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Hawaii COVID-19 Spikes

Today, Hawaii reported 18 new cases of Covid-19, which is part of a two week trend of rising confirmed cases.  The rise in confirmed cases is being attributed to the “reopening” of the economy and daily activities.   Part and parcel to that is another concerning trend.  As we are emerging from our respective lockdowns, there are daily news reports stating some people are ignoring warnings. They are refusing to wear face masks correctly or at all. Sometimes refusing to follow any social distancing guidelines.  These selfish actions threaten to undo months of hard work and diligence.

Remember, entering private businesses is a privilege, not a right. 

If a business or landowner sets reasonable requests for entry, such as wearing appropriate clothing or wearing a mask during an ongoing pandemic, then those are considered conditions to entry.  They are legal, and absent a legitimate medical condition, your personal opinions and feelings about masks, social distancing, etc. are irrelevant. If you choose to disregard these rules, then there are consequences. It  jeopardizes your safety and those around you. So you can be removed from the premises and may be subject to arrest for trespassing for refusing to leave.  Mayor Caldwell has even suggested calling 911 if a customer refuses wearing a mask.

Remember, we are all in this together. So if we work as a community, then we will come out of it stronger and better off.

California: Masks Mandatory

On the same topic, although in California, there were over 4,000 new confirmed cases today, June 18, 2020.  As the daily count has continued to grow recently, Governor Newsom has ordered that face masks must now be worn at all times when you are out in the public.  Stay safe, be smart, wear a mask.   No big deal.

DISCLAIMER: This post provides general information, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained in the post without seeking the advice of  an attorney in the relevant jurisdiction.  Hew & Bordenave, LLLP expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Can a business add additional fees and charges to a bill due to COVID-19?

Yes. Consider the additional costs to build barricades, close off every other table, provide enough disinfectant, and sanitizer. Also supplying disposable personal protective equipment (PPE) for employees. Obviously, that costs money.

Additionally, for those of you in the food industry you are already aware of the shortages in supplies. For example, COVID-19 has slowed the U.S. meat production for months due to closures: https://www.wsj.com/articles/coronavirus-to-slow-u-s-meat-production-for-months-ceo-says-11589540400.

What does a restaurant owner do in the face of rising costs, mandatory expenses, and limited customer base? Charge additional fees. Some businesses already have begun charging a COVID-19 fee to help cover these costs and expenses. Specifically, it appears as a line item on receipts. The economic justification is the COVID-19 fee is for the things like the PPE, plastic barricades, and other social distancing requirements placed by government regulation.

If the business is being transparent and disclosing the potential customer or client that additional fees will be charged, then the business can pass along those fees. Obviously, there are caveats to this, such as reasonableness and what is sufficient notice prior to the assessing such a charge. For example, kind of like how restaurants would notify you of automatic gratuity charge for parties over a certain size in their menu or putting a sign at the grocery store entrance to charge for providing a bag.

I understand for consumer-minded people that this is a shock, a deviation from the norm. Going from a couple of months of lockdown to added fees for some basic activities like dental cleaninings and haircuts is a bit much.  However, the overall sentiment is that, yes, a business can assess an additional fees due to COVID-19 social distancing expenses.

Isn’t this gouging?

Not likely. The law in Hawaii, which is Hawaii Revised Statute 127A-30 is specific about when it is prohibited to increase of prices during a state of emergency and similar situations. By the very nature that the economy is reopening, that would indicate the emergency is ending. Specifically, HRS 1270A-30 prohibits “any increase in selling price of any commodity, whether at the retail or wholesale level, in the area that is subject of the proclamation [state of emergency] or the severe weather warning;”

In the case of personal beauty service providers it would be hard to argue that their service is a “commodity.”

Additionally, the law makes clear that “any additional operating expenses incurred by the seller [] because of the emergency or disaster or the severe weather, and which can be documented may be passed on to the consumer.” Again, we have that key term “documented”.  So another out for these fees to documenting the decision in how to apply them. Business owners considering COVID-19 fees would be wise to do planning and accounting of how they are derived. Showing the correlation between the fees assessed and the social distancing requirement expenses may be critical in defending the practice.

