§237-4 - quot;Wholesaler", "jobber", defined.

§237-4 "Wholesaler","jobber", defined. (a) "Wholesaler" or"jobber" applies only to a person making sales at wholesale. Onlythe following are sales at wholesale:

(1) Sales to a licensed retail merchant, jobber, orother licensed seller for purposes of resale;

(2) Sales to a licensed manufacturer of materials orcommodities that are to be incorporated by the manufacturer into a finished orsaleable product (including the container or package in which the product iscontained) during the course of its preservation, manufacture, or processing,including preparation for market, and that will remain in such finished orsaleable product in such form as to be perceptible to the senses, whichfinished or saleable product is to be sold and not otherwise used by themanufacturer;

(3) Sales to a licensed producer or cooperativeassociation of materials or commodities that are to be incorporated by theproducer or by the cooperative association into a finished or saleable productthat is to be sold and not otherwise used by the producer or cooperativeassociation, including specifically materials or commodities expended asessential to the planting, growth, nurturing, and production of commoditiesthat are sold by the producer or by the cooperative association;

(4) Sales to a licensed contractor, of materials orcommodities that are to be incorporated by the contractor into the finishedwork or project required by the contract and that will remain in such finishedwork or project in such form as to be perceptible to the senses;

(5) Sales to a licensed producer, or to a cooperativeassociation described in section 237-23(a)(7) for sale to a licensed producer,or to a licensed person operating a feed lot, of poultry or animal feed,hatching eggs, semen, replacement stock, breeding services for the purpose ofraising or producing animal or poultry products for disposition as described insection 237-5 or for incorporation into a manufactured product as described inparagraph (2) or for the purpose of breeding, hatching, milking, or egg layingother than for the customer's own consumption of the meat, poultry, eggs, ormilk so produced; provided that in the case of a feed lot operator, only thesegregated cost of the feed furnished by the feed lot operator as part of thefeed lot operator's service to a licensed producer of poultry or animals to bebutchered or to a cooperative association described in section 237-23(a)(7) ofsuch licensed producers shall be deemed to be a sale at wholesale; and providedfurther that any amount derived from the furnishing of feed lot services, otherthan the segregated cost of feed, shall be deemed taxable at the servicebusiness rate. This paragraph shall not apply to the sale of feed for poultryor animals to be used for hauling, transportation, or sports purposes;

(6) Sales to a licensed producer, or to a cooperativeassociation described in section 237-23(a)(7) for sale to the producer, of seedor seedstock for producing agricultural and aquacultural products, or bait forcatching fish (including the catching of bait for catching fish), whichagricultural and aquacultural products or fish are to be disposed of asdescribed in section 237-5 or to be incorporated in a manufactured product asdescribed in paragraph (2);

(7) Sales to a licensed producer, or to a cooperativeassociation described in section 237-23(a)(7) for sale to such producer; ofpolypropylene shade cloth; of polyfilm; of polyethylene film; of cartons andsuch other containers, wrappers, and sacks, and binders to be used forpackaging eggs, vegetables, fruits, and other agricultural and aquaculturalproducts; of seedlings and cuttings for producing nursery plants oraquacultural products; or of chick containers; which cartons and such othercontainers, wrappers, and sacks, binders, seedlings, cuttings, and containersare to be used as described in section 237-5, or to be incorporated in amanufactured product as described in paragraph (2);

(8) Sales of tangible personal property where:

(A) Tangible personal property is sold uponthe order or request of a licensed seller for the purpose of rendering aservice in the course of the person's service business or calling, or upon theorder or request of a person subject to tax under section 237D-2 for thepurpose of furnishing transient accommodations;

(B) The tangible personal property becomes oris used as an identifiable element of the service rendered; and

the sale shall be subject to section 237-13.3;

(9) Sales to a licensed leasing company of capitalgoods that have a depreciable life, are purchased by the leasing company forlease to its customers, and are thereafter leased as a service to others;

(10) Sales of services to a licensed seller engagingin a business or calling whenever:

(A) Either:

(i) In the context of a service-to-servicetransaction, a service is rendered upon the order or request of a licensedseller for the purpose of rendering another service in the course of theseller's service business or calling, including a dealer's furnishing of goodsor services to the purchaser of tangible personal property to fulfill awarranty obligation of the manufacturer of the property;

(ii) In the context of a service-to-tangiblepersonal property transaction, a service is rendered upon the order or requestof a licensed seller for the purpose of manufacturing, producing, or preparingtangible personal property to be sold;

(iii) In the context of a services-to-contractingtransaction, a service is rendered upon the order or request of a licensedcontractor as defined in section 237-6 for the purpose of assisting thatlicensed contractor; or

(iv) In the context of a services-to-transientaccommodations rental transaction, a service is rendered upon the order orrequest of a person subject to tax under section 237D-2 for the purpose offurnishing transient accommodations;

(B) The benefit of the service passes to thecustomer of the licensed seller, licensed contractor, or person furnishingtransient accommodations as an identifiable element of the other service orproperty to be sold, the contracting, or the furnishing of transientaccommodations;

(C) The cost of the service does notconstitute overhead to the licensed seller, licensed contractor, or personfurnishing transient accommodations;

(D) The gross income of the licensed seller isnot divided between the licensed seller and another licensed seller,contractor, or person furnishing transient accommodations for imposition of thetax under this chapter;

(E) The gross income of the licensed seller isnot subject to a deduction under this chapter or chapter 237D; and

(F) The resale of the service, tangiblepersonal property, contracting, or transient accommodations is subject to thetax imposed under this chapter at the highest tax rate.

