HB2135 Summary: Streamlined Sales and Use Tax Amendments

• Creates three new tax chapters (A, B, C) to restructure Hawaii's general excise and use tax system to comply with the Streamlined Sales and Use Tax Agreement, moving wholesaler/service business taxes, imports tax, and insurance producer tax into separate chapters

• Establishes destination-based sourcing rules for sales, telecommunications services, and direct mail to determine which jurisdiction receives tax revenue based on where products/services are delivered or used

• Provides amnesty from back taxes and penalties for out-of-state sellers who register to collect Hawaii sales/use taxes within 12 months of the state joining the agreement, and protects sellers using certified systems from liability for erroneous tax calculations

• Implements technical provisions including bad debt deductions, rounding rules for tax calculations, certified service provider requirements with privacy protections, and relief from county audits for sellers registered under the agreement

• Effective July 1, 2030, or upon Hawaii becoming party to the streamlined agreement (whichever is later); creates legislative committee to oversee implementation and compliance