August 14, 1998
DEPARTMENT OF TAXATION ANNOUNCEMENT NO. 98-17
RE: Adoption of amendments to section 18-235-38-06,
Hawaii Administrative Rules,
relating to the apportionment of income for multi-state radio and television
broadcasters and publishers.
The Department of Taxation (Department) has adopted amendments to section
18-235-38-06, Hawaii Administrative Rules (HAR), effective July 25,
1998. Section 18-235-38-06.04, HAR, provides an industry-related apportionment
formula for multi-state taxpayers reporting State income taxes who are
engaged in the business of broadcasting film or radio programming through
the public airwaves, by cable, direct or indirect satellite transmission,
or any other means of communication through affiliated, unaffiliated or
independent radio and television broadcast stations. These taxpayers will
continue to use sections 235-21 to 235-39, Hawaii Revised Statutes (HRS),
or section 255-1, HRS, for the apportionment of business income from sources
both within and without Hawaii, except as modified by section 18-235-38-06.04,
HAR.
The radio and television broadcast rules modify the general sales, property,
and payroll apportionment factors by:
-
Including the gross receipts derived from advertising revenue in the ratio
of the viewing, listening, or subscribing audience for the broadcast station
located in Hawaii to the total audience for the network of stations (audience
factor) in the sales factor numerator. The sales factor numerator also
will include the gross receipts derived from the sale, rental, licensing,
or other disposition of audio or video cassettes, discs or similar media
intended for home viewing from sources within Hawaii;
-
Excluding the value of outer-jurisdictional property and film or radio
programming property from the property factor (both numerator and denominator).
Outer-jurisdictional property is defined as tangible personal property
such as orbiting satellites or undersea transmission cables used in the
business of broadcasting that are not physically located in any particular
state. Film or radio programming property is defined as any and all performances,
events, or productions that are broadcast on the radio through the use
of an audio tape, disc or any other format or medium; and
-
Including amounts paid to directors, actors, newscasters, and other talent
employed as employees in the payroll apportionment factor denominator.
Likewise, section 18-235-38-06.05, HAR, provides an industry-related apportionment
formula for multi-state taxpayers reporting State income taxes who are
engaged in the business of publishing, selling, licensing, or distributing
newspapers, magazines, periodicals, trade journals or other printed material
where the taxpayer has income from sources both within and without Hawaii.
The publishing rules modify the general sales and property factors by:
-
Including the gross receipts from the sale of printed materials delivered
or shipped to a purchaser or subscriber in Hawaii in the sales factor numerator.
The gross receipts derived from advertising and the sale, rental or other
use of a taxpayer's customer list will be attributed to Hawaii based upon
a ratio of the taxpayer's in-state circulation to its total circulation
to purchasers and subscribers everywhere; and
-
Including outer-jurisdictional property in the numerator and denominator
of the property factor.
If you have any questions regarding this Announcement, please call Johnson
Lau at 808-587-1562. Forms and other tax information may be downloaded
from the Department's website at http://www.state.hi.us/tax/tax.html. On
Oahu, forms may be ordered by calling the Department's Form Request Line
at 808-587-7572. Persons who are not calling from Oahu may call 1-800-222-7575
to receive forms by mail or 808-678-0522 from a fax machine to receive
forms by fax.
/s/
RAY K. KAMIKAWA
Director of Taxation
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