Salessubject to this paragraph shall be subject to section 237-13.3;

(11) Sales to a licensed retail merchant, jobber, orother licensed seller of bulk condiments or prepackaged single-serving packetsof condiments that are provided to customers by the licensed retail merchant,jobber, or other licensed seller;

(12) Sales to a licensed retail merchant, jobber, orother licensed seller of tangible personal property that will be incorporatedor processed by the licensed retail merchant, jobber, or other licensed sellerinto a finished or saleable product during the course of its preparation formarket (including disposable, nonreturnable containers, packages, or wrappers,in which the product is contained and that are generally known and mostcommonly used to contain food or beverage for transfer or delivery), and whichfinished or saleable product is to be sold and not otherwise used by thelicensed retail merchant, jobber, or other licensed seller;

(13) Sales of amusements subject to taxation undersection 237-13(4) to a licensed seller engaging in a business or callingwhenever:

(A) Either:

(i) In the context of an amusement-to-servicetransaction, an amusement is rendered upon the order or request of a licensedseller for the purpose of rendering another service in the course of theseller's service business or calling;

(ii) In the context of an amusement-to-tangiblepersonal property transaction, an amusement is rendered upon the order orrequest of a licensed seller for the purpose of selling tangible personalproperty; or

(iii) In the context of an amusement-to-amusementtransaction, an amusement is rendered upon the order or request of a licensedseller for the purpose of rendering another amusement in the course of theperson's amusement business;

(B) The benefit of the amusement passes to thecustomer of the licensed seller as an identifiable element of the otherservice, tangible personal property to be sold, or amusement;

(D) The gross income of the licensed seller isnot divided between the licensed seller and another licensed seller, personfurnishing transient accommodations, or person rendering an amusement forimposition of the tax under chapter 237;

(E) The gross income of the licensed seller isnot subject to a deduction under this chapter; and

(F) The resale of the service, tangiblepersonal property, or amusement is subject to the tax imposed under thischapter at the highest rate.

As used in this paragraph, "amusement"means entertainment provided as part of a show for which there is an admissioncharge. Sales subject to this paragraph shall be subject to section 237-13.3;and

(14) Sales by a printer to a publisher of magazines orsimilar printed materials containing advertisements, when the publisher isunder contract with the advertisers to distribute a minimum number of magazinesor similar printed materials to the public or defined segment of the public,whether or not there is a charge to the persons who actually receive themagazines or similar printed materials.

(b) If the use tax law is finally held by acourt of competent jurisdiction to be unconstitutional or invalid insofar as itpurports to tax the use or consumption of tangible personal property importedinto the State in interstate or foreign commerce or both, wholesalers andjobbers shall be taxed thereafter under this chapter in accordance with thefollowing definition (which shall supersede the preceding paragraph otherwisedefining "wholesaler" or "jobber"): "Wholesaler"or "jobber" means a person, or a definitely organized divisionthereof, definitely organized to render and rendering a general distributionservice that buys and maintains at the person's place of business a stock orlines of merchandise that the person distributes; and that the person, throughsalespersons, advertising, or sales promotion devices, sells to licensedretailers, to institutional or licensed commercial or industrial users, inwholesale quantities and at wholesale rates. A corporation deemed not to becarrying on a trade or business in this State under section 235-6 shallnevertheless be deemed to be a wholesaler and shall be subject to the taximposed by this chapter. [L 1935, c 141, pt of §1; RL 1945, §5446; RL 1955,§117-5; am L 1957, c 34, §11(a); am L 1959, c 257, §§1, 2; am L 1963, c 70, §2;am imp L 1965, c 155, §2; am L 1966, c 28, §2; am L 1967, c 155, §1; HRS§237-4; am L 1970, c 180, §9; am L 1971, c 204, §2; am L 1979, c 105, §22; am L1982, c 189, §1 and c 253, §2; am L 1984, c 73, §2; am L 1990, c 286, §2; am L1991, c 286, §2; am L 1992, c 106, §5; gen ch 1992; am L 1999, c 71, §4 and c173, §1; am L 2000, c 198, §1 and c 271, §1; am L 2001, c 164, §2; am L 2008, c16, §5 and c 89, §1]

Case Notes

PX and ships stores are not "licensed merchants",or "wholesalers". 37 H. 314, aff'd 174 F.2d 21.

Licensed means licensed under this chapter. 37 H. 314, aff'd174 F.2d 21; 41 H. 615.

Sales of automobiles to leasing company were at retail ratherthan wholesale, where agreements between leasing company and its customers wereactually leases and not conditional sales. 53 H. 195, 490 P.2d 902.

Sales of appliance parts to licensed repairpersons who billtheir customers for labor and materials are wholesale sales. 53 H. 450, 497P.2d 37.

Par. (8): Car rental contract is a "lease". "Depreciable life" and "capital goods" construed. 56 H.644, 547 P.2d 1343.

"Wholesaler" v. "Service business orcalling" construed. 63 H. 579, 633 P.2d 535.

Cited: 45 H. 167, 182, 363 P.2d 990.