The House of Representatives did not override the Governor’s veto of SB1678; SB1678 included amendments to bring Hawaii into conformity with the streamlined sales tax agreement. This means the Governors veto stands. It can also be confirmed that there was no override of the Governor’s veto of HB1405. Thank you to the Honorable Carol Fukunaga for confirming this information.

While Internet marketers in Hawaii may breathe a temporary sigh of relief as they look forward to being reinstated by Amazon and other merchants, our long term problems are not solved. We still face these same challenges in other states and, next year will probably see an escalation in actions in all states with a sales and use (or excise) tax. The simple reason is that technology has changed the way we shop. As such, whether we like it or not, sales tax laws will change.

The Streamlines Sales Tax Project is a step in the right direction but it is not ideal. It still presents challenges for both merchants and states. In addition because it has not been adopted by all states, it is not a complete solution.  The adaptation of the SSTA is complicated and it takes years for a state to make all the necessary changes. Large states such as New York have additional challenges and they do not see it as practical. It has also not been accepted on a Federal level.

What is needed is Federal action; either tax or don’t tax Internet sales. The mixed standards do not level the playing field. New York and Rhode Island Internet marketers are at a distinct disadvantage as our states have instituted ‘modern’ nexus laws. Whether the playing field between online  stores and brick and mortar stores has been leveled remains to be seen. When advertisers/affiliates are removed from programs in NY and RI in order for a merchant to remove a nexus it seems to me the field is not leveled.

Today in Hawaii is the first day of the Special Session in Hawaii legislature. It is the day that the Senate and Representatives are meeting to vote on whether to override the Governors vetoes. By a vote of 23 to 2, the Senate voted to override the Governor’s veto of SB 1678. SB 1678  contains the amendments to bring Hawaii into conformity with the streamlined sales tax agreement (SSTA).

SB1678 is a long complicated document, I think it’s 158 pages long. We will need to carefully examine it to determine the effect, if any, on Internet sales now. Remember, one of the aspects of SSTA is sales tax on Internet purchases.

For now, keeping eye on HB 1405 and Representatives’ actions. Wondering, will Representatives override too?

With the action of the Senate to override the Governor’s veto, it is logical to guess that even if the real Internet sales tax law is not in effect this year it will be introduced next year. We can be sure that they won’t make the same “mistake” they did in this year’s version.

Endless isn’t it?

Late yesterday, Hawaii’s Governor Lingle  notified legislators that she may veto HB1405. This action is required, she must give at least ten days notice. I am unsure why she had to wait until this late time to indicate her intent to veto, the bill has been sitting on her desk since May 11. This latest news just adds to the confusion for everyone. The law was supposed to take effect today. Affiliates from Hawaii have been removed from several large programs already.

In my opinion, affiliates from Hawaii should continue to work on the Governor and on Legislators as they may be able to override in the event the Governor follows through. Continue to prepare your sites; identify vulnerable merchant relationships and find replacements.

Merchants should consult their attorney to find out what it means to them. Should they collect sales tax as indicated in the law? Or does the Governor’s statement that she may veto put the law in limbo?

While this all unravels in Hawaii, I suggest that every affiliate in every state make note of all the events of the last few days. Remember what happened to NY affiliates last year. Then adjust your approach to business accordingly.