G-26 Instructions — Hawaii Use Tax Return (for purchases by non-permitted persons)

# STATE OF HAWAII - DEPARTMENT OF TAXATION

INSTRUCTIONS FOR FORM G-26

# USE TAX RETURN

(NOTE: ALL SECTION REFERENCES ARE TO THE HAWAII REVISED STATUTES UNLESS OTHERWISE NOTED)

# GENERAL INSTRUCTIONS

The Use Tax The use tax is an excise tax imposed on property, services, and/or contracting imported into the State from an unlicensed out-of-state seller for use in the State. The use tax rate is 4% of the landed value of the property and 4% of the value of services and/or contracting imported for use in a county that does not have a surcharge. Where applicable a county sur - charge is added if the property, services, or contracting is imported for use in a county that has adopted a surcharge. Examples of Property, Services, and Contracting You Must Report • Cars, trucks, boats, or office machines that are imported for personal use. Note: The importation of household goods, personal effects, and private automobiles by certain persons are exempt from the use tax under section 238-1. Property acquired through transactions, such as casual sales, which would not be subject to the general excise tax (GET) if occurring in Hawaii are also exempt from the use tax. (See Examples of Property, Services, and Contracting That You Do Not Report below.) • All services performed outside this State where the customer in this State uses or consumes the service in this State. • Contracting performed outside the State imported by a person who uses or consumes the value of the contracting in this State. • Goods (e.g., clothing, electronics, or cameras), services, or intangibles (e.g., license to access) purchased from an out-of-state seller via the internet where the customer in this State uses or consumes the goods, services, or intangibles in this State. Examples of Property, Services, and Contracting That You Do Not Report No use tax is due and you do not need to file a use tax return to report the following: • Household goods, personal effects, and private automobiles if the person importing them into the State (A) acquired them outside Hawaii, (B) acquired them while the person was not a Ha - waii resident, (C) acquired them for use outside Hawaii, and (D) made actual and substantial use of them outside Hawaii. An article that was acquired less than three months before importation into Hawaii is presumed to have been pur - chased for use within Hawaii, and, therefore, is presumed not to qualify for this exclusion. • Property received solely as a gift. Property purchased at a bargain, even from a friend or rela - tive, does not qualify for this exclusion. • Articles that are examined and then returned, such as goods that are returned after a trial pe - riod. • Newspapers, magazines, and other periodical publications purchased on a subscription plan that qualify for the second class mail rate. • Certain intangible property. This includes currency, stocks, bonds, interest in land, or dividends as defined by chapter 235. • Property, services, and/or contracting that have been previously subject to the Hawaii use tax. • Property, services, and/or contracting purchased from a seller who was subject to the GET upon a sale or transfer of the property, services, and/or contracting to the user.

# Who Must File

Every person who uses in this State property, services, and/or contracting which are imported into Hawaii, regardless if at the time of importation, the property, services, and/or contracting is owned by the importer, purchased from a seller that does not have a GET license, or however acquired, must file a use tax return to report and pay use tax. What Forms to File Form G-26. If you do not have a GET license, use Form G-26 to report and pay any use tax due or file and pay electronically at hitax.hawaii.gov. Forms G-45 and G-49. If you have a GET li - cense you cannot file Form G-26. If your Form G-45 is not due yet, and you need to pay the use tax on an imported vehicle in order to register it, go to hitax.hawaii.gov to pay the tax. Otherwise, use Forms G-45 and G-49 to report the property, services, and/or contracting that is subject to use tax on your regular periodic (monthly, quarterly, or semiannual) return. All activities for the taxable year must be reported on Form G-49 (annual return and reconciliation). Letter. Instead of filing Form G-26, an individual that does not have a GET license may send a letter to the Department of Taxation (Department) with a check or money order payable to the "Hawaii State Tax Collector" to report and pay any use tax due. The letter should contain the following information: (1) Purchaser's name and address; (2) Purchaser's social security number; (3) Month and year of importation into the State; (4) Taxation district into which purchaser imported tangible personal property, services, and/or contracting; (5) Landed value of the property, services, and/or contracting; (6) The amount of use tax due; and (7) If purchaser is importing a motor vehicle, in - clude the vehicle's make, model year, and vehicle identification number (VIN) along with the documentation (e.g., copies of the vehicle purchase invoice, freight bill, etc.) to support the calculation of the landed value of the motor vehicle. Due Date Form G-26 with payment is due on or before the 20th day of the calendar month after the property, services, and/or contracting were imported into the State. For example, a person who is subject to the use tax for a motor vehicle imported into the State in January 2023 must file Form G-26 with payment on or before February 20, 2023. Note: If any due date falls on a Saturday, Sun - day, or legal holiday, substitute the next regular work day as the due date. If you file and/or pay late, you may have to pay penalties and interest. See Penalties and Interest below.

