HB 1694 Summary

• Requires out-of-state sellers to collect Hawaii use taxes if they have agreements with in-state persons who refer customers to them (including through internet links or websites) and meet a $10,000 sales threshold in the preceding 12 months.

• Expands the definition of "engaged in business in the State" to include sellers that are members of commonly controlled groups with in-state entities selling similar products under the same business name or using identical trademarks.

• Allows exemptions from tax collection requirements for sellers meeting specific criteria, including demonstrating that in-state affiliates did not engage in referrals or activities that would satisfy commerce clause requirements.

• Directs the director of taxation to certify by the 2013 legislative session whether federal law has been enacted authorizing states to require tax collection from out-of-state sellers regardless of seller location.

• Takes effect July 1, 2012, but the main provisions delay until July 1, 2112, unless Hawaii enacts conforming legislation by June 30, 2013, responding to potential federal authorization.