Business owners should always be aware of actions that may be perceived by the public as unfair or deceptive. The reason is that consumer protection laws do consider unfair or deceptive acts or practices as unlawful. Therefore, a business owner needs to communicate effectively with potential clients and customers about their COVID-19 fees.

Is there an example of this in other industries?

The COVID-19 pandemic aside, disasters whether natural or man-made have always disrupted supply chains and causing problems for business owners. There are industries where detailing out the contractual relationship in these kinds of situation is the norm. One example is contractors and homeowners for the price of supplies.

Consider, if there is a forest fire that destroys a large supply of lumber. Then the lumber supplies for home building decreases, but demand goes up. So the contractor has to source the wood supplies from others. For business lawyers, we would look to see if this situation is in the contract. Is there an Escalation/Unit Price clause? This clause would be show there was an explicit understanding between the parties. It would indicate if the contractor is entitled to adjust the material price of an item due to an event impacting their bottom line. Like short supply of lumber due to a fire disaster.

Stores, restaurants, beauty services, and dental offices unused to such jumps in operating expenses obviously shock their consumers when they pass COVID-19 fees. Obviously, customers and clients also do not an expect a lengthy written contract that spells it out. Instead they just get the bill for it. The business owner then gets a lot of angry comments.

DISCLAIMER: This post provides general information, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained in the post without seeking the advice of  an attorney in the relevant jurisdiction.  Hew & Bordenave, LLLP expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Where is the Hawaii economy for reopening? Where can an owner get guidance to reopen?

So here in Hawaii the economy is beginning to reopen. In Honolulu, hair, nail, lash, and in general beauty operators and services were allowed to re-open past Friday. In Maui, most businesses will be allowed to reopen on June 1st, whereas in Hawaii island personal services and restaurants (excluding bars and night clubs). On Kauai, salons and barber shops, retail and mails, and cleaning and construction have been reopened since May 22nd.

In general, what is clear is the Hawaii economy is heading toward reopening, with the likelihood of gyms, bars, night clubs, and large gathering places where intimate contact is involved of remaining closed until government officials can come up with plans and guidelines. This is something determined between the governor and the mayors, as the mayors submit their proposals to the governor for approval. Therefore, the industry re-openings are not uniform between the islands.

The best thing for a Hawaii business owner that needs guidance as they consider reopening is to review the State of Hawaii COVID-19 resources, and then depending what county you are in, review the county orders and guidelines. Further, for many industries their trade groups and associations, provide industry-specific guidelines on dealing with these regulations. Finally, of course professional advisors, such as attorneys and human resource companies are there dealing with the customer/client and employee aspects of reopening.

Is there a place where the local rules and regulations are at?

Yes, the State of Hawaii and the 4 counties have websites going over the various order, mayoral proclamations, and guidelines to assist businesses in their reopening and future plans to reopen the economy. Of course this information constantly changes due to the virus. Further, the government frequently issues clarifications on unclear rules or plans as people and businesses provide feedback.

What are some of the specific requirements a business owner needs to prepare for reopening?

For the business owner that is committed to reopening soon, and especially dealing with direct interactions with clients and customers if you’ve reviewed some of the state and counties’ guidelines, then you know there are a number of changes you will have to make. This is especially true for retail, restaurants and food courts, beauty and personal health services. The following are some of the social distancing requirements a business owner in these industries need be keenly aware about:

  • 6-feet distancing;
  •  Limited occupancy;
  •  Face coverings
  • Providing of hand sanitizer and sanitizing products
  • Regular disinfecting; and
  • of course signage to notify all employees and customers of these requirements.

Again, this is a partial and general list and so a business owner needs to spend some research and review time for their business plan to reopen. One Oahu has a Business Guidance Page: https://www.oneoahu.org/business-guidance

CDC Reopening Guidance for Cleaning and Disinfecting Public Spaces, Workplaces, Businesses Schools, and Homes: https://www.cdc.gov/coronavirus/2019-ncov/community/reopen-guidance.html

DISCLAIMER: This post provides general information, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained in the post without seeking the advice of  an attorney in the relevant jurisdiction.  Hew & Bordenave, LLLP expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Happy Lunar New Year!

