Hawaii – Exemption for Professional Employer Organizations Amended

SALT Report 2856 – The Hawaii Department of Taxation issued guidance regarding Act 174, which amends and clarifies the eligibility requirements for the general excise tax exemption for Professional Employer Organizations.

The Act amends section 237-24.75, Hawaii Revised Statutes, to add the requirement that a PEO must be registered with the State in order to maintain the exemption. The Act also clarifies the circumstance in which a PEO will lose the right to claim the exemption by providing specific events.

Additionally, Act 174 provides that a PEO will lose the right to claim the exemption if the Department of Labor notifies the Department of Taxation of a PEO’s noncompliance with the registration requirements.  Or, if the Department of Taxation determines that the PEO has failed to pay any tax or tax withholding due.

For Further Information

Hawaii Department of Taxation – Tax Announcement 2013-21

Hawaii State Legislature – House Bill 144, Act 174