Hawaii Administrative Rules
Title 18 - DEPARTMENT OF TAXATION
Chapter 237 - GENERAL EXCISE TAX LAW
Subchapter 2 - LICENSES; TAX; EXEMPTIONS
Section 18-237-13(6)-09 - Burden of proof on Service Provider

Universal Citation: HI Admin Rules 18-237-13(6)-09

Current through August, 2024

(a) Service Provider has the burden of providing evidence satisfactory to the Department that Service Provider qualifies for the intermediary services rate of one-half percent. Whether Service Provider qualifies for the intermediary services rate is determined by all the factual circumstances; no single factor is controlling.

(b) Some of the relevant factors include the following:

(1) Whether there is a written contract identifying the customer for whom Intermediary is purchasing Service Provider's services, the services performed by the Intermediary for Customer, and the services performed by Service Provider at the request of Intermediary;

(2) Whether there has been a separate charge or bill by Intermediary for Service Provider's services; and

(3) Whether Intermediary has executed a certificate on a form prescribed by the Department that states that Intermediary will not alter, use, or otherwise consume Service Provider's services. Intermediary may execute a certificate which is applicable to every purchase of services from Service Provider, unless it is specified in writing that the certificate does not apply or until the certificate is revoked by notice in writing.

Example 1: Intermediary provides salon services. Customer requests hair styling services. Intermediary contracts with Service Provider to provide Customer with the hair styling; a written contract identifies Customer and the services performed by Service Provider. Intermediary executes the certificate that states that Intermediary will not alter, use, or otherwise consume Service Provider's services. Service Provider bills Intermediary. Intermediary bills Customer and includes a separate charge for the services of Service Provider. Intermediary is subject to the general excise tax at the four percent rate. Customer pays Intermediary and Intermediary pays Service Provider.

Service Provider has the burden of providing evidence satisfactory to the Department that Service Provider qualifies for the intermediary services rate of one-half percent. The written contract identifying Customer and the services performed by Service Provider, the separate billing by Intermediary, and the executed certificate are among the relevant factors that the Department will consider in determining whether Service Provider qualifies for the intermediary services rate.

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