As some of you know I do a post every year related to the Chinese zodiac animal of the New Year. Last year it was about landlord’s charging extra rent for dogs. The year prior to that one was, can you keep chickens in your backyard. Going to back when I started this tradition, in 2016, I wrote about can you own a monkey in Hawaii. Thank goodness dragon is still five years away! I have no idea what I am going to do that year …

2019 is Year of the Boar, so we are going hunting. Well, not literally, but I am going to cover the general basics for legally hunting feral pigs (sus scrofa scrofa) in the State of Hawaii.

Sus scrofa scrofa.

What do I Need to Hunt Legally?

Before getting to the paperwork, in general you should understand that hunting animals in Hawaii is largely regulated by the Department of Land and Natural Resources (DLNR).  DLNR is responsible for the management of public lands and all the interests therein, including the animals. So if you are planning to hunt and have further questions, DLNR is likely who you will be contacting.

With regard to the paperwork, a hunting in Hawaii requires a hunting license. A hunting license is necessary whether you are going to be hunting on public or private lands. In order to purchase a hunting license though you must either possess:

  1. a Hawaii Hunter Education Wallet Card; OR
  2. a Letter of Exemption.

In case of 1., you’ve passed the Hawaii Hunter Education Class, then received a Hunter Certification Card. In the case of 2., that means you have received an out-of-state hunter education card or obtained a Hawaii Hunting License prior to July 1, 1990. Specifically, for non-residents you will need complete the non-resident Letter of Exemption Form and submit it as an application to DLNR. Obviously, once you submit your application the government will review, process, and ideally approve it. Like any government process, there will be additional procedures after approval. However, with approval you should be able to purchase a Hawaii hunting license. If you are a nonresident, then you will likely have to work with your local hunter education office to get certification or proof to be submitted to DLNR to obtain the Letter of Exemption.

Go Hunt, Hawaii, a DLNR website is the State’s official hunting resource and provides a schedule of classes to take basic Hunter Education as well as an easy to follow flowchart on the basics of hunting.

What if I am a Nonimmigrant Alien?

If you are coming to the United States and temporarily bringing firearms and ammunition into the United States, then the Federal Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) has a FAQ to address these issues. Obviously, this is just a general FAQ and any specific concerns may require more planning and communication with the agency or others involved, such as your travel arrangements.

What About Bringing Firearms and Ammunition Into Hawaii?

Firearms and ammunition being brought into the state must be registered.

Firearms and ammunition brought into Hawaii must be registered within 48 hours after their arrival with the Chief of Police of the county of one’s residence, business or sojourn. So whatever islands you are heading to, you have to register your hunting weapons and ammunition. Understand that while DLNR regulates public lands, the regulation and enforcement of firearms happens at the county-level, so the police chiefs of the various counties have control. So you will want to contact the district police station on the island you are heading to or an office of the Division of Conservation and Resources Enforcement (DOCARE).

What About Minors and Firearms?

Minors, those who are 15 years and younger, that are hunting with a firearm must obtain a permit from the county police department.

What if I am Disabled Hunter?

Those with disabilities are suggested by DLNR to review the vehicle permit application and the cross-bow permit application. There may be additional requirements and issues. Therefore, it would probably be best to contact DLNR.

Where Can I Hunt Boar in Hawaii?

Each island has different zones, animals, and other variables to go hunting. Check the DLNR rules and regulations.

Ok, once you’ve squared away your hunting license where can you go to hunt boars? Well, in terms of public lands feral pigs may be hunted on Hawaii (also known as the “Big Island”), Maui, Molokai, Oahu, and Kauai. There are special zones for public lands hunting. It is best to check maps and understand the terrain. To be specific DLNR provides the Game Mammal Hunting Rules as a downloadable PDF. If you go through these Hawaii Administrative Rules you will see a number of maps, charts, and exhibits that discusses each of the islands zones, hunting units, means of hunting, bag limits, open hunting periods, open hunting days, and special conditions and restrictions. It is quite explicit. In addition, they provide many of these charts and tables for each of the islands as follows:

Yes, Lanai has a page as well, but this post is concentrated on feral pig hunting.

What about Private Lands?

In addition to everything indicated prior, that is having a valid hunting license, doing your hunting during limited hours, you obviously need the permission of the landowner. The exception as to what is okay to hunt with, that is setting weapons and method, hunting fees, and special prohibits are set by the landowner. More on those topics ahead.

