(a) Recapping tires or selling tangible
personal property for use in recapping tires.
(1) Sales by recapper. This paragraph applies
to a person who purchases used tires or accepts used tires as trade-ins and
subsequently recaps the same for the person's own stock for sale. When tires
covered by this paragraph are sold, the sales take the rate of:
(A) One-half of one percent if made to
another person who purchases the tires for purposes of resale; and
(B) Four percent if made for consumption or
use by the purchaser and not for resale.
Example 1: A tire recapper (taxpayer R) sells
tires from stock to a service station operator (taxpayer S) who purchases the
tires for purposes of resale. Taxpayer R is subject to the general excise tax
at the rate of one-half of one percent on the amount received from taxpayer
S.
Example 2: A tire recapper (taxpayer R) sells
tires from stock to a customer who installs the tires on the customer's family
automobile. Taxpayer R is subject to the general excise tax at the rate of four
percent on the amount received from the customer.
(2) Sales by purchaser of recapped tires.
This paragraph applies to the gross income of a person who purchases recapped
tires for purposes of resale. When tires covered by this paragraph are sold,
such sales take the rate of:
(A) One-half of
one percent if made to another person who purchases the tires for purposes of
resale; and
(B) Four percent if
made for consumption or use by the purchaser and not for resale.
(3) Sales of tangible personal
property for use in tire recapping. This paragraph applies to a person who
sells tangible personal property for use in tire recapping. When personal
property covered by this paragraph is sold to a person using or consuming the
personal property in tire recapping, such sales take the rate of:
(A) Four percent if made to a tire recapper
whose gross income is taxable at the rates stated in section 18-237-13-06.11;
and
(B) One-half of one percent if
made to a tire recapper whose gross income is taxable at the rates stated in
paragraph (1).
(b) Furnishing or use of trading stamps and
similar devices. See section 18-237-13-10.
(c) Containers and packaging materials. See
section 18-237-4(b).
(d) Resale
certificates and sales at wholesale. This subsection sets forth the application
of section
237-13(2)(F),
HRS.
(1) Scope. A seller, in proper cases,
may take from the purchaser of tangible personal property a certificate, in the
form the director prescribes, certifying that the sale is a sale at wholesale.
This subsection sets forth the effect as to resale certificates; defines "sales
at wholesale"; sets forth the duties of sellers and purchasers in determining
whether a sale is at wholesale; and prescribes the form of the certificate
referred to in this subsection and in the administration and enforcement of
these rules as a "resale certificate".
(2) Effect of rules as to resale
certificates.
(A) A purchaser who furnishes a
resale certificate in one of the prescribed general forms to a seller who
accepts the certificate, thereby makes the certificate applicable to each sale
of tangible personal property by the seller to that purchaser until the
certificate is revoked by notice in writing, except those orders as to which it
is specified in writing that the certificate does not apply. A special form of
resale certificate is prescribed for use by sellers, at their option, for
certain sales to purchasers who are in the contracting business, or who are
subject to taxation as if so engaged. A purchaser who furnishes a resale
certificate thereby makes the certificate applicable to each sale of materials
or commodities made by the seller to that purchaser in connection with the
particular work or project identified by this special form of resale
certificate until the certificate is revoked by notice in writing, except those
orders as to which it is specified by notice in writing that the certificate
does not apply.
(B) A purchaser, by
giving a resale certificate in any of the prescribed forms to a seller who
accepts the certificate, certifies that unless the purchaser gives notice in
writing, which either specifies that the certificate does not apply to a
particular order or revokes the certificate altogether, the purchaser will upon
demand of the seller pay to the seller the amount of the additional tax which
by reason thereof is imposed upon the seller in the event any sale of tangible
personal property by the seller to the purchaser (or in the case of a resale
certificate in the special form, any sale made in connection with the
particular work or project identified by the special form) is not in fact a
"sale at wholesale," as defined by section 18-237-4, or is not a sale at
wholesale to the extent stated in the resale certificate, as the case may
be.
(C) If no resale certificate is
given, or if there is a certificate but not in the proper form, or if the
certificate is made inapplicable to a specific sale by a notice in writing, or
if the certificate is revoked, there is a presumption that the sales which, in
whole or in part, are not covered by an applicable certificate in the proper
form, are not at wholesale. However, this presumption does not apply if the
seller is one having a business which consists exclusively of sales at
wholesale, as defined.
