GENERAL INSTRUCTIONS FOR FILING THE GENERAL ... - Hawaii

1 (REV. 2007)STATE OF HAWAIIDEPARTMENT OF TAXATIONGENERAL INSTRUCTIONS FOR FILING THEGENERAL EXCISE/USE TAX RETURNSCONTAINS THE FOLLOWING:Page Excise/Use Tax Returns GENERAL INSTRUCTIONS .. 2-3 GENERAL Excise/Use Tax Activity Classifications .. 4-6 Step-By-Step INSTRUCTIONS for Filling in Your Form G-45 (Periodic Return) .. 7-12 Step-By-Step INSTRUCTIONS for Filling in Your Form G-49 (Annual Return and Reconciliation) .. 13-18 Schedule of GENERAL Excise Tax Exemptions and Deductions .. 19-21 Division of Gross Income Among Taxpayers .. 21 Schedule of Use Tax Exemptions and Deductions .. 22 NOTE:Periodic GENERAL excise/use tax returns (Form G-45), the annual GENERAL excise/use tax return (Form G-49), andthe Application For Extension Of Time To File The Annual Return And Reconciliation GENERAL Excise/Use Tax(Form G-39) may be electronically filed (e-filed) with the Department of Taxation.

2 For more information, go tohttp Address InformationHAWAII DEPARTMENT OF BOX 1425 HONOLULU, HI 96806-1425 GENERAL EXCISE/USE TAX RETURNSGENERAL INSTRUCTIONSC hanges You Should Note Amounts received after June 13, 2007, by theoperator of the Hawaii convention center forreimbursement of costs or advances madepursuant to a contract with the Hawaii tourismauthority are exempt from the GENERAL excisetax. (Act 173, Session Laws of Hawaii (SLH)2007) Effective July 1, 2007, the sale of alcohol fu-els is exempt from the GENERAL excise tax.(Act 209, SLH 2007) Amounts received after June 30, 2007, by aprofessional employment organization (PEO)from a client company equal to amounts thatare disbursed by the PEO for wages, salaries,payroll taxes, insurance premiums, and bene-fits of the assigned employees at a clientcompany are exempt from the GENERAL excisetax; provided that the PEO has not failed tocollect, account for, and pay over any incometax withholding for assigned employees orany federal or state taxes for which the PEOis responsible.

3 (Act 225, SLH 2007) Effective January 1, 2008, the GENERAL excisetax exemption for amounts received by man-agers in reimbursement of condominium com-mon expenses is extended to amountsreceived by submanagers. (Act 239, SLH2007) Effective January 1, 2008, the GENERAL excisetax exemption for amounts received by hoteloperators in reimbursement of hotel employeeexpenses is extended to amounts received bysuboperators and to employee expenses intimeshare projects. (Act 239, SLH 2007) Effective January 1, 2007, a new countysurcharge on the State's GENERAL exciseand/or use taxes will be imposed on Hawaiitaxpayers. Although only the City and Countyof Honolulu is levying the county surcharge,taxpayers in ALL counties may be provisions of the GENERAL excise and usetax laws are applicable to the county sur-charge.

4 The county surcharge does not applyto gross income or gross proceeds taxable atthe or the tax rates. Taxpayersare required to complete a schedule on theirperiodic and annual GENERAL excise and usetax returns summarizing the amount of taxesassigned to each county. (Act 247, SLH2005) The Forms G-45 and G-49 have been revisedso you can file an amended return on FormG-45 or Form G-49 to change the Form G-45or Form G-49 you already filed. Forms G-54and G-55 have been made GENERAL Excise TaxThe GENERAL excise tax is a privilege tax imposedon business activity in the State of Hawaii . The taxis imposed on the gross income received by theperson engaging in the business activity. Activitiessubject to the tax include wholesaling, retailing,farming, services, construction contracting, rental ofpersonal or real property, business interest income,and Must FileEvery person doing business in Hawaii during thetaxable year must get a GENERAL excise tax licenseand file the appropriate returns, regardless of howmuch income the business earns, and whether ornot the business also incurred losses.

5 Every per-son receiving rents from real property owned in Ha-waii is considered to be doing business, and mustfile person who uses in this State tangible per-sonal property, services, or contracting which areimported into Hawaii , regardless if at the time of im-portation, the property, services, or contracting isowned by the importer, purchased from a seller thatdoes not have a GENERAL excise tax license, or how-ever acquired, must file a return to report use taxinaddition togeneral excise the GENERAL Excise and Use Tax Laws, per-son means every separate legal entity, eventhough it might not pay net income tax or file a netincome tax return. For example, although a part-nership that is doing business does not pay net in-come tax on the income it earns, the partnership(rather than its partners) is required to pay generalexcise or use tax.

