Hawaii Administrative Rules
Title 18 - DEPARTMENT OF TAXATION
Chapter 237 - GENERAL EXCISE TAX LAW
Subchapter 2 - LICENSES; TAX; EXEMPTIONS
Section 18-237-29.53-10 - Services performed by commissioned agents
Current through November, 2023
(a) Except as provided in section 18-237-2953-04, services performed by a commissioned agent are used or consumed where the agent is located at the time the agent's services are performed; provided that:
(b) For purposes of this section, "online" means that the transaction occurs exclusively through a website or web application without any in-person contact.
Example 1: Alex Adventurer, a resident of Hawaii, visits the office of Maui Travel Agency ("MTA"), a travel agency located in Hawaii, to plan a vacation to Alaska. MTA sells a seven-night stay at Glacier Hotel, a hotel in Alaska, to Alex Adventurer. The contract between MTA and Glacier Hotel provides that MTA may book rooms at Glacier Hotel for $125 per room per night and that, for each booking, MTA will receive ten per cent of the sale. MTA does not have the authority to mark up or unilaterally change the total price charged to the customer. All of the value or gross income that MTA receives is not exempt under section 237-29.53, HRS, because MTA is a commissioned agent and its services are used or consumed in Hawaii, where MTA is located.
Example 2: Assume the same facts as in Example 1, except that Alex Adventurer books the stay at Glacier Hotel online through MTAs website and does not visit MTAs office. All of the value or gross income that MTA receives is exempt under section 237-29.53, HRS. MTAs service is used or consumed in Alaska, where the transient accommodation is located, because the transient accommodation was booked online through MTA, a commissioned agent.
Example 3: Vacation Rentals Online ("VRO") operates a website that allows guests to book transient accommodations listed for rent by owners. Ryan Renter, a resident of Florida, uses VRO's website to book a two-night stay at Olivia Owner's unit in Hawaii for $100 per night. The contract between VRO and Olivia Owner provides that for each booking of Oliva Owner's unit made through VRO's website, VRO will receive ten per cent of the rental price, which is determined solely by Olivia Owner. VRO also charges Ryan Renter a fee of five per cent of the rental price. All of the value or gross income that VRO receives is not exempt under section 237-29.53, HRS. VRO's service is used or consumed in Hawaii, where the transient accommodation is located, because the transient accommodation was booked online through VRO, a commissioned agent.
Example 4: Errand Runner Inc. operates a website through which users can request or offer the performance of short-term services, such as picking up dry cleaning, dog walking, and grocery shopping. Carrie Consumer, a resident of Virginia, uses Errand Runner Inc. to hire Andy Assistant, a resident of Hawaii, to stand in line at the Hanauma Bay State Park in Hawaii, where die first one hundred persons to enter the park will receive a collectible item. The terms of service between Errand Runner Inc. and Andy Assistant provides that Errand Runner Inc. will receive ten per cent of the income Andy Assistant receives for services booked through Errand Runner Inc. The amount charged for Andy Assistant's services are determined solely by Andy Assistant. Errand Runner Inc. also charges Carrie Consumer a fee often dollars for using its website to book die service. All of the value or gross income that Errand Runner Inc. receives is not exempt under section 237-29.53, HRS. Errand Runner Inc.'s service is used or consumed in Hawaii, where Andy Assistant's service was performed, because Andy Assistant's service was booked online through Errand Runner Inc., a commissioned agent.
Example 5: Derrick Driver, a resident of Hawaii, calls Aloha Auto Finder, LLC, a car broker located in Hawaii, and hires it to find and negotiate a purchase price for a green classic car. Derrick Driver provides Aloha Auto Finder, LLC with a list of specifications that the car must have and the total amount he is willing to pay for the car. Derrick Driver and Aloha Auto Finder, LLC agree that Aloha Auto Finder, LLC will be paid a flat fee of $500. Aloha Auto Finder, LLC finds a green classic car in Michigan and negotiates a purchase price on behalf of Derrick Driver. Derrick Driver purchases the car and instructs the seller to ship the car from Michigan to Derrick Driver's second home in Rhode Island. All of the value or gross income that Aloha Auto Finder, LLC receives is not exempt under section 237-29.53, HRS, because Aloha Auto Finder, LLC is a commissioned agent and its services are used or consumed in Hawaii, where Aloha Auto Finder, LLC is located.
[Eff 3/17/2018] (Auth: HRS §§ 231-3(9), 237-8) (Imp: HRS § 237-29.53)