The Department of Taxation ("Department") has amended section 18-235-38-03, Hawaii Administrative Rules (HAR), relating to the sales factor of the apportionment formula. Section 18-235-38-03, HAR, is amended by adding a new subsection (f) which requires a multi-state corporate taxpayer reporting State income tax to include in the sales factor of the apportionment formula the net gain from the short-term investment, reinvestment, or trading of certain liquid assets such as stocks and bonds held in connection with the taxpayer's "treasury function." The term "treasury function" is defined as the pooling and management of liquid assets for the purpose of satisfying the cash flow needs of the taxpayer's business. The definition of "treasury function," however, exempts those taxpayers who are principally engaged in the business of dealing and trading securities.
The amendment of section 18-235-38-03, HAR, conforms with the tax laws of other states and allows businesses to apply consistent tax practices.
A copy of the rule and other tax information may be downloaded from the Department's website at: http://www.state/hi.us/tax/tax.html. A copy of the rule and other tax information may also be obtained by calling the Department's Forms Request Line at: 808-587-7572. Persons who are not calling from Oahu may request a copy of the rules by calling 1-800-222-7572.
RAY K. KAMIKAWA
Director of Taxation
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