West Maui Taxpayers Association
  • HOME
  • Olowalu Fire Station
  • WMTAPAC22
  • Affordable Housing
  • West Maui Lifesavers
  • Wall of Honor
  • Support WMTA
    • Membership - One Time Payment
    • Membership - Recurring Payment
    • Donations
    • Wills & Trusts
    • Charity Walk
  • Newsletter
  • Emergency Planning
  • News Blog
  • About Us
    • Goals & Objectives
    • Accomplishments
    • Board of Directors
    • WMTA vs WMIF
  • Contact
  • Subscribe

The Wayfair Switch in Time

8/2/2018

0 Comments

 
WMTA Shares these commentaries, without taking a position unless otherwise noted, to bring information to our readers
​To view the archives of the Tax Foundation of Hawaii's commentary click here.
 ​​​​​​​

​
Weekly Commentary

For the Week of July 29, 2018
​

The Wayfair Switch In Time
By Tom Yamachika, President
 
In late June, the U.S. Supreme Court decided the Wayfair v. South Dakota case.  It was a huge turning point in constitutional law involving the ability of states to tax “online sellers” such as Amazon, Newegg, and Wayfair.

“Yeah,” you might say.  “I know about online sellers because last April, Amazon started charging Hawaii GET, so I had to pay more for what I buy online. What a drag!”

But another way to look at the case is fairness to local businesses.  Local stores hire local people, pay taxes to local government, and support local communities.  Online stores typically didn’t do any of the above and were able to boast that local taxes weren’t added to purchase prices, giving them a 4% or 4.5% economic advantage.  (This is not quite true because the law says that the buyer is supposed to pay the 4% or 4.5% tax in that situation, which we call “Use Tax,” but many buyers, especially individuals, don’t.)

This year our legislature passed, and the Governor signed, Act 41 (S.B. 2514).  That law put key provisions of the South Dakota law into our GET law so we are well positioned to take advantage of South Dakota’s Wayfair victory.  It also said that it “shall take effect on July 1, 2018, and shall apply to taxable years beginning after December 31, 2017.”

Apparently, the Tax Department couldn’t contain its excitement over this turn of events.  On June 27, two days after the Wayfair decision was announced, the Department released Announcement 2018-10, which told taxpayers that if they met the criteria in the new law (200 transactions or $100,000 in sales in Hawaii either in the current or previous taxable year) that they were liable for GET as of the beginning of their taxable year.  For many taxpayers, that meant January 1, 2018.  The Department magnanimously offered to allow affected taxpayers to pay their back taxes ratably over the remainder of the year, without penalties and interest.  But it wanted the tax.

This would be a problem for some online sellers who had sold products or services to Hawaii customers for the first six months of the year.  Those sales transactions were already closed and completed, leaving no opportunity for the sellers to reevaluate their economic deals to take the Hawaii tax into account.

It seems that the Supreme Court foresaw just such a problem.  In its opinion, the Court noted that the South Dakota law had three features designed to prevent discrimination against or undue burdens upon interstate commerce, and one of them was that the law was not retroactive.  In that way it dropped a big hint that retroactivity was not going to be looked at favorably.

Act 41, moreover, wasn’t even retroactive.  It took effect on July 1, 2018, which probably meant that the Department had no business asking for tax retroactive to January in the first place.

On July 10, the Department amended Announcement 2018-10 to flip the Department’s position.  The new law would be applied from July 1, and there would be no retroactive application to that extent.  But there would be “catch-up payments” required for those taxpayers who tripped the threshold late in the year.  For example, if a taxpayer had no sales in Hawaii in 2018 but managed to break the threshold in sales in December 2019, then the Department wants tax on all $100,000 for the whole of 2019 to be paid with the December 2019 return.  Is that a fair outcome for the online seller that probably had no idea that the $100,000 would be achieved until November at the earliest?

Big note to businesses and others who are paying Use Tax:  After July 1, more vendors probably will be registered for GET.  If a vendor is registered for GET, the purchaser does not have to pay Use Tax.  So, it may pay to check your Use Tax list and stop paying tax on purchases from any newly registered vendor.
 
0 Comments

Your comment will be posted after it is approved.


Leave a Reply.

    Picture

    RSS Feed


    If you wish to further discuss blog posts, please contat our office directly or contact us via Contact page.

    Categories

    All
    Affordable Housing & Homelessness
    Board
    Capital Improvements
    Charity Walk
    Commentaries
    Community Events
    Community Resources
    CON
    COVID 19
    Educational
    Emergency Planning
    Health & Safety
    HHARP
    Housing
    Infrastructure In West Maui
    In The News
    Kapalua Airport Runway Lights
    Kapalua Coastal Trail
    Lahaina Bypass
    Legislature Newsletters
    LLC
    Long Range Transportation Plan 2040
    Long-Range Transportation Plan 2040
    Makila
    MAUI CANCER CENTER
    Maui Cancer Center Llc
    Maui County
    Maui County Budget
    Maui County Dept Of Environmental Management
    Maui County - Dept Of Water
    Maui Destination Management Plan
    Press
    Public Safety In West Maui
    Real Property Tax
    Recycling Info
    TAT
    Tax
    Tourism
    Traffic & Roadways
    Transportation
    Video
    Vote
    Voting
    West Maui Community Plan
    West Maui Hospital
    West Maui Skate Park
    WMTA Annual Meeting
    WMTA Breakfast Events
    WMTA Candidates Night
    WMTA Disaster Preparedness
    WMTA Fundraisers
    WMTA Hot Topics
    Wmta Hot Topics Replay
    WMTA Membership
    WMTA PAC
    WMTA Sunset Sail
    WMTA Whale Watch

Quick Links: 

Home

News

About Us

Wall of Honor

Newsletter

Support WMTA
Emergency Planning

Contact

Copyright © 2021
Photo used under Creative Commons from wolfsavard
  • HOME
  • Olowalu Fire Station
  • WMTAPAC22
  • Affordable Housing
  • West Maui Lifesavers
  • Wall of Honor
  • Support WMTA
    • Membership - One Time Payment
    • Membership - Recurring Payment
    • Donations
    • Wills & Trusts
    • Charity Walk
  • Newsletter
  • Emergency Planning
  • News Blog
  • About Us
    • Goals & Objectives
    • Accomplishments
    • Board of Directors
    • WMTA vs WMIF
  • Contact
  • Subscribe