HRS § 237-9 — Licenses; penalty


LICENSES; TAX; EXEMPTIONS
LICENSES;
TAX; EXEMPTIONS
§237-9 Licenses; penalty. (a) Except
as provided in this section, any person who has a gross income or gross
proceeds of sales or value of products upon which a privilege tax is imposed by
this chapter, as a condition precedent to engaging or continuing in such
business, shall in writing apply for and obtain from the department of
taxation, upon a one-time payment of the sum of $20, a license to engage in and
to conduct such business, upon condition that the person shall pay the taxes
accruing to the State under this chapter, and the person shall thereby be duly
licensed to engage in and conduct the business. The license shall not be
transferable and shall be valid only for the person in whose name it is issued
and for the transaction of business at the place designated therein. The
license may be inspected and examined, and shall at all times be conspicuously
displayed at the place for which it is issued.
(b) Licenses and applications therefor shall
be in such form as the department shall prescribe, except that where the
licensee is engaged in two or more forms of business of different
classification, the license shall so state on its face. The license provided
for by this section shall be effective until canceled in writing. Any
application for the reissuance of a previously canceled license identification
number after December 31, 1989, shall be regarded as a new license application
and subject to the payment of the one-time license fee of $20. The director
may revoke or cancel any license issued under this chapter for cause as
provided by rules adopted pursuant to chapter 91.
(c) Any person who receives gross income or
gross proceeds of sales or value of products from engaging in business in the
State and who fails to obtain a license or receives gross income or gross
proceeds of sales or value of products from engaging in business in the State
without a license required under this section may be fined not more than $500;
provided that a cash-based business may be fined not less than $500 and not
more than $2,000, as determined by the director or the director's designee.
The penalty under this subsection shall be in addition to any other penalty
provided under law and may be waived or canceled upon a showing of good cause.
(d) If the license fee is paid, the department
shall not refuse to issue a license or revoke or cancel a license for the
exercise of a privilege protected by the First Amendment of the Constitution of
the United States, or for the carrying on of interstate or foreign commerce, or
for any privilege the exercise of which, under the Constitution and laws of the
United States, cannot be restrained on account of nonpayment of taxes, nor
shall section 237-46 be invoked to restrain the exercise of such a privilege,
or the carrying on of such commerce.
(e) The director may permit a person engaged
in network marketing, multi-level marketing, or other similar business to
obtain the license required under this section for purposes of becoming a tax
collection agent on behalf of its direct sellers. The tax collection agent
shall report, collect, and pay over the taxes due under this chapter and
chapter 238 on behalf of its direct sellers who are covered by the tax
collection agreement. The tax collection agent's direct sellers shall be
deemed to be licensed under this chapter; provided that the licensure shall
apply solely to the business activity conducted directly through the marketing
arrangement. Under this section, a tax collection agent shall:
(1) Notify all of its direct sellers making sales in
the State that it has been designated to collect, report, and pay over the tax
imposed by this chapter and chapter 238 on their behalf on the business
activity conducted through the marketing arrangement;
(2) If required by the director as a condition of
obtaining the license, furnish with the annual return, a list (including
identification numbers) of all direct sellers for the taxable year who have
been provided (by the tax collection agent) information returns required under
section 6041A of the Internal Revenue Code of 1986, as amended, and any other
information that is relevant to ensure proper payment of taxes due under this
section; and
(3) Be personally liable for the taxes due and
collected under the tax collection agreement if taxes are collected, but not
reported or paid, together with penalties and interest as provided by law.
(f) For the purposes of this section:
"Cash-based business" has the same
meaning as in section 231-93.
"Consumer product" shall include
tangible consumer products and intangible consumer services.
"Direct seller" means any person who
is engaged in the trade or business of selling (or soliciting the sale of)
consumer products:
(1) To any buyer on a buy-sell basis, a
deposit-commission basis, or any similar basis, that the director prescribes by
rule adopted pursuant to chapter 91, for resale other than in a permanent
retail establishment;
(2) Other than in a permanent retail establishment;
provided that:
(A) Substantially all the remuneration
(whether or not paid in cash) for the sale of consumer products is directly
related to sales or other output rather than to the number of hours worked; and
(B) The sales of consumer products by the
person are performed pursuant to a written contract that provides that the
person will not be treated as an employee with respect to those sales for
federal or state tax purposes.
"Direct seller" includes individuals
who realize remuneration dependent on the productivity of other individuals in
the marketing arrangement.
"Network marketing" or "multi-level
marketing" means a marketing arrangement in which consumer products are
distributed and sold to or through direct sellers.