Hawaii General Excise Tax (GET) and Use Tax Protest

HAWAII GENERAL EXCISE TAX (GET) AND USE TAX PROTEST AND NOTICE OF APPEAL

TABLE OF CONTENTS

1. Header and Caption
2. Identification of Taxpayer and Notice
3. Statement of Timeliness
4. Statement of Facts
5. Issues Presented
6. Legal Argument — GET Liability and Wayfair Nexus
7. Legal Argument — Use Tax (HRS Ch. 238)
8. Refund Claim
9. Requested Relief
10. Hearing Request and Forum Election
11. Reservation of Rights
12. Verification
13. Signature and Service Block
14. Certificate of Service
15. Hawaii GET Practice Notes
16. Sources and References

1. HEADER AND CAPTION

STATE OF HAWAII

DEPARTMENT OF TAXATION

[☐ TAXATION BOARD OF REVIEW ☐ ADMINISTRATIVE APPEALS OFFICE ☐ TAX APPEAL COURT, FIRST CIRCUIT]

HAWAII GET LICENSE NO.: GE-[________________]

HAWAII USE TAX I.D. NO. (if separate): [________________]

TAX TYPE(S): ☐ General Excise Tax (Ch. 237) ☐ Use Tax (Ch. 238) ☐ County Surcharge

PERIOD(S) AT ISSUE: [__/__/____] through [__/__/____]

NOTICE OF FINAL ASSESSMENT NO.: [________________________________]

MAILING DATE OF FINAL ASSESSMENT: [__/__/____]

AMOUNT IN CONTROVERSY: $[________________]

WRITTEN PROTEST AND NOTICE OF APPEAL — GENERAL EXCISE / USE TAX

2. IDENTIFICATION OF TAXPAYER AND NOTICE

2.1. Appellant [TAXPAYER NAME] ("Taxpayer") is [a Hawaii corporation / a foreign corporation / a sole proprietorship / an LLC] with a principal place of business at [ADDRESS].

2.2. Taxpayer [is licensed under Haw. Rev. Stat. § 237-9 / disputes any obligation to license under Haw. Rev. Stat. § 237-9 because it does not engage in business in Hawaii] and [holds / does not hold] Hawaii GET License No. GE-[________________].

2.3. Taxpayer received a Notice of Final Assessment (the "Final Assessment") issued by the State of Hawaii Department of Taxation ("DOTAX") dated [__/__/____] asserting [General Excise Tax / Use Tax / Both] liability under [Haw. Rev. Stat. Ch. 237 / Ch. 238] in the amount of $[________________], plus penalties of $[________________] and interest of $[________________], for the period(s) noted above.

2.4. Taxpayer timely files this Written Protest and Notice of Appeal pursuant to Haw. Rev. Stat. §§ 237-42, 238-8, and Chapter 232.

3. STATEMENT OF TIMELINESS

3.1. The Final Assessment is dated [__/__/____].

3.2. Pursuant to Haw. Rev. Stat. § 237-42 (incorporating Ch. 232) and Haw. Rev. Stat. § 232-17, an appeal must be filed within thirty (30) calendar days after the mailing date of the Final Assessment.

3.3. The thirtieth (30th) day after the mailing date is [__/__/____]. This Notice of Appeal is filed on [__/__/____], which is on or before that deadline.

3.4. This appeal is therefore timely.

4. STATEMENT OF FACTS

4.1. Taxpayer's Business. Taxpayer is engaged in the business of [describe activity — retail sales of tangible personal property / professional services / contracting / rentals / e-commerce / SaaS / other].

4.2. Hawaii Activities and Connections. During the periods at issue, Taxpayer [describe physical presence (offices, employees, inventory, agents) and economic activity (Hawaii-delivered sales, Hawaii customer count, Hawaii service consumption)].

4.3. Returns Filed. Taxpayer filed Hawaii Form [G-45 (periodic GET/Use return) / G-49 (annual reconciliation) / G-26 (Use Tax)] for the periods at issue, reporting:

4.4. DOTAX Audit. [Describe the audit chronology — opening letter date, IDRs, position statements, NOPA date, Final Assessment date.]

4.5. Adjustments Asserted in the Final Assessment. DOTAX has proposed the following adjustments, each of which Taxpayer disputes:

• [Adjustment 1 — e.g., reclassification of wholesale (0.5%) gross receipts as retail (4.0%);]
• [Adjustment 2 — e.g., assertion of economic nexus under § 237-2.5 against an out-of-state seller;]
• [Adjustment 3 — e.g., disallowance of subcontract deduction under § 237-13(3) for general contractors;]
• [Adjustment 4 — e.g., imposition of Use Tax under Ch. 238 on imported tangible personal property;]
• [Adjustment 5 — e.g., County Surcharge for Honolulu / Maui / Hawaii / Kauai counties.]