# Penalties and Interest

Late Filing of Return. The penalty for failure to file a return on time is assessed on the tax due at a rate of 5% per month, or part of a month, up to a maximum of 25%. Failure to Pay Tax After Filing Timely Return. The penalty for failure to pay the tax after filing a timely return is 20% of the tax unpaid within 60 days of the prescribed due date. Interest. Interest at the rate of 2/3 of 1% per month, or part of a month, shall be assessed on the unpaid taxes and penalties beginning with the first calendar day after the date prescribed for payment, whether or not that first calendar day falls on Saturday, Sunday, or legal holiday. Please check your return carefully. Additional penalties may be assessed if you make an underpayment of tax due to negligence, intentional disregard of the Department's rules, or fraud.

# Where to File

File Form G-26 and your use tax payment with: P.O. Box 1425 Honolulu, HI 96806-1425 or you may file and pay electronically at hitax. hawaii.gov. Rounding to Whole Dollars in Columns a, b, c, e, f, and g The Department is requiring taxpayers to round off cents to the nearest whole dollar for all dollar entries in columns a, b, c, e, f and g. To do so, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example: $1.49 becomes $1 and $2.50 becomes $3. If you have to add two or more amounts to figure the amount to enter in the column, include the cents when adding and round off only the total. CAUTION: DO NOT enter the cents in columns a, b, c, e, f and g. Amended Return If you are filing an amended Form G-26, darken the oval at the top of Form G-26. Enter the correct amounts of values and exemptions (if applicable) which should have been reported on the original Form G-26. Follow steps 1 through 20. Protective Claim A protective refund claim is a claim filed to protect a taxpayer's right to a potential refund based on a contingent event for a taxable period for which the statute of limitations is about to expire. A protective claim is usually based on contingencies such as pending litigation or an ongoing federal income tax audit or an audit in another state. For more information see Tax Facts 2021-2. Where to Get Forms, Instructions, and Publications Forms, publications, and other documents, such as copies of Tax Information Releases and Admin - istrative Rules issued by the Department, are available on the Department's website at tax.hawaii.gov or you may contact a customer service representative at: Voice: 808-587-4242 1-800-222-3229 (Toll-Free) Telephone for the Hearing Impaired: 808-587-1418 1-800-887-8974 (Toll-Free) Fax: 808-587-1488

# INSTRUCTIONS

Instructions For Form G-26 Page 2 (REV. 2022) Mail: Taxpayer Services Branch P.O. Box 259 Honolulu, HI 96809-0259

# STEP-BY-STEP INSTRUCTIONS

Step 1 - Enter your name, current mailing ad - dress, and social security number in the spaces provided at the top of Form G-26. Step 2 - Enter the (two-digit) month and the (two-digit) year (e.g., Month of January 2023 = 01- 23) that the property, services, and/or contracting was imported into the State in the space provided at the top of Form G-26. Step 3 - If you imported a motor vehicle into Hawaii, enter the motor vehicle's identification number in the space provided at the top of Form G-26. If you did not import a motor vehicle, leave this space blank and go to step 4. Step 4 - Check the appropriate box for the county in which you imported the property, services, and/or contracting. Oahu: Oahu Taxation District, also known as the City and County of Honolulu or the island of Oahu. Maui: Maui Taxation District also known as the County of Maui or the islands of Maui, Lanai and Molokai. Hawaii: Hawaii Taxation District, also known as the County of Hawaii or the island of Hawaii. Kauai: Kauai Taxation District, also known as the County of Kauai or the island of Kauai including Niihau. Step 5 - In column (a), enter the landed value of the property and the value of the services and/or contracting that was imported into the State. The landed value of imported property is the fair and reasonable cash value of the property when it arrives in Hawaii. It generally includes the purchase or in - voice price, shipping and handling fees, insurance costs, customs duty, and other related costs. It does not include sales tax paid in another state. If you imported a motor vehicle, use the worksheet on page 2 of Form G-26 to compute its landed value. The value of imported services or contracting is the fair and reasonable cash value of the services or contracting when the services or contracting is re - ceived by the importer or purchaser. Property, services, and/or contracting are not subject to the use tax if either the GET or use tax has been previously paid on the property, services, and/or contracting. Step 6 - In column (b), if you have allowable exemptions or deductions, enter the total amount here and explain each exemption and deduction. If you do not have any exemptions or deductions, enter "0." See the Schedule of Use Tax Exemptions and Deductions below for more information. If you include the HRS section number of the exemptions/deductions that you are claiming in columns (b) and (f), it will speed the processing of your return, and minimize the chances of us misunderstanding what you are claiming. Step 7 - In column (c), subtract column (b) from column (a) and enter the result here. Step 8 - In column (d), multiply column (c) by the tax rate of .04 and enter the result, including the cents, here. Step 9 - In column (e), enter the landed value of the property, services, and/or contracting that was imported into a county that has adopted a surcharge. Step 10 - In column (f), if you have allowable exemptions or deductions, enter the total amount here and explain each exemption and deduction. If you do not have any exemptions or deductions, enter "0." See the Schedule of Use Tax Exemptions and Deductions below for more information. If you include the HRS section number of the exemptions/deductions that you are claiming in columns (b) and (f), it will speed the processing of your return, and minimize the chances of us misunderstanding what you are claiming. Step 11 - In column (g), subtract column (f) from column (e) and enter the result here. Step 12 - In column (i), multiply column (g) by column (h) and enter the result, including the cents, here. Step 13 - On line (j), add column (d) and col - umn (i), and enter the result here. Step 14 - On line (k), enter the allowable sales or use tax paid to another state. Attach to Form G-26 a copy of the receipt or voucher indicating the pay - ment of the sales or use tax paid to the other state. A credit against the Hawaii use tax may be claimed for the amount of sales or use taxes imposed by another state (or any subdivision thereof) and paid by the taxpayer on property, services, and/or contracting before it is imported into Hawaii. (Section 238- 3(i).) The credit shall not include any other taxes paid to another state, such as taxes on manufacturing, extraction, and the like, as well as license fees, or transfer taxes. The amount of credit shall not exceed the amount of use tax imposed by Hawaii on such property, services, and/or contracting.

