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Taxes / State tax rules / Hawaii

Selling on eBay, Poshmark or Etsy from Hawaii: sales tax and 1099-K rules

Hawaii has no sales tax but a general excise tax (GET) on businesses, and since January 1, 2020, Act 2 (2019) has made a marketplace facilitator the retail seller of what is sold through it, at 4% plus any county surcharge, while a marketplace seller engaged in business in Hawaii still owes GET at the 0.5% wholesale rate on those sales and must hold a GET license. For Form 1099-K, no Hawaii threshold appears on the Department of Taxation pages checked for this page; the federal test is over $20,000 in more than 200 transactions.

General information, not tax advice. Check with a tax professional about your own situation.

Checked against the official pages listed below on .

Hawaii in short

General sales tax:
Yes, general excise tax (GET), 4% state rate
Marketplace facilitator law:
Yes: Act 2, Session Laws of Hawaii 2019 (Tax Information Release 2019-03), since Jan 1, 2020
When a marketplace must collect:
a physical presence in Hawaii, or gross income sourced to Hawaii of $100,000 or more or 200 or more transactions (Act 41, 2018), counting its own and its marketplace sales
Form 1099-K:
No state rule stated on the pages checked

Who collects the tax on a marketplace sale

Act 2 deems a marketplace facilitator the retail seller of the tangible personal property, intangible property and services sold through its marketplace, so it owes GET at the 4% retail rate plus any county surcharge on those sales, whether or not the marketplace seller is registered in Hawaii (TIR 2019-03). GET is a tax on the business rather than a tax collected from the buyer.

If you sell only through marketplaces

Act 2 also deems the marketplace seller's sales to the facilitator to be sales at wholesale. A marketplace seller engaged in business in Hawaii, which includes any seller with a physical presence there, owes GET at the 0.5% wholesale rate on tangible personal property it sells through a marketplace facilitator and sends to a retail purchaser in Hawaii, and must register for a GET license. A seller with no physical presence counts its Hawaii sales, including marketplace sales it ships into the state, toward the $100,000 or 200-transaction test.

Registration, resale certificates and what changes when you also sell direct have their own page: Hawaii: seller's permit and resale certificate rules.

The law: Act 2, Session Laws of Hawaii 2019 (Tax Information Release 2019-03), effective .

"Act 2 deems “marketplace facilitators” to be the retail level sellers of tangible personal property, intangible personal property, and services sold through its marketplace."
Hawaii Department of Taxation, Tax Information Release No. 2019-03 (Revised): Guidance Regarding Marketplace Facilitators, Act 2, Session Laws of Hawaii 2019, Background
"Act 2 also deems sales of tangible personal property, intangible personal property, and services by sellers to the “marketplace facilitator” to be sales at wholesale."
Hawaii Department of Taxation, Tax Information Release No. 2019-03 (Revised): Guidance Regarding Marketplace Facilitators, Act 2, Session Laws of Hawaii 2019, Background
"If they have not already done so, all marketplace facilitators and marketplace sellers engaged in business in the State must register for GET licenses prior January 1, 2020, or prior to starting business activities, whichever is later."
Hawaii Department of Taxation, Tax Information Release No. 2019-03 (Revised): Guidance Regarding Marketplace Facilitators, Act 2, Session Laws of Hawaii 2019, Engaged in Business in the State and Registration

Sources: Tax Information Release No. 2019-03 (Revised): Guidance Regarding Marketplace Facilitators, Act 2, Session Laws of Hawaii 2019.

Hawaii's general excise tax (GET)

The Department of Taxation says Hawaii does not have a sales tax; it has the general excise tax (GET), assessed on all business activities, at 4% for most activities and 0.5% for wholesaling. Each county adds a 0.5% surcharge on the 4% rate through December 31, 2030 (Honolulu, Kauai, Hawaii and Maui counties), so the retail rate is 4.5%; the tax is on the business, which may visibly pass it on at up to 4.7120%.

"Hawaii does not have a sales tax; instead, we have the GET, which is assessed on all business activities."
Hawaii Department of Taxation, General Excise Tax (GET) FAQ

Sources: General Excise Tax (GET) FAQ.

