SECTION 1. Chapter 255D, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"Part . ALTERNATIVE TO STREAMLINED SALES AND USE TAX AGREEMENT

§255D-A Definitions. For the purposes of this part:

"Certified software provider" means a person that:

(1) Provides software to remote sellers to facilitate state sales and use tax compliance; and

(2) Is certified by a state to provide such software.

"Remote sale" means a sale sourced to a state in which the seller would not legally be required to pay, collect, or remit state or local sales and use taxes unless provided for by an act of Congress.

"Remote seller" means a person that makes a remote sale; provided that the seller has gross annual receipts in total remote sales in the United States in the preceding calendar year exceeding $1,000,000. For purposes of determining whether this threshold is met, the gross annual receipts from remote sales of two or more persons shall be aggregated if:

(1) The persons are related to the remote seller within the meaning of subsections (b) and (c) of section 267 or section 707(b)(1) of the Internal Revenue Code; or

(2) The persons have one or more ownership relationships and the relationships were designed with the principal purpose to avoid collecting and remitting state or local sales and use taxes.

"Sourced" means the location where a product or service that is sold is received by the purchaser, based on the location indicated by instructions for delivery that the purchaser furnishes to the seller. When no delivery location is specified, the remote sale is sourced to the customer's address that is either known to the seller or, if not known, obtained by the seller during the consummation of the transaction, including the address of the customer's payment instrument if no other address is available. If an address is unknown and a billing address cannot be obtained, the remote sale is sourced to the address of the seller from which the remote sale was made.

§255D-B Implementation of minimum simplification requirements. If the State seeks to require sellers to collect and remit sales and use taxes with respect to remote sales sourced to the State, but is not a member state under the Streamlined Sales and Use Tax Agreement, the department shall establish rules to implement minimum simplification requirements. These rules shall:

(1) Provide the following:

(A) A single entity within the State responsible for all state and local sales and use tax administration, return processing, and audits for remote sales sourced to the State;

(B) A single audit of a remote seller for all state and local taxing jurisdictions within that State; and

(C) A single sales and use tax return to be used by remote sellers to be filed with the single entity responsible for tax administration;

provided that the department shall not require a remote seller to file sales and use tax returns any more frequently than returns are required for nonremote sellers or impose requirements on remote sellers that the department does not impose on nonremote sellers with respect to the collection of sales and use taxes;

(2) Provide a uniform sales and use tax base;

(3) Source all remote sales in compliance with the sourcing definition set forth in section 255D-A;

(4) Provide the following:

(A) Information indicating the taxability of products and services along with any product and service exemptions from sales and use tax in the State and a rates and boundary database;

(B) Software free of charge for remote sellers that calculates sales and use taxes due on each transaction at the time the transaction is completed, that files sales and use tax returns, and that is updated to reflect rate changes as described in paragraph (8); and

(C) Certification procedures for persons to be approved as certified software providers; provided that the software provided by certified software providers shall be capable of calculating and filing sales and use taxes in all states;

(5) Relieve remote sellers from liability to the State for the incorrect collection, remittance, or noncollection of sales and use taxes, including any penalties or interest, if the liability is the result of an error or omission made by a certified software provider;

(6) Relieve certified software providers from liability to the State for the incorrect collection, remittance, or noncollection of sales and use taxes, including any penalties or interest, if the liability is the result of misleading or inaccurate information provided by a remote seller;

(7) Relieve remote sellers and certified software providers from liability to the State for incorrect collection, remittance, or noncollection of sales and use taxes, including any penalties or interest, if the liability is the result of incorrect information or software provided by the State; and

(8) Provide remote sellers and certified software providers with ninety days notice of a rate change by the State and update the information described in subparagraph (4)(A) accordingly and relieve any remote seller or certified software provider from liability for collecting sales and use taxes at the immediately preceding effective rate during the ninety-day notice period if the required notice is not provided."

SECTION 2. Chapter 255D, Hawaii Revised Statutes, is amended by designating sections 255D-1 to 255D-9 as part I, entitled:

"PART I. GENERAL PROVISIONS"

SECTION 3. In codifying the new sections added by section 1 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2030.

HOUSE OF REPRESENTATIVES	H.B. NO.	2507
TWENTY-SEVENTH LEGISLATURE, 2014		H.D. 1
STATE OF HAWAII