2007-02_County_Surcharge_on_State_Excise_Tax

Home

March 19, 2007 Page 3 of 3 allocated to the tax district in which the sale occurs. Therefore, any sale of real property occurring within the County of Hawaii to any person is not subject to the surcharge. Purchase of Service HAR 18-237-8.6-03 allocates income from the service provided to the tax district where the service is used or consumed, including but not limited to construction. Any service or work performed for the County of Hawaii occurring within the County will have its income allocated to the Hawaii Tax District. Therefore, contractors or other service providers should not assess the surcharge for services provided within Hawaii County, regardless of where they are from. Where the County of Hawaii contracts for services to be done on Maui or Kauai, no surcharge is applicable, since Maui, Kauai, and Hawaii counties have not enacted surcharge ordinances. However, if any county contracts a service to be performed on Oahu, then income is allocated to Oahu and is therefore subject to the surcharge of 0.5%. Conclusion It should be noted that in the limited instances where the County of Hawaii could rightfully be assessed the 0.5% surcharge, the County always has the.option of negotiating with the vendor to not pass on this surcharge to the County. Further, as stated previously, contracts entered into prior to June 30, 2006, which do not provide for increases in taxes are not subject to Act 2477 or the 0.5% surcharge. There should be relatively few instances where the County of Hawaii should be assessed the surcharge of 0.5%. Should you have any questions or comments please contact me at your convenience. CTM:mc sAdepts\corp counsel\numbered memo 2007-02 3-19-07 CTMmc 7 Act 247 of the 2005 State Legislature.