Hawaii Administrative Rules
Title 18 - DEPARTMENT OF TAXATION
Chapter 237 - GENERAL EXCISE TAX LAW
Subchapter 2 - LICENSES; TAX; EXEMPTIONS
Section 18-237-13(6)-08 - Gross income received from Customer by Intermediary subject to general excise tax at the four percent rate
Current through February, 2024
(a) In order for Service Provider to be eligible for the intermediary services rate, the gross income received from Customer by Intermediary must be subject to the general excise tax at the rate of four percent on all the gross income received for or derived from those services.
Example 1: Intermediary, a service station, enters into an agreement with Customer to recap Customer's tires. Intermediary contracts with Service Provider to recap Customer's tires. Service Provider bills Intermediary for recapping the tires and Intermediary bills Customer. Customer pays Intermediary, which is subject to the general excise tax at the rate of four percent on all the gross income received for or derived from those services. Intermediary pays Service Provider.
In order for Service Provider to be eligible for the intermediary services rate, the gross income received from Customer by Intermediary must be subject to the general excise tax at the rate of four percent on all the gross income received for or derived from those services. Here, Intermediary is subject to the general excise tax at the rate of four percent on all the gross income received for or derived from those services furnished to Customer.
Example 2: Assume the same facts as in Example 20 above, except that Service Provider arranges for W to recap the tire. W bills Service Provider, Service Provider bills Intermediary, and Intermediary bills Customer. Customer pays Intermediary. Intermediary pays Service Provider and Service Provider pays W.
In order for Service Provider to be eligible for the intermediary services rate, the gross income received from Customer by Intermediary must be subject to the general excise tax at the rate of four percent on all the gross income received for or derived from those services.
W is eligible for the intermediary services rate because Intermediary is subject to the general excise tax at the rate of four percent on all the gross income received for or derived from those services furnished to Customer, notwithstanding that Service Provider also is subject to the one-half percent intermediary services rate.
(b) Service Provider is not eligible for the intermediary services rate if there are only three parties and Intermediary is not subject to the general excise tax.
Example 3: Intermediary, a tax-exempt hospital under section 237-23(a)(6), HRS, contracts with Service Provider to provide counseling services to Customers (Intermediary's patients). Service Provider provides the counseling services and bills Intermediary. Intermediary bills the Customer's insurers. The insurers pay Intermediary and Intermediary pays Service Provider.
In order for Service Provider to be eligible for the intermediary services rate, the gross income received from Customer by Intermediary must be subject to the general excise tax at the rate of four percent on all the gross income received for or derived from those services. The gross income received from Customer is not subject to the general excise tax at the rate of four percent because Intermediary is exempt from the general excise tax. The intermediary services rate is not applicable to the payments Service Provider receives from Intermediary. Service Provider is subject to the general excise tax at the rate of four percent.
(c) The Service Provider is not eligible for the intermediary services rate if income is divided between the Service Provider and another person under section 237-18, HRS.
Example 4: Intermediary, a Realtor, enters into an agreement with Customer to sell Customer's real estate. Service Provider, a licensed real estate agent with Intermediary, sells the real estate. The income received by Intermediary is divided between Intermediary and Service Provider, pursuant to section 237-18, HRS.
In order for Service Provider to be eligible for the intermediary services rate, the gross income received from Customer by Intermediary must be subject to the general excise tax at the rate of four percent on all the gross income received for or derived from those services. The gross income received from Customer is not subject to the general excise tax at the rate of four percent on all the gross income received for or derived from those services because Intermediary, pursuant to section 237-18, HRS, has split its income with Service Provider. The intermediary services rate is not applicable to the payment Service Provider receives. Service Provider is subject to the general excise tax at the rate of four percent on Service Provider's share of the income.