Whoever Goes Hunting Are They Required to Have Special Clothing?

Blaze orange garment is a must for anyone part of the hunt. Hawaii rules specific what is a must for this garment.

Yes, any person who goes on the hunt in a public hunting area basically needs to wear something specific. Think orange. That is whether the person is serving as a guide, accompanying or assisting the hunter, and the hunter themselves needs to be wearing an exterior blaze orange garment. The rules on this blaze orange garment are very specific, the point being safety. So the blaze orange garment while engaging in any of those hunting activities:

  1. may be a shirt, vest, coat or jacket;
  2. the material must be commercially manufactured and may be either solid or mesh with a maximum mesh size of one-eighth inch; and
  3. the use of camouflage orange is PROHIBITED.

Finally, these blaze orange garments are not required on designated archery only public hunting areas.

When Can I Hunt Boar? What Times During the Year and Day?

Game mammals (which includes feral pigs) may only be hunted from one-half hour prior to sunrise and until one-half hour after sunset. This is year-round. It is prohibited by law to hunt during one-half hour after sunset and one-half hour before sunrise. Basically, after the sun goes down and until rises again hunting is illegal. Again, much like the orange clothing requirement, safety is an issue.

How can I Hunt Boar? What Tools and Methods are Okay?

What about Using Flashlights?

So from the prior question and answer, you may be thinking what if we lit up the area? DLNR prohibits the use of any form of artificial light for hunting.

What about Dogs, Firearms, Bows and Crossbows or Melee weapons?

From DLNR’s Game Mammal Hunting page:

When hunting with dogs where permitted, hunters may use any muzzeloading rifle with a minimum of 0.45 caliber bore diameter; any rifle using at least a 0.22 caliber magnum load or center fire cartridge; shotguns loaded with slugs or 00 or larger buckshot or spears or knives. When hunting without dogs, hunters may use any rifle with a muzzle energy rating of 1,200 foot pounds or more; shotguns loaded with 00 or larger buckshot and muzzleloader rifles with a minimum of 0.45 caliber bore diameter (Breech loaders may not be used during muzzleloader only designated hunts). When hunting with a bow, the following drawing tension requirements are applicable: Long bows must have a minimum of 40 pounds at a 28-inch draw; Recurved bows must have a minimum of 35 pounds; Compound bows must have a minimum of 30 pounds.

Last Reminder: General Information and On Feral Pigs Only

Remember, we are only talking about feral pigs in this post, which falls under game mammals. Also much of this is general information provided on DLNR’s webpages, but when dealing with activities, such as hunting, then there are a lot of safety issues to deal with.  Additionally, for this post everything discussed here is on feral pigs. While some of these rules and regulations apply to other animals, such as feral goat – there are slightly different permit requirements for other game mammals. For example, deer, wallabies, and wild cattle are protected. Further, game birds are regulated both on public and private lands. So again, you are going to have to do some homework for those animals. Many people get turned away at the license agent’s counter due to being unaware or requirements. Research and plan ahead!

Good luck and good hunting! May you find the Year of the Boar prosperous and full of bounty!  As always, thanks for stopping by and reading.

-RKH

DISCLAIMER: This post provides general information, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained in the post without seeking the advice of  an attorney in the relevant jurisdiction.  Hew & Bordenave, LLLP expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Dear Hawaii Small Business Owner I reach out to you on this post as …

A Small Law Firm Owner that Has Legislative Experience and Works with Businesses

I am letting you know that the Hawaii legislature has a number of minimum wage bills introduced this legislative session (2019). I am an owner and Managing Partner of a small law firm here in Honolulu, and of course any legislation that may impact my operations and my clients then I do have concerns. It is not only as business attorney, but as an owner as well. Additionally, I spent 4 legislative sessions as a legislative aide, committee clerk, and then attorney for the Hawaii House Labor, and then the Judiciary Committees. So therefore, I am in a unique position to share my concern via legalese, but also educate others as to the legislative process.

