HAR § 18-235-17-18 — Production company personnel and contractors; required Hawaii tax notice

(a) Any taxpayer claiming the income tax credit allowed under section 235-17, HRS, shall provide every contractor, HRS §235-17 HRS §235-17 §18-235-17-18 vendor, loan-out company, or other agent providing goods or performing services in the state that does not have a general excise tax license with a tax advisory informing such persons of state tax obligations and obtain acknowledgement that the advisory was received. The tax advisory under this section shall be provided to all such persons not later than thirty calendar days after engaging the contractor, vendor, loan-out company, or other agent. (b) The tax advisory to be provided shall be any tax advisory made available to the motion picture and television film industry by the department through official pronouncement, and in a form that includes substantially the following: “The purpose of this Tax Advisory is to provide notice to persons engaged in the motion picture and television film production industry (film industry) of their Hawaii tax obligations. GENERAL EXCISE TAX OBLIGATIONS All businesses, including loan-out companies and independent contractors, that engage in business in Hawaii are subject to the general excise tax (GET). GET is a privilege tax that is measured by the business’ gross receipts. All businesses that provide services or have other business activities in the Hawaii film industry are subject to the GET, as they are engaged in business in Hawaii. All businesses must register for a GET license prior to engaging in business in Hawaii. Submit Form BB-1 together with a one-time $20 fee to register for a GET license. A $500 fine will be imposed on any non-cash- based business that receives income from engaging in business in Hawaii prior to registering for a GET license. Hawaii Revised Statutes (HRS) §237-9(c). GET is reported and remitted by filing periodic returns (Form G-45), followed by an annual reconciliation return (Form G-49) after the end of the tax year. Other forms may be necessary depending upon the circumstances. The penalty for failure to file a tax return by the deadline is 5% of the unpaid tax per month, with a maximum penalty of 25%. The penalty for failure to pay the tax within 60 days of timely filing a return is 20% of the amount that is unpaid. If the failure to pay tax is due to fraud, the penalty is an amount up to 50% of the underpayment. The interest on nonpayment of tax or underpayment of tax accrues at a rate of two-thirds of 1% per month. HRS §231-39. Taxpayers may register, file and pay GET online through the Department’s website at https://hitax. hawaii.gov. INCOME TAX OBLIGATIONS Income earned from performing services or conducting other business activities in Hawaii is taxable regardless of residency. Wages earned while working in Hawaii as an employee (receiving Form W-2) are subject to Hawaii income tax for the amount of income earned from performing services or conducting other business activities in Hawaii. Loan-out companies and independent contractors (receiving Form 1099) are also subject to Hawaii income tax on the income earned from performing services or conducting other business activities in Hawaii. Income tax is reported and remitted by using the proper income tax form. Resident individuals must file Form N-11 and nonresidents or part-year resident individuals file Form N-15. Corporations file Form N-30, S Corporations file N-35, and partnerships and multimember limited liability companies file Form N-20. Other forms may be necessary depending upon circumstances. The penalty for failure to file a tax return by the deadline is 5% of the unpaid tax per month, with a maximum penalty of 25%. The penalty for failure to pay the tax within 60 days of timely filing a return is 20% of the amount that is unpaid. If the failure to pay tax is due to fraud, the penalty is an amount up to 50% of the underpayment. The interest on nonpayment of tax or underpayment of tax accrues at a rate of two-thirds of 1% per month. HRS §231-39. CONTACT A TAX PROFESSIONAL The Department suggests that any person affected by this Tax Advisory contact a tax professional familiar with Hawaii tax laws to assist them with any Hawaii tax issues. ADDITIONAL INFORMATION For additional information: - Website: tax.hawaii.gov §18-235-20.5-01 - Telephone: (808) 587-1530 - Fax: (808) 587-1584 - Hawaii Administrative Rules 18-235-17” (c) A taxpayer claiming the tax credit under section 235-17, HRS, shall retain evidence that the tax advisory was provided to the contractors, vendors, loan-out companies, or other agents, as required under subsection (a), not later than thirty calendar days after engaging such parties.