6 However, if the grantor of a re-vocable living trust reports all items of the trust s in-come on the grantor s individual net income taxreturn, the grantor rather than the trust will reportand pay GENERAL excise tax on the trust s Tax Information Release No. 94-5 for more in-formation. Furthermore, a husband and wife mayfile joint GENERAL excise and use tax most circumstances, GENERAL excise tax returnsdo not have to be filed by: Individuals not engaged in business. If an in-dividual s only business is performing per-sonal services as an employee under thedirection and control of an employer, returnsare not required, but an individual who rentsout real property or performs services as anindependent contractor, even as a side busi-ness, must report and pay tax on that income.

7 Financial institutions. Afinancial institutionthat is subject to the Franchise Tax Law(Chapter 241, Hawaii Revised Statutes(HRS)), and that earns only income that istaxable under that law, only needs to file afranchise tax return. See Section ,HRS, for more information. Public utilities owned and operated by theState or a political subdivision of it, or publicservice companies subject to the Public Ser-vice Company Tax Law (Chapter 239, HRS).If, however, a public service company re-ceives income from directory advertising, in-terest income, or income not included in themeasure of the tax imposed by Chapter 239,HRS, GENERAL excise tax returns must be filedto report and pay tax on those amounts. Insurance companies subject to the insurancepremiums tax (Sections 431:7-201 to431:7-205, HRS).

8 If, however, an insurancecompany receives rents from investments inHawaii real property, GENERAL excise tax re-turns must be filed to report and pay tax onthat income. See Section , HRS, formore information. Nonprofit organizations that have filed FormG-6, Application for Exemption From GeneralExcise Taxes, or Form G-6S, Application forExemption From GENERAL Excise Taxes (ShortForm), and which have been granted tax ex-empt status by the nonprofitorganization must file Form G-6 or FormG-6S even if it has a determination letterfrom the Internal Revenue anonprofit organization conducts fund raisingactivity such as selling barbecued chicken orsweet bread, or conducts any other businessthat is unrelated to the exempt activity, gen-eral excise tax returns must be filed to reportand pay tax on that income.

9 See Tax FactsNos. 98-3 and 99-4 for more or Nonresident?Under the GENERAL Excise and Use Tax Laws, itdoes not matter if you are a resident, nonresident,or part-year PeriodThe periodic returns (Form G-45) are used to reportgross income, exemptions, deductions, and tax dueon business activities periodically. They must befiled throughout the year at specified often you file depends on the amount of gen-eral excise tax your business has to pay during theyear. You must file monthly if you will pay morethan $4,000 in GENERAL excise tax per year. You may file quarterly if you will pay $4,000or less in GENERAL excise tax per year. You may file semiannually if you will pay$2,000 or less in GENERAL excise tax per you are FILING quarterly or semiannually and yourtax liability is more than the amounts listed above,you must change your FILING change your FILING period, notify the Departmentof Taxation by FILING Form GEW-TA-RV-5, GeneralExcise/Use, Employer s Withholding, Transient Ac-commodations and Rental Motor Vehicle & TourVehicle Surcharge Application Forms to FileA monthly filer must file aForm G-45every month,a quarterly filer must file a return for each quarter,and a semiannual filer must file a return for eachsemiannual filers must file an annual return and reconcilia-tion (Form G-49) after the close of the taxableyear.

10 Form G-49 is a summary of your activity forthe entire year. This return must be filedin addi-tion toForm must file a Form G-45 even if you do not haveany gross income to report for the period. Justwrite a zero (0) in each column of your main busi-ness activity and also on the Total Taxes Due line. If your business activity has temporarilystopped, you can write us to request that your li-cense be put on inactive status for 2 years. You donot have to file Forms G-45 while your license is in-active; only Forms G-49 are the Forms G-45 and G-49 have been rede-signed for scanning, there is no longer a section onthe forms to list details concerning "exemptions"and "deductions" claimed. There is now a separateform (Schedule GE (Form G-45/G-49)) that needsto be completed to list details concerning "exemp-tions" and "deductions" claimed and attached toForms G-45 and G-49 or the "exemptions" and "de-ductions" claimed will be completing Part V - Schedule of Assignmentof Taxes By District on Forms G-45 and G-49, ifyou did business in MORE THAN one District, youwill need to completeForm G-75, GENERAL Ex-cise/Use Taxes By Districts.