The Hearing Information and the Minimum Wage Bills

Having communicated that, I share the following:

  • The Hawaii Senate Committee on Labor, Culture and the Arts has scheduled a hearing. It is on Thursday, January 31 at 3:00 p.m. The following bills related to minimum wage are being heard: (A) SB 789; and (B) SB 1248. These two bills, as currently drafted, would: (A) increase the minimum wage to $12.00 per hour beginning 1/1/2022; and (B) provide an income tax credit for qualifying small businesses to offset the increase in the minimum hourly rate that employers must pay employees, and increase the minimum wage rate each year from 2020 through 2024.
  • Here is the Hearing Notice.

Note that the submitting of testimony for the hearing of bills may impact some legislators’ decisions on how to vote or recommend changes to a piece of legislation. As a constituency, Hawaii small business owners should be heard on matters that impact them. However, you have to write and submit the testimony to them to have it part of the process. Further, if you have time, then appearing in-person at the hearing may also be impactful. If you have questions on drafting and submitting testimony online, and/or testifying in person, then feel free to ask or email me at ryan@hewbordenave.com.

Thanks for reading this, now go submit some testimony and be a part of the Hawaii legislative process!

-RKH

UPDATE (2018/01/15): Included a PDF for the Hawaii State Department of Defense below.

Did You Know How to Respond to the Missile Threat?

We are glad that everyone is safe and that the emergency alert about a ballistic missile threat to Hawaii on January 13, 2018, which people received on their mobile devices and saw flash across their tv screens was just a mistake. However, seeing social media reactions as the situation unfolded it seems apparent we all could be better prepared. We hope that we never have to act on disaster plans, but wherever you live you could always take better steps to safeguard yourself, your family and friends, and your businesses and organizations.

Do you know what to do if you see this on your mobile device or tv?

I was fortunate enough to attend a Hawaii Society of Business Professional’s luncheon last fall that covered the topic of the threat from North Korea and what people and businesses should do to prepare. So I felt a little better prepared compared to the confusion I saw on social media this morning. However, faced with the reality I did ask myself, did I take all t he precautions I could?  Maybe, but also maybe not. While we should ask questions of our officials about how a mistake like this happened, this presents us all an opportunity. An opportunity for us to better prepare for emergencies.

Hawaii’s Emergency Management Agency

To that end I would like to direct your attention to the State of Hawaii’s Emergency Management Agency’s website. On it you will find a Get Ready section that has resources to help you prepare your family, your home, and your business. Those are resources for you to review in general for getting prepared for disaster in general. If you have concerns about the Nuclear Threat, the agency has a specific section dedicated to that here. Further, there is a FAQ and if you still have questions you can submit them to the agency for review and response.

Thank goodness there was no actual threat. However, it may be an opportunity to be prepared for disasters.

Additionally, Hawaii State Department of Defense and the Hawaii Emergency Management Agency provided a Guidance Summary for Coordinated Public Messaging that gives critical information for the Immediate Actions you should take in case of a nuclear detonation.

 

It was last revised on June 27, 2017. Direct link to PDF.

Planning Requires asking Questions

As you go through some of the resources, you will realize while there are a lot of practical steps, such as putting together an emergency kit by getting food, water, and medical supplies, a lot of planning is asking questions. Planning is that, whether it be strategic business planning or estate planning, we need to ask a lot of questions to get us to think of what we should do in a particular situation. Disaster planning is not any different: Do you have everything that you need for an emergency? Does everyone in your family know what to do in emergency? What if you are at home? What if you are at work?  And so forth …

On the one hand, we spend a lot of time planning for risk mitigation with clients, so we get it. It is sometimes hard putting in that mental time for thinking about the future. However, our firm’s other services include being a resource for clients and their businesses in going after claims for their injuries they’ve suffered in a disaster or asking for a release of obligation under a contract under a Force Majuere (Act of God) clause the reality is that work comes after. Bottom line is that your goal should be to keep yourself, family, business and community safe. So please consider steps to plan and prepare. Stay safe!

DISCLAIMER: This post provides general information, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained in the post without seeking the advice of  an attorney in the relevant jurisdiction.  Hew & Bordenave, LLLP expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Formalities

From: “Let me provide the formalities.”

Hew and Bordenave

To: “Let us provides the formalities.”

