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Will Hawaii Governor Sign HB1405

It is more or less a wait and see situation for affiliates in Hawaii. As we reported here, HB1405 which amends the definition of nexus to include affiliates, was transmitted to the Governor on May 11. Unless vetoed by Governor Linda Lingle, the law takes effect on July 1.  Popular opinion is that the law will not be vetoed. This opinion is based on the fact that Hawaii, like most states, is working hard to close the difference between financial need and revenue.  Some of their measures include 3 days of unpaid furlough for state employees and salary reduction for legislators, judges, and senior officials of the Executive Branch. Seems logical that collecting a tax that is due yet uncollected is a logical step. HB1405 is similar to the NY Internet nexus law which sets a threshold of $10,000  (sales by  affiliates per  12 month period) and a condition where the presumption can be rebutted.

Hawaii affiliates should consult a excise (sales) tax  attorney to see if the NY solution can be used as a guide. It is important to be proactive and approach merchants before they remove you from their program. It will also prevent some down time. Examine all your merchants to see what the current status is. If the merchant does not currently pay the excise tax, you should contact them to see what they have planned for July 1. Do not wait for the last minute or assume the merchant will give you adequate notice.  If you are an affiliate with Amazon, contact them to see if they will follow through with their announced plan to remove affiliates from Hawaii rather than collect and remit the tax.

Hawaii also passed Streamlined Sales and Use Tax Amendments (SB1678) which exerts more pressure on the United States Congress to enact streamlined sales tax legislation. This also awaits signing by Governor Lingle. Ultimately, the ideal answer for all of us – merchants, affiliates and government is the adoption of  a streamlined sales and use tax. It is the only way to level the playing field for all in a more simplified manner.

{ 3 comments… add one }

  • Dean June 12, 2009, 6:24 pm

    Hawaii Affiliate please join the HB1405 Opposition site: http://hawaiiaffiliatetax.ning.com/

  • Melanie June 16, 2009, 12:22 pm

    Thanks Dean. I will posting a follow up shortly. I am also sending you a follow up email.

  • No new taxes June 18, 2009, 10:10 pm

    Does this law effect Google Adsense publishers?

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