(D) The
additional amount which the seller may require the purchaser to pay pursuant to
subparagraph (B), is illustrated by the following examples:
Example 1: Seller manufactures animal feed as a
by-product. On a sale as to which there is an applicable resale certificate,
seller's price is $100. Tax is reported and remitted by the seller in the
amount of $.50, at the one-half of one percent manufacturing rate. However, the
sale in fact is not at "wholesale" because the feed is used by the purchaser
for feeding saddle animals. Seller is assessed at the four percent rate
applicable to sales other than at wholesale. The purchaser is liable to pay the
seller $4.
Example 2: The facts are the same except that
the seller is a producer of agricultural products, which are the subject of the
sale. The amount which the purchaser is liable to pay the seller is $4.
Example 3: The sale is of animal feed brought
in from the mainland. On a sale where there is an applicable resale
certificate, seller's price is $100. Tax is reported and remitted by the seller
in the amount of $.50, at the one-half of one percent wholesale rate. However,
the sale in fact is not at "wholesale" because the feed is used by the
purchaser for feeding saddle animals. Seller is assessed at the four percent
rate applicable to sales other than at wholesale. The purchaser is liable to
pay the seller $4.
Example 4: The sale is of cement brought in
from the mainland. On a sale where there is an applicable resale certificate,
seller's price is $100. Tax is reported and remitted by the seller in the
amount of $.50, at the one-half of one percent wholesale rate. However, the
sale in fact is not at "wholesale" because the project consists in the
improvement of a rental unit owned by the purchaser and which the purchaser
continues to hold. Seller is assessed at the four percent rate applicable to
sales other than at wholesale. The purchaser is liable to pay the seller
$4.
(3) "Sale at
wholesale", defined. See section 18-237-4.
(4) Duties of the seller. It is the duty of
the seller, under the penalties prescribed by sections
237-41,
237-48,
231-34,
and
231-39,
HRS, to:
(A) Refuse to accept a resale
certificate if it is not in proper form and properly made out; or if having due
regard to the type of property sold, the nature and character of the business
of the purchaser, and the generally known customs or practices of the
purchaser's trade, it appears that the sales made to the purchaser will not be
sales at wholesale, or will not be sales at wholesale to the extent stated in
the certificate;
(B) Make inquiry
and ascertain the facts when, having due regard to the type of property sold,
the nature and character of the business of the purchaser, and the generally
known customers or practices of the purchaser's trade, the seller has reason to
believe that some of the sales to the purchaser, in addition to those of which
the seller is notified, are not sales at wholesale;
(C) Report for taxation at the rate of four
percent all sales of tangible personal property which the seller knows are not
sales at wholesale, unless upon inquiry the seller ascertains the facts as to
those sales which, in fact, are sales at wholesale;
(D) Keep as a part of the seller's records
all resale certificates accepted by the seller, notices of inapplicability of
such resale certificates to particular sales, and notices of revocation of such
certificates; and
(E) Keep proper
records, as required by section
237-14,
HRS, correctly segregating the items of gross income, gross proceeds of sales,
and value of products taxable at less than four percent, in order that a lesser
rate may be applied.
(5)
Duties of the purchaser. It is the duty of the purchaser, under the penalties
prescribed by sections
237-41,
237-48, and
231-34,
HRS, to:
(A) Furnish to sellers only resale
certificates as are in proper form and properly made out;
(B) Give notice of revocation of resale
certificates furnished to sellers, if the purchaser no longer holds a general
excise tax license, if the purchaser has a different license number under the
general excise tax law from that stated on the certificate, or in any other
case of a material change in facts;
(C) Furnish to sellers the facts as to
whether sales are at wholesale; and
(D) Keep as a part of the purchaser's records
copies of all resale certificates given by the purchaser, notices of
inapplicability of such resale certificates to particular sales, and notices of
revocation of such certificates.
(6) Forms of resale certificates. Three forms
of resale certificates are prescribed, two types of general form and a special
form which may be used by sellers, at their option, for sales to purchasers who
are in the contracting business, or who are subject to taxation the same as if
engaged in the contracting business, of materials and commodities as set forth
in section 18-237-4(a)(3), in connection with a particular project identified
in the special form of certificate.