Form 1099-K: Hawaii and the federal test

The Department of Taxation pages checked for this page (its GET information and TIR 2019-03) don't address Form 1099-K, so no Hawaii 1099-K rule is stated here.

The federal test, for comparison: the IRS says a payment app or online marketplace must send a Form 1099-K when payments for goods or services total over $20,000 in more than 200 transactions, and adds: "However, they may send you a Form 1099-K with lower amounts and/or transactions." (Understanding your Form 1099-K, reviewed ). The Instructions for Form 1099-K count both parts for the calendar year, through each platform separately, and say the box 1a gross amount is figured without adjustments for credits, discounts, fees, refunds or shipping, so a 1099-K figure is not the same as profit. More on the federal rule in Form 1099-K for resellers.

Sources: General Excise Tax (GET) FAQ; Tax Information Release No. 2019-03 (Revised): Guidance Regarding Marketplace Facilitators, Act 2, Session Laws of Hawaii 2019.

Worked examples

A Hawaii seller's $40 marketplace sale to a Honolulu buyer

The marketplace facilitator, as the retail seller, owes GET at 4% plus Honolulu's 0.5% surcharge: $40 x 4.5% = $1.80. The Hawaii-based seller owes GET at the 0.5% wholesale rate on its sale to the facilitator: $40 x 0.5% = $0.20, if the seller's gross income from that sale is the $40 price. The county surcharge doesn't apply at the 0.5% rate.

An out-of-state seller shipping into Hawaii

With $30,000 of Hawaii sales in 150 transactions a year, all through marketplaces and shipped into the state, a seller with no Hawaii presence is under both Act 41 thresholds ($100,000 of gross income or 200 transactions), so it isn't engaged in business in Hawaii. At 250 transactions it would be, and TIR 2019-03 then puts it on GET at the 0.5% wholesale rate for those marketplace sales.

Edge cases and details

  • If the marketplace facilitator itself is not engaged in business in Hawaii, TIR 2019-03 says the ordinary engaged-in-business analysis applies to the seller as if Act 2 had not been enacted, counting all of the seller's sales into the state.
  • If neither the facilitator nor the seller is engaged in business in Hawaii, the purchaser is liable for use tax on the purchase, the TIR says.
  • The facilitator also owes use tax at the wholesale rate on goods sold through its marketplace by a seller who isn't engaged in business in Hawaii (TIR 2019-03).
  • A GET license costs a one-time $20 registration fee, applied for on Form BB-1, according to the department's GET FAQ.
  • All four counties' 0.5% surcharges run through December 31, 2030 on the department's page; Maui County's took effect January 1, 2024.

What to do

  1. If you are based in Hawaii and sell through marketplaces, read TIR 2019-03 on GET licenses and the 0.5% wholesale rate for marketplace sellers.
  2. Keep each marketplace's sales report, which shows the Hawaii sales you'd use to figure wholesale gross income.
  3. If you sell from outside Hawaii, count your Hawaii sales and transactions each year against the $100,000 and 200-transaction thresholds.
  4. Check with a tax professional, or with the Department of Taxation's Rules Office, about your own situation.

Common questions

Do I owe Hawaii GET if eBay or Etsy already pays it on my sales?

Under Act 2 as explained in TIR 2019-03, the marketplace facilitator owes GET at the retail rate, and a marketplace seller engaged in business in Hawaii also owes GET at the 0.5% wholesale rate on goods it sells through the facilitator to Hawaii buyers.

Why is the GET on my Honolulu sale 4.5%, or 4.712% on the receipt?

The state GET is 4% and the City and County of Honolulu adds a 0.5% surcharge, for 4.5%. The department says a business may choose to visibly pass the tax on to customers, and lists 4.7120% as the maximum pass-on rate for Honolulu, including the surcharge.

Related

General information, not tax advice

This page summarizes Hawaii's own published pages and statutes as read on , and the IRS's 1099-K pages. It doesn't say what you should file, register for or pay. Rules depend on your situation and change: check with a tax professional, or with the state's revenue department.

Sources

Official pages this page is built from, with the day each was read.

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