Question: Last Christmas, I purchased a gift certificate at a nail salon in Salt Lake and paid tax on it. Isn’t it wrong to charge tax on a gift certificate/card? This would mean that not only did I pay tax on the gift certificate, but the person who I gave it to will pay tax on it as well. Needless to say, I haven’t been back to that place since!
Answer: Yes, you are correct, Hawaii’s general excise tax doesn’t apply to the purchase of gift certificates or gift cards, according to the state Department of Taxation. “Gift certificates are not subject to GET upon sale. Instead, they are subject to GET when they are redeemed,” said Nicki Ann Thompson, taxation services administrator. “Also, if the gift certificate is not redeemed and the seller is able to recognize the proceeds, it is subject to GET at the time of recognition.”
You are one of several readers who’ve reported such double taxation, at different Hawaii businesses.
Also, on a related note, a reader submitted this “Auwe”:
“Even though the law took effect Jan. 1, 2020, many establishments on Oahu still refuse to cash out the balance of gift cards less than $5. Auwe to those who refuse and/or make it really inconvenient (must drive to Kaimuki location rather than locations on the west side of the island, for example). Mahalo to the establishments who actually check on the validity and thank me for the information, stating they were unaware that they were not complying with the law.”
As the reader noted, Hawaii’s gift certificate law was updated effective Jan. 1, 2020, to require gift certificate issuers to pay customers back the remaining value in cash if the gift certificate has a balance of less than $5, according to the state Department of Commerce and Consumer Affairs.
The law also says “that any restaurant or other party involved in retail goods and services must honor its gift certificates for at least two years for gift certificates issued only in paper form, or at least five years for gift certificates issued in other forms, such as electronic cards or other mediums. If there is an expiration date, it must be listed on the gift certificate. Service fees, including service fees for dormancy or inactivity, are prohibited,” the DCCA says on its website.
Hawaii’s law applies only to gift certificates or gift cards for which the issuer was paid the full face value. It doesn’t apply to those sold at a discount, used solely for telephone services, not marketed to the general public or given as a loyalty award or promotional gift card. It also doesn’t apply “to cards or certificates that are redeemable solely for admission to events or venues at a particular location or group of affiliated locations (e.g. a particular concert or sporting event),” the DCCA says.
Q: Will state workers who have to work today and Dec. 30 be paid overtime?
A: No, not according to the Dec. 9 memo Gov. Josh Green issued granting those extra days off to salaried state employees. Eligible employees who cannot be spared from their duties and must work those days “shall not be entitled to overtime, but shall be given equivalent administrative time off on other dates as determined by the department head,” the memo says. Eligible employees in positions with scheduling concerns have until Feb. 28 to use the 16 hours of administrative leave.
Q: Do part-timers get this, too?
A: Yes, although not 16 hours. Part-time salaried employees “shall be granted a proportionate amount of administrative leave from their scheduled working time,” the memo says. Hourly employees are not eligible.
Mahalo
Mahalo to the generous person who gifted a happy and most grateful 8-year-old boy with a box of Pokemon cards at the store From the Heart. His actions exemplified his heart, also. Merry Christmas and God bless. — Grateful grandparents
Write to Kokua Line at Honolulu Star-Advertiser, 500 Ala Moana Blvd., Suite 7-500, Honolulu, HI 96813; call 808-529-4773; or email kokualine@staradvertiser.com.
