How to Get a Resale Certificate in Hawaii

Suppose you’re starting a limited liability company (LLC) in Hawaii and planning to sell goods subject to sales tax. In that case, you’ll need a resale certificate, or several of them, before doing business. 

Hawaii does not have a sales tax but charges businesses an excise tax, usually passed on to their customers. Because of this, the excise tax works the same as a sales tax. 

This guide lays out all you need to do to get a resale certificate in Hawaii.

What Is a Resale Certificate?

If your LLC expects to sell tangible goods in Hawaii, a resale certificate will enable you to purchase goods without paying the usual excise tax. This prevents your goods from being double taxed, as you will need to charge your customers the excise tax when they buy them. Then you’ll pay that excise tax to the state. 

If you purchase goods without paying sales tax and neglect to charge sales tax to customers who buy those goods, or if you fail to sell the goods, you and your LLC will be responsible for the sales tax. Failure to pass the sales tax onto the state could result in steep fines. 

If you purposely purchase an item not intended for resale, such as office equipment, and use your resale certificate to avoid paying sales tax, that’s tax fraud, a federal offense. In Hawaii, the penalty for tax fraud is repayment of the tax owed plus accrued interest and penalties. It could also result in a fine of up to $100,0000 and probation or imprisonment for up to five years.

Each resale certificate applies to only one vendor, so you’ll need one for each vendor. 

Suppliers and vendors do not have to accept resale certificates. However, a vendor might refuse a resale certificate if it is invalid, as an invalid certificate could make the vendor responsible for the sales tax.

How to Obtain a Resale Certificate in Hawaii 

To obtain a resale certificate in Hawaii, visit the Department of Taxation website to download the form. 

Once you have the certificate, present it to your vendor and keep a copy for your records.

Does a Resale Certificate Expire in Hawaii?

Hawaii resale certificates do not expire and can only be revoked in writing by the purchaser of the goods. 

In Closing

In Hawaii, a resale certificate is relatively easy to obtain yet provides significant savings. It will also help you and your LLC avoid potentially substantial penalties. 

Be sure to present the correct certificate to your vendors and keep track of expiration dates so your certificates are always current. You don’t want to pay unnecessary sales tax.