5. ISSUES PRESENTED

5.1. Whether Taxpayer has substantial nexus with Hawaii under Haw. Rev. Stat. § 237-2.5 and the Commerce Clause as interpreted in South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018).

5.2. Whether the gross receipts classified by DOTAX at the 4.0% retail/services rate are properly classified at the 0.5% wholesale rate under Haw. Rev. Stat. § 237-4 or at another reduced rate.

5.3. Whether Taxpayer is entitled to claimed exemptions, deductions, or credits, including the subcontract deduction under § 237-13(3), the export-out-of-state exemption under § 237-29.5, the wholesale exemption under § 237-4, and any qualifying credits.

5.4. Whether Use Tax is correctly imposed under Haw. Rev. Stat. Ch. 238 on the property or services in question.

5.5. Whether the asserted penalties should be abated under Haw. Rev. Stat. § 231-39(b)(4) for reasonable cause.

6. LEGAL ARGUMENT — GET LIABILITY AND WAYFAIR NEXUS

6.1. GET is a tax on the privilege of doing business, not a sales tax. Haw. Rev. Stat. § 237-13 imposes the General Excise Tax on every person engaging in business in Hawaii, measured by the gross income or gross proceeds of the business. The legal incidence falls on the seller, not the buyer. See DOTAX Brochure, "An Introduction to the General Excise Tax" (2023).

6.2. Substantial Nexus After Wayfair.

• (a) The U.S. Supreme Court in South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018), abandoned the physical-presence rule of Quill Corp. v. North Dakota, 504 U.S. 298 (1992), and held that a state may impose tax-collection obligations on an out-of-state seller that has substantial economic nexus with the state.
• (b) Hawaii responded with Act 41 (Laws 2018), codified at Haw. Rev. Stat. § 237-2.5, providing that a person is "engaging in business" in Hawaii — whether or not physically present — if in the current or immediately preceding calendar year either:
• (i) gross income or gross proceeds from Hawaii-delivered tangible personal property, services used or consumed in Hawaii, or intangible property used in Hawaii are $100,000 or more; or
• (ii) the person engaged in 200 or more separate transactions of such property or services delivered, used, or consumed in Hawaii.
• (c) Application to Taxpayer: During the periods at issue, Taxpayer's Hawaii-delivered gross receipts were $[________] and the number of Hawaii transactions was [____]. [Argue why Taxpayer falls below or above the thresholds, citing transaction-counting methodology and any safe harbors.]

6.3. Classification — Wholesale vs. Retail. Under Haw. Rev. Stat. § 237-4 and DOTAX Tax Information Releases, sales for resale qualify for the 0.5% wholesale rate where the buyer is a licensed reseller and the seller obtains a Form G-17 (Resale Certificate). The Final Assessment reclassified $[________] in wholesale receipts as retail; this reclassification is incorrect because [apply facts — buyer's GE license, executed G-17, downstream resale documented].

6.4. Subcontract Deduction. Haw. Rev. Stat. § 237-13(3) permits a prime contractor to deduct amounts paid to a duly licensed subcontractor on the same job. Taxpayer paid $[________] to subcontractor [NAME] (GE License [GE-________]) on the [PROJECT] job; the deduction was properly claimed and is supported by Form G-15 documentation.

6.5. Export Exemption. Haw. Rev. Stat. § 237-29.5 exempts gross proceeds from the sale of tangible personal property shipped to a point outside Hawaii where the property is for resale or use outside Hawaii. Taxpayer's $[________] in export receipts qualifies and was wrongly disallowed.

6.6. County Surcharge. The county surcharge is layered on top of the 4.0% state GET (Honolulu — 0.5%, Hawaii County — 0.5%, Kauai — 0.5%, Maui — 0.5% effective Jan. 1, 2024 per Maui ordinance) and is sourced under DOTAX guidance to the place of delivery/use. [Argue any sourcing error.]

6.7. Penalty Abatement. Penalties under Haw. Rev. Stat. § 231-39 should be abated for reasonable cause where Taxpayer relied on professional advice, prior DOTAX guidance, or a reasonable interpretation of unsettled law.

7. LEGAL ARGUMENT — USE TAX (HRS Ch. 238)

7.1. Complementary Tax. The Hawaii Use Tax under Haw. Rev. Stat. Ch. 238 is complementary to GET. It applies to property, services, contracting, and intangibles imported into Hawaii from an unlicensed out-of-state seller for use, consumption, or rendering of services in Hawaii. A transaction is subject to either GET or Use Tax — not both.

7.2. Imposition. Haw. Rev. Stat. § 238-2 imposes Use Tax at the rate of 4.0% (with county surcharge where applicable) on the value of the imported property or services. The legal incidence falls on the importer/user, not the out-of-state seller.