From Old Solo to New Partnership

Hey everyone, thanks for visiting our Blawg. I am just letting you know that all the posts prior to January 1, 2017 are from my solo practice. They are from Ryan K. Hew, Attorney at Law, LLLC. In particular, the old: hawaiiesquire.com. I brought the posts to our new site because a lot of the legal information is helpful for business owners and truth be told I loved doing Draw the Law, Boilerplate Blurb, and all the other content. So please continue enjoying them, but I do hope you like the new content from Trejur and me. Mahalo!

-Ryan K. Hew

*I posted this to my Facebook yesterday for the Federal income tax return deadline, and forgot to put it to my blawg! To busy dealing with my taxes and clients’ transactional issues during this hectic tax period.  Anyway, a little less relevant today, but remember 2015 Hawaii income tax returns or requests for extension are due tomorrow (4/20/16), so still slightly relevant. Cheers and good luck to you! 

I hope your Monday, this final day for submitting your U.S. federal income tax returns (at least without an extension), is not that stressful, but I share this interesting quote with you by one of my favorite U.S. Supreme Court Justices from the past, Oliver Wendell Holmes, Jr. He was a great jurist and in his time was known as the I hope your Monday, this final day for submitting your U.S. federal income tax returns (at least without an extension), is not that stressful, but I share this interesting quote with you by one of my favorite U.S. Supreme Court Justices from the past, Oliver Wendell Holmes, Jr. He was a great jurist and in his time was known as the “Great Dissenter”. I selected this quote, as apparently this quote appears on the IRS building in Washington D.C. So with that, I wish good luck on your taxes, as I do empathize with all of you, especially fellow self-employed small business owners! Anyway, if you are interested, you can find a nice short biographical history for Justice Holmes here: http://www.pbs.org/wnet/supremecourt/capitalism/robes_holmes.html

Hey everyone, long time no see . . . been very busy, but I am grateful for all the business deals that everyone has been doing.  It makes for an optimistic outlook in the economy and that there are a lot of creative people in Hawaii looking to be successful.
Anyway, I am writing this post on Act 162 (SB1197 SD1 HD1) of the 2013 Hawaii Legislative Session because I am wondering did you file your General Excise/Use Tax Returns (more commonly known as GET)?  It was due on July 20th for monthly, quarterly, and semiannual (so all three categories basically).

Further, this Act even though it is so short highlights several key concepts to understanding government, law, and business.  Specifically the following aspects: (1) the concept of “sunset” provisions and how legislation is tied together over the years; (2) how laws are enforced (namely through taxes and penalties); and (3) the applicability of the law to people/businesses who don’t think the law applies (cash-based businesses and the GET in this case).

Let’s get to it!

Act 162: Relating to Tax Administration

Act 162’s measure title doesn’t really help tell you what it does. All it says is “relating to tax administration” so I can see how someone may just gloss over the title.  However, the description, which says “Deletes the sunset provisions for the special enforcement section of the department of taxation.” provides no insight either, unless you know what is the special enforcement section of the Department of Taxation.

Sunset Provisions and Repealing Them

Before, I get to the Special Enforcement Section, let’s touch upon the first concept I mentioned, the “sunset provision”.  So many times legislators are not sure about the effectiveness of a proposed law, it might be for a variety of reasons, may be the problem will go away, there is not enough money to fund the project, etc . . . so they put in a sunset provision, that is the law will repeal itself upon a certain date in the future (i.e. it will cease becoming law upon that date).  If you are a contract buff, consider it like a specified termination date in the agreement.

In Act 162, this is how the language looks like that references the sunset provision:

SECTION 1.  Act 134, Session Laws of Hawaii 2009, is amended by amending section 13 to read as follows:

“SECTION 13.  This Act shall take effect upon its approval; provided that:

(1)  The amendments made to section 235-20.5, Hawaii Revised Statutes, by this Act shall not be repealed when section 235-20.5, Hawaii Revised Statutes, is reenacted on January 1, 2011, pursuant to section 8 of Act 206, Session Laws of Hawaii 2007; and

(2)  Sections 231-F, 231-J, 231-K, 231-L, 231-M, 231-N, 231-O, and 231-P, Hawaii Revised Statutes, in section 2 of this Act shall take effect on July 1, 2009[; and

(3)  This Act shall be repealed on June 30, 2014, and section 235-20.5, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of section 8 of Act 206, Session Laws of Hawaii 2007; provided further that sections 231-1, 237-9, and 237-12(b), Hawaii Revised Statutes, shall be reenacted in the form in which they read on the day prior to the effective date of this Act].”

