Hawaii Administrative Rules
Title 18 - DEPARTMENT OF TAXATION
Chapter 238 - USE TAX LAW
Section 18-238-5-02 - Allocation of the purchase price or value of tangible personal property used in this State
Current through August, 2023
(a) Where used in this section, unless the context otherwise requires "assignment of tax" means the designation of the use tax to a taxation district where the property is first used in the State.
(b) The provisions of sections 18-237-34-01 to 18-237-34-12 consistent with this section and which may be appropriately applied to the assignment of the use tax as set forth in this section, shall be applicable to and incorporated in this section, to the extent necessary for the proper administration of the assignment of the use tax to the proper taxation district.
(c) When a taxpayer is subject to the use tax, the taxpayer shall allocate the purchase price or value of the tangible personal property to the taxation district where the property is first used. The term "use" is defined in section 238-1, HRS, and includes the exercise of any right or power over tangible personal property incident to the ownership of that property, whether the nature of the use causes the property to be appreciably consumed or not, or the keeping of the property for such use or for sale. The tax is imposed upon the user of the tangible personal property. The tax liability arises when the first use occurs in Hawaii and no additional use tax liability arises with respect to any subsequent use of that same property.
Example 1: Taxpayer is a furniture store which buys and imports furniture from an out-of-state seller who is not licensed under chapter 237, HRS. Taxpayer has stores located in the Oahu district, Maui district, and Kauai district. The seller ships the furniture to the Oahu district. Taxpayer subsequently ships some of the furniture to branch stores located in the Maui district and Kauai district. Taxpayer shall assign the use tax due on all of the furniture to the Oahu district.
Example 2: Taxpayer, a distributor located in the Maui district, purchases a product from an unlicensed seller located on the mainland. Taxpayer makes a sale to B, located in the Oahu district. The product will be shipped directly from the seller to B in the Oahu district. Taxpayer shall assign this purchase and the one-half percent use tax due to the Oahu district. Taxpayer also owes the four percent general excise tax on the sale of the product to B. Taxpayer shall allocate the gross income or proceeds of this sale to the Oahu district, where the product is delivered to B.
[Eff 3/30/91] (Auth: HRS §§ 231-3(9), 238-16) (Imp: HRS § 238-5)