Haw. Code R. § 15-6-13

Current through November, 2024

Section 15-6-13 - Wholesale sale of tangible personal property

(a) Tangible personal property must be sold at wholesale by an establishment or qualified business located within an enterprise zone. The

transfer of title to the buyer of the tangible personal property must take place in an enterprise zone located within the same county in which the tangible personal property is sold.

(b) When title passes is dependent upon the factual circumstances of the transaction gathered from the contract of sale and invoice. Among the circumstances that are considered in making this determination are when the risk of loss transferred from the seller to the purchaser, where delivery occurs, and when title to the property sold passed from the seller to the purchaser under the provisions of the uniform commercial code, chapter 490, HRS. A statement in a contract that title passes at a certain time or event will not in itself create a presumption of passing of title for purposes of this section, unless title has in fact passed considering all of the facts and circumstances.

(c) The application of this section is illustrated in the following examples:

Example 1:

ABC Company is located in an area designated as an enterprise zone. ABC is a wholesaler of electronic parts and equipment. The purchasers take title and receive delivery of the parts and equipment in the zone. Accordingly, ABC will qualify for tax credits against any taxes due the State and the general excise tax exemption.

Example 2:

ABC Seafood Company is located in an area designated as an enterprise zone. ABC sells the seafood at wholesale to purchasers who take title to the seafood within the zone and receive delivery of the seafood within the zone. ABC also sells the seafood at retail to customers who come to ABC's place of business. The wholesale sales will qualify for the income tax credits and general excise tax exemption. The retail sales to customers, however, will not qualify. Accordingly, ABC will have to allocate the income received from each type of sale and claim income tax credits and the general excise tax exemption only for wholesale sales.

Example 3:

ABC Ranch is located in an area designated as an enterprise zone. ABC raises cattle and various food crops. ABC sells the cattle and crops at wholesale to purchasers who receive title and delivery within the zone. ABC will qualify for the tax credits and general excise exemption.

Example 4:

Assume the same facts as in Example 3, except that ABC also sells cattle and crops to purchasers who receive possession of the cattle and crops in an enterprise zone outside of the county that ABC is located in. The contract provides that title passes to the purchaser upon execution of the contract but also provides that ABC must bear the cost of delivery and any risk of loss. Under applicable law, title is deemed not to pass to the purchaser and ABC will have to apportion the income received from the sales outside the county that ABC is located in and claim income tax credits and the general excise tax exemption only for sales where the purchasers receive title within an enterprise zone located within the same county in which the cattle and crops are sold.

Haw. Code R. § 15-6-13

[Eff 11/3/90; am and comp2/28/2015] (Auth: HRS § 209E-8) (Imp: HRS § 209E-9)