DP Tool Club 12/CD_ASCQ_12_0294.iso/vrac/sba93_4.zip/F264.SBE

Text File | 1993-07-01 | 6KB | 154 lines

@083 CHAP ZZ
@CODE: HI

             ┌─────────────────────────────────────┐
             │     GENERAL EXCISE TAX (HAWAII)     │
             └─────────────────────────────────────┘

Unlike most states, Hawaii does not have a general sales
tax, as such.  Instead, it has a General Excise (or gross
income) Tax (GET), which is one of the most pervasive taxes
levied by any state government in the U.S.  It is much like
a general sales tax, except that it is in many ways much
broader than the typical sales tax, in that it applies to
all types of services, real estate rentals, and other types
of income as well as to the sale of tangible goods.

The GET is an excise tax for the privilege of engaging in
business within the state of Hawaii, and is based on the
value of products, gross proceeds of sales, or gross in-
come.  As such, it is applicable to virtually all kinds
of business income, but there are a number of exemptions,
including wages and salaries.

The tax, which applies at a uniform rate throughout the
state, is generally imposed at a rate of 4%.  As of 1993,
counties may be permitted to impose an additional 0.5% tax
for mass transit funding, on transactions subject to the 4%
state wide general excise (or use) tax.

The GET tax rate is reduced to 0.5% on many transactions,
such as wholesale transactions made for resale (if the sel-
ler obtains a resale certificate from a licensed retailer),
intermediate services, manufacturing, producing, canning,
and for certain other types of taxpayers.  A special tax
rate of 0.15% applies to insurance solicitors' income.

Businesses must register with the Dept. of Taxation on Form
GEW-TA-RV-3, which is also used to obtain an employer's
withholding number and a transient accommodations tax num-
ber.  A $20 fee must be paid to register, and you must
renew the license by January 31 each year.

A complementary "use tax" applies to certain transactions
to which the GET does not apply, such as on tangible prop-
erty bought outside of Hawaii and imported into the state.
The use tax on such items is usually 4%, except that the
lower 0.5% rate applies to items that are imported for
purposes of resale.  Use tax exemptions include newspapers
and other periodicals, items imported for temporary use
within the state, and autos imported for personal use (if
used first while a resident of another state).

Not all gross receipts are subject to the GET or related
use tax.  Exemptions to the GET include:

    . Sales of land or securities;

    . Wages, salaries;

    . Various state excise taxes, such as Transient
      Accommodations Tax (no tax on tax, except for
      GET itself);

    . Sales of tangible personal property to the
      federal government;

    . Income of banks or S & L's which are subject to
      the tax on financial institutions (the franchise
      tax);

    . Certain sales of tangible personal property
      that is shipped out of the state;

    . No tax on federal excise taxes collected on
      retail sales;

    . No tax on certain "casual sales" outside the
      normal scope of business.

    . 1991 legislation now allows hotel operators to
      reduce taxable gross receipts by the amount dis-
      bursed for hotel employees' salaries, wages,
      bonuses, retirement contributions and other
      benefits.

    . Effective July 1, 1992, gross income received by
      certain persons for planning, design, financing,
      construction or sale of "affordable housing units"
      is exempt from the tax, with various conditions
      and limitations (units must be completed by the
      end of 1994, for example).

Taxpayers subject to GET and use taxes are required to file
monthly returns on Form G-45.  If your annual tax is less
than $2,000, you may file quarterly, and if less than
$1,000, you may file semi-annual returns.  In any case, you
must also file an annual reconciliation return on Form G-49.

Finally, note that the GET is imposed on the seller, not on
the consumer, so you need not pass on the tax.  In fact, if
you do add the 4% tax to the price you charge the consumer,
you must pay more GET on the additional amount collected.
Thus, on a $100 item, if you charge the consumer $104 to
cover the tax, you will owe tax of 4% times $104, or $4.16
on the transaction, since you collected a total of $104.
Some retailers add 4.16% tax to their charges.

@CODE:EN
@CODE: NM

             ┌─────────────────────────────────────┐
             │   GROSS RECEIPTS TAX (NEW MEXICO)   │
             └─────────────────────────────────────┘

Unlike most states, New Mexico does not have the typical
sales and use tax that applies mostly to sales of tangible
personal property.  Instead, New Mexico has a "gross re-
ceipts tax" on virtually all forms of gross income, includ-
ing income from services as well as from the sale of goods.
As such, it is a much broader and more pervasive tax than
the sales tax imposed in all but a handful of the other
50 states.  It applies to all gross receipts of all persons
(including corporations, associations, etc.) selling pro-
ducts or furnishing services within the state, but allows
a number of deductions and exemptions.

The tax rate is currently 5% (as of 7-1-91), but cities and
counties are allowed to add on local gross receipts taxes,
so that rates range from as low as 5.125% to as much as
6.75% in different localities.  As a seller subject to the
tax, you must register on Form RP-31 with the New Mexico
Taxation and Revenue Department.  Businesses are generally
required to file monthly returns on Form CRS-1, which is
used to report gross receipts tax and, if applicable, state
income tax withheld from wages.

Major exemptions from the gross receipts tax include wages,
salaries and commissions paid to employees; receipts of
growers, producers, or nonprofit associations from selling
livestock, poultry and unprocessed agricultural products;
interest or dividend income; receipts from sales of stocks,
bonds or other securities; and receipts from the sale or
leasing of oil, natural gas, or mineral interests.

Sales of various goods and services for resale are usually
deductible from the gross receipts tax base, if the buyer
gives the seller the appropriate type of Nontaxable Trans-
action Certificate.

@CODE:EN