Step 15 - If you are filing an amended Form G-26, enter on line (l) the amount of payment made with the original Form G-26.

# Step 16 - If you are filing an amended Form

G-26, if line (j) is less than the sum of lines (k) and (l), enter the result on line (m), otherwise go to step 17. Step 17 - On line (n), subtract line (k) and (l) from line (j) and enter the result here. Step 18 - On line (o), if you file a tax return after the due date and there is tax due on the return, then you must compute penalty and interest charges. After computing the amounts, enter the results to the right of "PENALTY $" and "INTEREST $" and enter the total of the two amounts on line (o). If you need help computing the penalty and interest, please call a customer service representative at 808- 587-4242 or toll-free 1-800-222-3229; or leave these lines blank, and the Department will compute the charges for you and send you a bill. Step 19 - On line (p), add line (n) and line (o), and enter the result here. Attach your check or money order for this amount payable to "Hawaii State Tax Collector" in U.S. dollars drawn on any U.S. bank. Write "Use Tax," the month ending (MM/YY), and a daytime phone number on your check or money order. DO NOT SEND CASH. You may also file and pay electronically at hitax.hawaii.gov. Step 20 - Sign your name and write your title, the date, and a daytime contact phone number in the spaces provided on Form G-26.

# SCHEDULE OF USE TAX EXEMPTIONS AND DEDUCTIONS

(NOTE: ALL SECTION REFERENCES ARE TO THE HAWAII REVISED STATUTES) Unless the following instructions tell you not to report the exempt or deducted amounts, you must report and explain the exemptions and deductions you are claiming on Form G-26. For circumstances under which an exemption or a deduction is permitted or allowed, refer to the following sections: Casual Purchases: A sale of tangible personal property by someone not in the business of selling the property is called a casual sale. A casual sale means an occasional, isolated, irregular, infrequent, or incidental sale or transaction involving tangible personal property that is not ordinarily sold in the usual course of a trade or business. Because gross income derived from a casual sale is excluded from gross income subject to the general excise tax, the landed value of tangible personal property acquired in a casual sale also is not subject to the use tax. For example, if you purchase a used car from an indi - vidual selling his or her personal car and import that car into Hawaii, report the landed value of the car, but claim this exemption. (Section 238-1.) Diplomats and Consular Officials: The use of property, services, or contracting imported by foreign diplomats and consular officials holding cards issued by the U.S. Department of State granting them an exemption from state taxes are exempt. Report and explain these amounts. (Section 238-1.) The tax exemption, however, is not applicable to taxes im - posed on telecommunication services, other utilities, or gasoline purchases. For more information, see Tax Facts 2016-1. Director of Taxation's Authority to Exempt, Exclude or Apportion the Use Tax: Imports of property, services, or contracting to the extent that the general excise tax would not have applied to a similarly-situated taxpayer engaged in a local transaction. The Director of Taxation (Director) has the authority to: (1) Exempt or exclude from the use tax, property, services, or contracting, or the use of property, services, or contracting exempted from the general excise tax; or (2) Apportion the gross value of services or con - tracting sold to customers within the State by persons engaged in business both within and without the State to determine the value of that portion of the services or contracting that is subject to the general excise tax for the pur - poses of section 237-21. The Director will use the authority to exempt, ex - clude, or apportion the value of imported property, services, or contracting when an exemption, exclu - sion, or apportionment of gross receipts would be allowed under the General Excise Tax Law in the case of a similar local transaction. (Section 238-3(a).) Drugs and Prosthetic Devices for Personal Use: If you are an individual who bought drugs or prosthetic devices from a hospital, infirmary, medical clinic, health care facility, pharmacy, or a practitioner licensed to administer the drug to an individual, the landed value of the drugs or prosthetic devices is exempt from use tax. Do not report these amounts. (Section 238-1.)