Hawaii – ENexus Retroactive Enforcement Date Revised To July 1, 2018

Hawaii revised their reaction to Wayfair. DEPARTMENT OF TAXATION ANNOUNCEMENT NO. 2018-10 dated July 10, 2018 supersedes their previous Wayfair ENexus Announcement dated June 27, 2018. Based on further review Hawaii’s retroactive application of their Economic Nexus (ENexus) obligations is revised. Hawaii originally set the enforcement date to January 1, 2018 however after further review (and to avoid litigation) the new enforcement date is July 1, 2018. Hawaii’s ENexus threshold is $100,000/200. The reason they reversed is quoted below.

“Implementation of Act 41 in 2018 Retroactivity – Although the U.S. Supreme Court, in South Dakota v. Wayfair, Inc., held that Senate Bill 106 satisfied the substantial nexus requirement, the Court did not rule on whether Senate Bill 106 violated other principles of the U.S. Commerce Clause. Wayfair, 2018 WL 3058015, at *17. The Court noted, however, that South Dakota’s law contains “several features that appear designed to prevent discrimination against or undue burdens upon interstate commerce,” including a prohibition on retroactive application of Senate Bill 106. Id.

To avoid any constitutional concerns, the Department will not retroactively administer Act 41. Accordingly, taxpayers who lacked physical presence in Hawaii prior to July 1, 2018, but who met the $100,000 or 200-transaction threshold in 2017 or 2018, will not be required to remit GET for the period from January 1, 2018 to June 30, 2018.”

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