HRS § 237-23 — Exemptions, persons exempt, applications for exemption


§237-23 Exemptions, persons exempt,
applications for exemption. (a) This chapter shall not apply to the
following persons:
(1) Public service companies as that term is defined
in section 239-2, with respect to the gross income, either actual gross income
or gross income estimated and adjusted, that is included in the measure of the
tax imposed by chapter 239;
(2) Public utilities owned and operated by the State
or any county, or other political subdivision thereof;
(3) Fraternal benefit societies, orders, or
associations, operating under the lodge system, or for the exclusive benefit of
the members of the fraternity itself, operating under the lodge system, and
providing for the payment of death, sick, accident, a legal service plan, or
other benefits to the members of the societies, orders, or associations, and to
their dependents;
(4) Corporations, associations, trusts, or societies
organized and operated exclusively for religious, charitable, scientific, or
educational purposes, as well as that of operating senior citizens housing
facilities qualifying for a loan under the laws of the United States as
authorized by section 202 of the Housing Act of 1959, as amended, as well as
that of operating a legal service plan, as well as that of operating or
managing a homeless facility, or any other program for the homeless authorized
under part XVII of chapter 346;
(5) Business leagues, chambers of commerce, boards of
trade, civic leagues, agricultural and horticultural organizations, and
organizations operated exclusively for the benefit of the community and for the
promotion of social welfare that shall include the operation of a legal service
plan, and from which no profit inures to the benefit of any private stockholder
or individual;
(6) Hospitals, infirmaries, and sanitaria;
(7) Companies that provide potable water to
residential communities that lack any access to public utility water services
and are tax exempt under section 501(c)(12) of the Internal Revenue Code of
1986, as amended;
(8) Cooperative associations incorporated under
chapter 421 or Code section 521 cooperatives which fully meet the requirements
of section 421-23, except Code section 521 cooperatives need not be organized
in Hawaii; provided that:
(A) The exemption shall apply only to the
gross income derived from activities that are pursuant to purposes and powers
authorized by chapter 421, except those provisions pertaining to or requiring
corporate organization in Hawaii do not apply to Code section 521 cooperatives;
(B) The exemption shall not relieve any
person who receives any proceeds of sale from the association of the duty of
returning and paying the tax on the total gross proceeds of the sales on
account of which the payment was made, in the same amount and at the same rate
as would apply thereto had the sales been made directly by the person, and all
those persons shall be so taxable; and
(C) As used in this paragraph, "Code
section 521 cooperatives" mean associations that qualify as a cooperative
under section 521 (with respect to exemption of farmers' cooperatives from tax)
of the Internal Revenue Code of 1986, as amended;
(9) Persons affected with Hansen's disease and
kokuas, with respect to business within the county of Kalawao;
(10) Corporations, companies, associations, or trusts
organized for the establishment and conduct of cemeteries no part of the net
earnings of which inures to the financial benefit of any private stockholder or
individual; provided that the exemption shall apply only to the activities of
those persons in the conduct of cemeteries and shall not apply to any activity
the primary purpose of which is to produce income, even though the income is to
be used for or in the furtherance of the exempt activities of those persons;
and
(11) Nonprofit shippers associations operating under
part 296 of the Civil Aeronautics Board Economic Regulations.
(b) The exemptions enumerated in subsection
(a)(3) to (7) shall apply only:
(1) To those persons who shall have registered with
the department of taxation by filing a written application for registration in
such form as the department shall prescribe, shall have paid the registration
fee of $20, and shall have had the exemption allowed by the department or by a
court or tribunal of competent jurisdiction upon appeal from any assessment
resulting from disallowance of the exemption by the department;
(2) To activities from which no profit inures to the
benefit of any private stockholder or individual, except for death or other
benefits to the members of fraternal societies; and
(3) To the fraternal, religious, charitable,
scientific, educational, communal, or social welfare activities of such
persons, or to the activities of hospitals, infirmaries, sanitaria, and potable
water companies, as such, and not to any activity the primary purpose of which
is to produce income even though the income is to be used for or in furtherance
of the exempt activities of such persons.
(c) To obtain allowance of an exemption:
(1) A person under subsection (a)(3) to (7), who has
received or applied for recognition of tax exempt status under section
501(c)(3), (4), (6), (8), or (12) of the Internal Revenue Code of 1986, as
amended, or who is a subordinate person of a person who has received a group
exemption letter under section 501(c)(3), (4), (6), (8), or (12) of the
Internal Revenue Code of 1986, as amended, shall register with the department
by filing a statement attaching a copy of the exemption or application for
recognition of exempt status and any particular facts that the department may
require; and
(2) All other persons under subsection (a)(3) to (7)
shall file an application for exemption in the form of an affidavit or
affidavits setting forth in general all facts affecting the right to the
exemption and any particular facts that the department may require, to which
shall be attached any records, papers, and other information as the department
may prescribe.
(d) For all persons, the statement registering
the person with the department or application for exemption shall be filed on
or before March 31 of the first year of registration or within three months
after the commencement of business. In the event of allowance of the
exemption, no further statement or application therefor need be filed unless
there is a material change in the facts. In the event of disallowance of the
exemption, a license may be obtained upon payment of the required fee as
provided by section 237-9, less the $20 already paid under this section, which
shall be credited thereon. In the event the registrant has a license under
this chapter, no further fee shall be required for registration under this
section.
(e) The department for good cause may extend
the time for registration or the time for filing an application for exemption.