Sales Tax Fundamentals
Get up to speed on the basics of sales tax
Economic Nexus Law by State: Hawaii
byJune 21, 2018
State laws on economic nexus vary and it’s hard to keep up if you’re doing business in multiple states. We’ve done the research for you and here’s all the information you need to know about economic nexus in Hawaii.
What is economic nexus in Hawaii?
With the recent South Dakota v. Wayfair Supreme Court ruling in favor of South Dakota, states are now free to pursue sales tax from eCommerce businesses who have a ‘significant presence’ in their state.
Significant presence or “nexus” was previously defined as having a physical presence (ex: a brick & mortar store, employee or inventory in a fulfillment center like FBA). But with this recent ruling, now this definition has been expanded to include economic activity in a state as well. This concept of triggering sales tax responsibility because of your economic activity in a state is now referred to as economic nexus.
Most importantly, what this means is that if you pass a state’s economic threshold for total revenue in that state and/or number of transactions in that state, you’re now legally required to register, collect and remit sales tax for that state.
What’s the threshold for economic nexus law in Hawaii?
- State: Hawaii
- Threshold: $100,000/year in gross revenue, or makes sales into Hawaii in more than 200 separate transactions in the previous or current calendar year. The general excise tax (GET) is imposed on the sale of of virtually all transactions, even sales for resale.
- Summary: According to the state, sellers that meet either the sales or transaction number thresholds are required to register for a Hawaii sales tax permit, collect sales tax on sales that ship into Hawaii, and remit sales tax to the state.
- Full text: You can read the text of Hawaii’s economic nexus law here.
- More: You can read guidance on economic nexus from the Hawaii Department of Revenue here
When did this Hawaii law go into effect or is it planned?
This law went into effect 7/1/2018.
I meet the economic threshold requirement in Hawaii. Now what?
Here’s a quick checklist of what to do next:
- Register for a sales tax permit in Hawaii (info below)
- Choose a technology like TaxJar to help you manage multi-state compliance. Sign up for a free 30-day trial to see how we can help you save time!
- Connect TaxJar once to all of the places you sell
- Ensure all your eCommerce channels are setup correctly to collect sales tax
- Enroll in AutoFile and tell us how often you need to file
- Relax, you now handled your sales tax exposure. We’ll handle the rest for you.
Can you help me register for a sales tax permit?
Certainly! TaxJar offers these two options:
- Read our do it yourself instructions for every state
- Visit TaxJar.com/register to have one of our expert partners do it for you (~$100 each state not including state’s fees)
Who can handle my Hawaii sales tax filings for me?
At TaxJar, we help more than 10,000 sellers manage their sales tax needs every month. We help your business save on submitting your returns with our automated filing service called AutoFile. Read more about how AutoFile can handle all of your returns in as many states as you’d like.
I’ve met this threshold in Hawaii, now where can I ask questions?
Above all, we recommend speaking with a vetted sales tax expert to answer specific questions for your business.
And finally…I’m close to meeting this threshold for Hawaii. Will TaxJar notify me when I reach it?
Coming soon. We are working on a solution to provide notices for TaxJar customers when you meet a specific state’s economic nexus threshold, but it’s not ready just yet.
How you can prepare: make sure we’re able to get in touch with you
- Ensure your TaxJar account email is valid and can receive messages
- Confirm you receive TaxJar’s emails and are avoiding any spam filters