Notice the lined-through section?  That is the sunset provision from the original law that was passed, Act 134 from session 2009, which now Act 162 (2013) is amending.   So by strike-through, the goal of Act 162 is to delete that sunset provision from the Act 134 (2009) law.  Since no new date was put in, rather they deleted the whole section, this would mean that now Act 134 (2009) is permanent.

Click here to see the bill in its entirety.  Notice, that Act 162 DELETES the sunset provision.

Special Enforcement Section and Tying it Together

However, deleting the sunset provision of the previously enacted bill has no meaning to you unless you know what that bill did.  So notice that in Act 162 (2013) it tells you exactly that piece of information.  Specifically, that “Act 134, Session Laws of Hawaii 2009, is amended”, so if you look up Act 134 (2009) you would discover that the purpose of that act earlier was to:

The purpose of this Act is to provide the department of taxation with the necessary resources and tools to target high-risk, cash-based transactions to shore up confidence in Hawaii’s tax system for those that do comply.  Importantly, the legislature intends that the enforcement resources provided focus on the civil collection and enforcement nature of Hawaii’s tax laws.  In an effort to demonstrate the targets of this undertaking, this Act defines “cash-based business” for enforcement purposes, and the department of taxation is directed to focus on such businesses.  At the same time, education is equally important as enforcement.  Therefore, this Act requires the department of taxation to reach out to industry groups, specific demographics in the economy, and practitioners to educate taxpayers on their tax responsibilities.

While this is only describes the purpose, an in-depth look at the provisions of the bill would show that the Special Enforcement Section was created in the Department of Taxation and that its powers included investigation, enforcement, etc . . . for violations of the tax code, specifically targeting “cash-based businesses”.

Now what businesses primarily deal in cash?  You would probably think those vendors who are at farmers markets, craft and fairs, and swap meets.  You would be right because the since the creation of the Special Enforcement Section they have investigated numerous cash-based vendors and found that when asked for their tax license, they had none.  You can see some of the specifics from the Section’s reports by clicking the following for: (1)  July 1, 2009 through June 30, 2010 and (2) July 1, 2011 through June 30, 2012.

What you should take away from all of this is that if you are a cash-based business, you should realize that the deletion of the sunset provision effects you because the Special Enforcement Section of the Department of Taxation has been made permanent.  So it will continue to investigate and enforce penalties against you, if you are in violation of the law. Primarily focusing on the fact that if you do not have a tax license to conduct business you will pay a penalty.

What’s the Penalty for Not Having a Tax License?

Act 134 (2009) amended Hawaii Revised Statute 237-9 by inserting the following language:

Any person who receives gross income or gross proceeds of sales or value of products from engaging in business in the State and who fails to obtain a license or receives gross income or gross proceeds of sales or value of products from engaging in business in the State without a license required under this section may be fined not more than $500; provided that a cash-based business may be fined not less than $500 and not more than $2,000, as determined by the director or the director’s designee.  The penalty under this subsection shall be in addition to any other penalty provided under law and may be waived or canceled upon a showing of good cause.

So as a cash-based business can you afford penalties like these? 

But the Law Doesn’t Apply to Me! I only do this Occasionally . . . every Saturday, Sunday and Every Other Wednesday

I know, I can hear it right now, as I have with many clients, “X law does not apply to my Y situation” . . . well, to be honest your focus is perhaps cooking delicious food for people or creating a unique piece of art, but your craft is not the practice of the law (lawyers) or the application/enforcement of the law (government agents), so how can you be absolutely sure the law does not apply to you?

What you should realize that the words and definitions for the tax code are broad, so long as you are “engaged in business” you are subject to the tax.  HRS 237-2 defines:

“Business” as used in this chapter, includes all activities (personal, professional, or corporate), engaged in or caused to be engaged in with the object of gain or economic benefit either direct or indirect, but does not include casual sales.