7.3. Application to Taxpayer. [Apply facts — was the seller licensed in Hawaii (no Use Tax — GET applies); was the property used in Hawaii; what was the landed value used by DOTAX].

7.4. Exemptions. Use Tax does not apply to property previously taxed under GET, property purchased for resale, or property otherwise exempted under Haw. Rev. Stat. § 238-3.

8. REFUND CLAIM

8.1. To the extent Taxpayer overpaid GET or Use Tax during the periods at issue, Taxpayer hereby asserts a refund claim pursuant to Haw. Rev. Stat. § 231-23 in the amount of $[________].

8.2. The refund claim is timely because it was filed within three (3) years of payment / return filing as required by § 231-23.

8.3. Pursuant to Haw. Rev. Stat. § 232-17, denial of a refund claim is appealable to the Board of Review or the Tax Appeal Court within thirty (30) days of the notice of denial.

9. REQUESTED RELIEF

WHEREFORE, Taxpayer respectfully requests that the [Board of Review / Administrative Appeals Office / Tax Appeal Court]:

• A. Cancel and abate the Final Assessment in its entirety;
• B. Alternatively, reduce the assessed deficiency, penalties, and interest to the amount properly owed under Hawaii law;
• C. Order refund of any overpaid amounts under Haw. Rev. Stat. § 231-23;
• D. Grant a hearing at which Taxpayer may present testimony and documentary evidence;
• E. Issue a written decision setting forth findings of fact and conclusions of law; and
• F. Grant such other and further relief as is just and proper.

10. HEARING REQUEST AND FORUM ELECTION

10.1. Taxpayer requests an in-person evidentiary hearing pursuant to Haw. Rev. Stat. § 232-7.

10.2. Taxpayer elects the following forum (check one):

• ☐ Taxation Board of Review (informal hearing under Haw. Rev. Stat. §§ 232-6, 232-7; no filing fee; Form BOR-1).
• ☐ Administrative Appeals Office (AAO) (independent within DOTAX; AADR Program under Haw. Rev. Stat. § 231-7.5; Form AA-1).
• ☐ Tax Appeal Court, First Circuit (direct appeal under Haw. Rev. Stat. § 232-16; costs of court under § 232-22 apply).

11. RESERVATION OF RIGHTS

11.1. Taxpayer reserves the right to amend or supplement this Protest, to introduce additional evidence and legal argument, to invoke the AADR Program under Haw. Rev. Stat. § 231-7.5, and to seek further appellate review by the Hawaii Tax Appeal Court, the Hawaii Intermediate Court of Appeals, and the Hawaii Supreme Court as permitted by Haw. Rev. Stat. Ch. 232.

11.2. Nothing in this Protest constitutes a waiver of any defense, including the Commerce Clause, the Due Process Clause, the Internet Tax Freedom Act (47 U.S.C. § 151 note), the limitations period under Haw. Rev. Stat. § 235-111 (as incorporated for GET), or any state-constitutional defense.

12. VERIFICATION

STATE OF HAWAII

CITY AND COUNTY OF [HONOLULU / MAUI / HAWAII / KAUAI]

I, [TAXPAYER NAME / OFFICER NAME AND TITLE], being first duly sworn upon oath, depose and say that I am the Taxpayer (or the duly authorized officer of the Taxpayer) in the foregoing Protest; that I have read the foregoing Protest and Notice of Appeal; and that the statements contained therein are true and correct to the best of my knowledge, information, and belief.

[________________________________]

[TAXPAYER / OFFICER NAME]

Title (if applicable): [________________________________]

Subscribed and sworn to before me this [____] day of [_______________], 20[____].

[________________________________]

Notary Public, State of Hawaii

(My Commission Expires: [_______________])

13. SIGNATURE AND SERVICE BLOCK

Date: [__/__/____]

Respectfully submitted,

[LAW FIRM / CPA FIRM NAME]

By: [________________________________]

[ATTORNEY / CPA NAME], Hawaii Bar No. [####] / Hawaii CPA License No. [####]

Counsel / Authorized Representative for Taxpayer

[STREET ADDRESS]

[CITY, HI ZIP]

Telephone: [NUMBER]

Email: [EMAIL]

14. CERTIFICATE OF SERVICE

I hereby certify that on [__/__/____], a true and correct copy of the foregoing WRITTEN PROTEST AND NOTICE OF APPEAL was served upon the following by the method indicated:

[________________________________]

[ATTORNEY / CPA NAME]

