Internet Sales in Hawaii to be taxed?

[Bob Orts]

Hawaii, like many other states are just trying to level the playing field. Hawaii is looking at the SSTP so that the issues raised why vendors should not have to collect sales tax are removed. The restriction is based on many reasons with 2 main issues. One being that it's a near impossible task to determine sales tax rates when there's no unformed structure as to what constitutes sales tax. Is it just the states portion, or county or city? By agreeing just to a standard state amount regardless of the actual address of delivery, it makes it easier for small vendors to comply. Second, there's no universal "what for". Some states collect sales tax on an item yet another state does not. Or one state collects one amount on certain foods but another amount on other non-food items. Without a universal method of determining what items are taxable, it again favors no collection.

However, all this may come to a screeching halt since the original basis that businesses can not be compelled to collect a state sales tax unless the vendor had nexus, has been turned upside down. Based on the Amazon and Overstock court ruling, that nexus is established if anyone received compensation for a sale. In other words, if you have a commissioned salesperson in a state, who receives direct compensation from an out of state vendor, you have nexus. That means if the State of Hawaii can determine that anyone in Hawaii is being paid a commission for selling an out of state vendor’s product direct to the consumer, sales tax must be collected for consumer shipments to Hawaii.