I know you see it, it says “does not include casual sales” and you feel that you only show up on Saturdays to do your sales, well we look again at HRS 237-1 and find that “causal sales” means an “occasional or isolated sale or transaction” involving:

     (1)  Tangible personal property by a person who is not required to be licensed under this chapter, or

(2)  Tangible personal property which is not ordinarily sold in the business of a person who is regularly engaged in business.

Yeah, it is hard to imagine the Department of Taxation’s Special Enforcement Section buying into “occasional or isolated” when you show up for your slotted vendor stall on a regular section, and you are selling the same goods that you did the week before.  However, everyone’s facts and situation is different and it might be something worth looking into, but the point of this post is to generate some thought for you the reader the following:

  1. sunset provisions are temporary, but by deleting them it makes the law permanent;
  2. that a new law in one year you feel might not apply to you may actually have huge ramifications for your business because it is tied to a prior one that has continuously effected you; and
  3. your business is your business, but the applicability of the law is for enforcers and practitioners, however they can help you make better risk management decisions based on these laws. 

At the end of the day consider seeking professional (law, tax, and accounting) help to make determinations for your cash-based business.   As you’d rather be paying taxes on time rather than paying penalties and taxes for trying to avoid a law that you did not think applied to you because you were just taking cash or viewed yourself as “casual”.  It might be the time to register your LLC or corporation, update your accounting practices, or make better financial decisions in light of your taxes.

Mahalo for staying through this lengthy post!

P.S.

Need instructions on filing your returns? Click on this link to be taken to the State of Hawaii’s Department of Taxation’s General Instructions.

Considering getting a LLC or Corporation because your cash-based business needs it?  Review my downloadable one-sheet.  If you are a more visual person take a look at this infographic.

LEGAL DISCLAIMER: The information provided here is meant to be general information, and should not be taken as specific legal advice that pertains to any particular situation.  The reader should not base any decisions on the information here to act or refrain from acting regarding a legal problem.  If you believe you have a legal problem please seek legal advice from a licensed attorney in the relevant jurisdiction.


Hey everyone, I know you were all looking forward to talking about licensing agreements for this week’s Draw the Law, a follow-up to my discussion on marketing or reseller agreements, but you are just going to have to wait one more week.  As an Oahu Director of Hawaii’s Young Lawyers Division I am working on Law Week this week (as well as following the wrap-up of the local state Legislature).  So my sketches of the concept have to wait one more week.  Pardon the delay.

Law Week with KHON2 Action Line (April 30th – May 4th)

Instead please, if you live in Hawaii, take advantage of our Law Week program put on by many legal professionals here in the State.  Although you may have missed Monday’s KHON2’s Action Line on Consumer Protection, Bankruptcy, and Foreclosure law you can still call in for the following topics:

  1. Tuesday, Family Law (Divorce, Custody, and Child Support);
  2. Wednesday, Estate Planning and Elder Care Law
  3. Thursday, Employment Law and Wrongful Termination
  4. Friday, Property Law (Landlord/Tenant)

Please call the studio between the hours of 11:00 am – 1:00 pm (Hawaii time) at the following number: 808-591-0222.  For further information, click this link.

Free Legal Clinics (May 5th)

If you miss out on our legal phone lines we will be bringing volunteer paralegals and attorneys to a neighborhood near you this Saturday.  We have volunteer attorneys taking your questions and providing free legal information.  There are no solicitation fees and everything discussed is in confidence.

The main goal is help the public gain access to justice and highlight this year’s theme of Law Week, No Courts, No Justice No Freedom.  We are bringing the professionals of the court to you, so you can be better informed of your legal rights. Please see below for a list of locations, all clinics will be open from 10:00 am – 2:00 p.m. this Saturday, May 5th.

Mahalo and see you around!

The clinic locations are as follows:

Oahu Legal Clinic Locations:

  • Don Quijote – Kaheka
  • Don Quijote – Pearl City
  • Don Quijote – Waipahu
  • Haleiwa Historical Gym (Haleiwa)
  • Sack N Save (Nanakuli)
  • Waianae Coast Comprehensive Health Center (Waianae)
  • Windward Mall Shopping Center (Windward)
  • Filipino Festival (Kapiolani Park)
  • Kapolei Marketplace (Kapolei)

Neighbor Island Locations:

  • • Maui Mall (Maui)
  • • Puainako Town Ctr. (Hilo)