15. HAWAII GET PRACTICE NOTES

• GET is NOT a sales tax — common misconceptions. GET is the seller's tax, levied on the privilege of doing business in Hawaii under Haw. Rev. Stat. § 237-13. It is broader than a sales tax: it taxes services (including professional services), commissions, rents, royalties, contracting, and intra-business transactions. Sellers may visibly pass the tax to buyers (typically at 4.166% gross-up to recover the 4.0% GET on net proceeds), but the legal incidence stays with the seller.
• Rate structure. State GET: 4.0% retail/services; 0.5% wholesale; 0.15% insurance commissions. County surcharges (where adopted): 0.5% — Honolulu, Maui (effective 1/1/2024), Kauai, Hawaii County. Maximum combined rate is 4.5%.
• Wayfair / economic nexus — Haw. Rev. Stat. § 237-2.5. Out-of-state sellers must register and remit GET if Hawaii-delivered gross income meets either (a) $100,000 or (b) 200 transactions in current or prior calendar year. No physical presence required.
• Marketplace facilitators. Haw. Rev. Stat. § 237-9.5 imposes GET-collection obligations on marketplace facilitators meeting the same § 237-2.5 thresholds, treating the facilitator as the seller for marketplace transactions.
• Use Tax — Haw. Rev. Stat. Ch. 238. Complementary to GET. Applies to imports for Hawaii use from unlicensed out-of-state sellers. Rate: 4.0% (plus county surcharge). The buyer/importer is liable. A given transaction is taxed under either GET or Use Tax, never both.
• Records retention. Haw. Rev. Stat. § 237-41 requires GET records to be kept in English, in Hawaii, for at least three years. Limitations extensions extend retention.
• Refund claims. Three-year window under Haw. Rev. Stat. § 231-23 (with cross-reference to specific tax-type provisions). Denial appealable within 30 days under § 232-17.
• Appeal forums. AAO (informal, no filing fee), BOR (informal, no filing fee), or direct to TAC (filing fee under § 232-22). 30-day jurisdictional deadline runs from mailing of the Final Assessment.
• Pay-and-protest. Alternatively, taxpayer may pay tax under protest and sue for refund under Haw. Rev. Stat. § 40-35; this is a separate, non-§ 232 track.
• Form references. G-45 (periodic GET/Use return); G-49 (annual reconciliation); G-26 (use-tax return for unlicensed buyers); G-15 (subcontract deduction); G-17 (resale certificate); BB-1 (basic business application).

16. SOURCES AND REFERENCES

• Haw. Rev. Stat. Ch. 237 (General Excise Tax Law) — https://www.capitol.hawaii.gov/hrscurrent/vol04_ch0201-0257/HRS0237/HRS_0237-.htm
• Haw. Rev. Stat. § 237-2.5 (Engaging in business — economic nexus) — https://files.hawaii.gov/tax/legal/hrs/hrs_237.pdf
• Haw. Rev. Stat. § 237-13 (Imposition of GET) — https://law.justia.com/codes/hawaii/title-14/chapter-237/section-237-13/
• Haw. Rev. Stat. Ch. 238 (Use Tax Law) — https://www.capitol.hawaii.gov/hrscurrent/Vol04_Ch0201-0257/HRS0238/HRS_0238-.htm
• Haw. Rev. Stat. § 231-23 (Adjustments and refunds) — https://www.capitol.hawaii.gov/hrscurrent/vol04_Ch0201-0257/HRS0231/HRS_0231-0023.htm
• Haw. Rev. Stat. Ch. 232 (Tax Appeals) — https://www.capitol.hawaii.gov/hrscurrent/vol04_ch0201-0257/HRS0232/HRS_0232-.htm
• DOTAX Brochure, "An Introduction to the General Excise Tax" (2023) — https://files.hawaii.gov/tax/legal/brochures/GE_brochure-23.pdf
• DOTAX Brochure, "An Introduction to the Use Tax" (2023) — https://files.hawaii.gov/tax/legal/brochures/Use_brochure-23.pdf
• DOTAX Form G-45 Instructions (Rev. 2024) — https://files.hawaii.gov/tax/forms/2024/g45ins.pdf
• DOTAX Administrative Appeals Office — https://tax.hawaii.gov/appeals/
• Form BOR-1 (2024) — https://files.hawaii.gov/tax/forms/2024/bor1.pdf
• Form AA-1 (Rev. 2024) — https://files.hawaii.gov/tax/forms/2024/aa1.pdf
• South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018)
• Travelocity.com, L.P. v. Director of Taxation, 135 Haw. 88, 346 P.3d 157 (2015) (GET on online travel companies)
• Act 41, Session Laws of Hawaii 2018 (post-Wayfair economic nexus)

Disclaimer: This template is provided for informational purposes only and does not constitute legal advice. A licensed Hawaii attorney or CPA must review and customize this document before filing. Hawaii's General Excise Tax differs materially from a sales tax — confirm classification, rate, and exemption analysis against current DOTAX guidance, Tax Information Releases, and Hawaii Tax Appeal Court precedent before use.