A resale certificate or license in Hawaii is the documentation you need to avoid paying tax on items that you are going to resell to customers. Note that the resale certificate for an item only needs to be paid once, and it is paid by the end customer, not you as the seller.
A resale certificate in the state of Hawaii allows your suppliers know that you are licensed and allowed to sell the items, and that they can sell them to you without collecting the resale certificate from you. Most suppliers will require a resale license before they will do business with you.
Have it in mind that your Resale certificate will only allow you to avoid paying tax on items you successfully resell. But if you are purchasing items for your business that you won’t be reselling, or you don’t end up reselling the items you have bought, you are tasked with paying the tax on those items.
As a buyer in the state of Hawaii, you will present your Hawaii resale certificate to the vendor at the time of purchase. Always make sure that it is filled out completely, including both the seller and purchasers name and addresses. Note there is also a portion about the nature and description of your business that must be applicable to your purchase.
After you must have presented your Hawaii resale certificate to a vendor, it is applicable for all sales between you and that vendor. If there are sales that are inapplicable to the certificate, you will notify the vendor in writing. And if your status changes and you are no longer eligible for the resell tax rate, you are mandated by law to send a written notice of revocation to your vendors.
Also note that it is crucial that you retain a copy of all resale certificates you present to wholesalers. If you need to give written notice of a revocation or inapplicability to any vendors, keep a copy of those notifications, too. You will need them all for your records.
As a wholesale vendor in Hawaii, by law you are tasked with a couple of duties when it comes to accepting Hawaii resale certificates. You are expected to receive one at the time of purchase. However, ensure to reject any certificate that isn’t properly filled out. All of the fields should be complete and should match the buyer’s information.
Do not forget that you are accepting these resale certificates in good faith. It simply entails that to the best of your knowledge, you are selling goods to someone who will resell them and has a valid tax account and a valid resale certificate.
Howbeit, if for any reason you believe that the goods you are selling are not for resell, you must collect the applicable (usually four percent) tax on that transaction. According to Hawaiian state law, you are also tasked with keeping proper sales and tax records. Always ensure to keep all resale certificates you have collected, along with written notices of inapplicability or revocations.
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How to Get a Resale Certificate in Hawaii
While many states waive resale certificate on tangible goods purchased to be resold, Hawaii lowers the tax percentage from four percent (4.5 percent in the city and county of Honolulu) to a half percent. However, you must have a valid Hawaiian resale certificate for these transactions.
Apply and present all required documents
To apply for the certificate, you will be required to provide basic information about your business, such as name and address, as well as a tax identification number—either your Social Security number (SSN) or employer identification number (EIN). If a business doesn’t yet have an EIN, the Comptroller will issue a temporary one until you receive it and issue a new certificate thereafter. You can register for the resale certificate online, in person, or by mail. In Hawaii, the Comptroller provides a stress free online registration application for a number of tax certificates. First-time users will be mandated to create a profile, which you can later use to update your account, such as changing your mailing address or reporting the addition or closure of business locations.
Ask questions when necessary
If you have questions concerning the application or if you prefer to speak to a customer representative in person, you can visit one of the state’s Taxpayer Services offices. Most offices are open Monday through Friday from 8 a.m. to 5 p.m. What if you choose to mail in your application? You can do that by filling out and printing the Form G-17 application form and mail it to the Comptroller. If you have specific questions regarding your business, taxes owed, or the application process, you can call a nearby field office.
Pick up your certificate
You now have a certificate number and are ready to collect resale certificate whenever a buyer makes a purchase from your business. All sales tax is paid to the state quarterly and is submitted along with the appropriate state tax forms. Have it in mind that once you receive your Hawaii resale certificate, the state expects you to display it conspicuously at your place of business and also collect tax on taxable sales. You must keep track of taxes collected and pay the appropriate amount of sales and use taxes to the state.
How to Fill Out the Hawaii Certificate of Resale – Form G-17
Filling out the G-17 is quite easy and straightforward, but is imperative for the seller to gather all the information. If audited, the Hawaii Department of Taxation mandates the seller to have a correctly filled out G-17 certificate of resale. Note that without it filled out correctly, the seller could end up owing sales tax that should have been collected from the buyer in addition to penalties and interest. Steps for filling out the G-17 Hawaii Certificate of Resale include:
- Begin by downloading the Hawaii Certificate of Resale Form G-17
- Identify the name and of the seller
- Enter the date the certificate was prepared
- Include the buyer’s Hawaii Tax Identification Number.
- Describe the nature and character of the buyer’s business
- Indicate whether the purchases are for resale at retail or leases or resale at wholesale
- The name address, title and signature of the buyer.
Also note that if at any time the percentage of purchases for resale changes, the certificate should be updated. The resale certificate is kept on file by the seller and is not filed with the state.
Similar names for a resale certificate include reseller number, seller’s certificate, exemption certificate or reseller’s license. To prove buyer intentions to resell the product, they must provide a valid resale certificate to the seller of the goods. Resale certificates are only intended to be used for inventory that will be resold and not intended for the tax – free purchase of items used in normal business operations such as paper, pens, etc.