Hawaii-2013-SB948-Amended

THE SENATE	S.B. NO.	948
TWENTY-SEVENTH LEGISLATURE, 2013		S.D. 1
STATE OF HAWAII		Proposed HD1

A BILL FOR AN ACT

RELATING TO TAXATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Section 237-1, Hawaii Revised Statutes, is amended by amending the definition of "representative" to read as follows:

""Representative" means any salesperson, commission agent, manufacturer's representative, broker or other person who is authorized or employed by an unlicensed seller to [~~assist such seller in~~] conduct activities in this State that are significantly associated with the seller's ability to establish or maintain a market in this State for the seller's sales, including selling property for use in the State, [by] procuring orders for [~~such~~] sales [~~or otherwise, and who carries on such activities in the State~~], and making collections or deliveries, it being immaterial whether such activities are regular or intermittent[; but the term "representative" does not include a manufacturer's representative whose functions are wholly promotional and to act as liaison between an unlicensed seller and a seller or sellers, and which do not include the procuring, soliciting or accepting of orders for property or the making of deliveries of property, or the collecting of payment for deliveries of property, or the keeping of books of account concerning property orders, deliveries or collections transpiring between an unlicensed seller and a seller or sellers]. Any unlicensed seller who in person carries on any such activity in the State shall also be classed as a representative."

SECTION 2. Section 237-13, Hawaii Revised Statutes, is amended as follows:

"§237-13 Imposition of tax. There is hereby levied and shall be assessed and collected annually privilege taxes against persons on account of their business and other activities in the State measured by the application of rates against values of products, gross proceeds of sales, or gross income, whichever is specified, as follows:

(1) Tax on manufacturers.

(A) Upon every person engaging or continuing within the State in the business of manufacturing, including compounding, canning, preserving, packing, printing, publishing, milling, processing, refining, or preparing for sale, profit, or commercial use, either directly or through the activity of others, in whole or in part, any article or articles, substance or substances, commodity or commodities, the amount of the tax to be equal to the value of the articles, substances, or commodities, manufactured, compounded, canned, preserved, packed, printed, milled, processed, refined, or prepared for sale, as shown by the gross proceeds derived from the sale thereof by the manufacturer or person compounding, preparing, or printing them, multiplied by one-half of one per cent.

(B) The measure of the tax on manufacturers is the value of the entire product for sale, regardless of the place of sale or the fact that deliveries may be made to points outside the State.

(C) If any person liable for the tax on manufacturers ships or transports the person's product, or any part thereof, out of the State, whether in a finished or unfinished condition, or sells the same for delivery to points outside the State (for example, consigned to a mainland purchaser via common carrier f.o.b. Honolulu), the value of the products in the condition or form in which they exist immediately before entering interstate or foreign commerce, determined as hereinafter provided, shall be the basis for the assessment of the tax imposed by this paragraph. This tax shall be due and payable as of the date of entry of the products into interstate or foreign commerce, whether the products are then sold or not. The department shall determine the basis for assessment, as provided by this paragraph, as follows:

(i) If the products at the time of their entry into interstate or foreign commerce already have been sold, the gross proceeds of sale, less the transportation expenses, if any, incurred in realizing the gross proceeds for transportation from the time of entry of the products into interstate or foreign commerce, including insurance and storage in transit, shall be the measure of the value of the products;

(ii) If the products have not been sold at the time of their entry into interstate or foreign commerce, and in cases governed by clause (i) in which the products are sold under circumstances such that the gross proceeds of sale are not indicative of the true value of the products, the value of the products constituting the basis for assessment shall correspond as nearly as possible to the gross proceeds of sales for delivery outside the State, adjusted as provided in clause (i), or if sufficient data are not available, sales in the State, of similar products of like quality and character and in similar quantities, made by the taxpayer (unless not indicative of the true value) or by others. Sales outside the State, adjusted as provided in clause (i), may be considered when they constitute the best available data. The department shall prescribe uniform and equitable rules for ascertaining the values;

(iii) At the election of the taxpayer and with the approval of the department, the taxpayer may make the taxpayer's returns under clause (i) even though the products have not been sold at the time of their entry into interstate or foreign commerce; and

(iv) In all cases in which products leave the State in an unfinished condition, the basis for assessment shall be adjusted so as to deduct the portion of the value as is attributable to the finishing of the goods outside the State.

(2) Tax on business of selling tangible personal property; producing.

(A) Upon every person engaging or continuing within this State in the business of selling any tangible personal property whatsoever (not including, however, bonds or other evidence of indebtedness, or stocks), there is likewise hereby levied, and shall be assessed and collected, a tax equivalent to four per cent of the gross proceeds of sales of the business; provided that insofar as the sale of tangible personal property is a wholesale sale under section [[]237-4(a)(8)[]], the sale shall be subject to section 237-13.3. Upon every person engaging or continuing within this State in the business of a producer, the tax shall be equal to one-half of one per cent of the gross proceeds of sales of the business, or the value of the products, for sale, if sold for delivery outside the State or shipped or transported out of the State, and the value of the products shall be determined in the same manner as the value of manufactured products covered in the cases under paragraph (1)(C).

(B) Gross proceeds of sales of tangible property in interstate and foreign commerce shall constitute a part of the measure of the tax imposed on persons in the business of selling tangible personal property, to the extent, under the conditions, and in accordance with the provisions of the Constitution of the United States and the Acts of the Congress of the United States which may be now in force or may be hereafter adopted, and whenever there occurs in the State an activity to which, under the Constitution and Acts of Congress, there may be attributed gross proceeds of sales, the gross proceeds shall be so attributed.

(C) For purposes of this section, a seller is "engaging or continuing within this State in business" within the meaning of subparagraph (2)(A) if the seller, regularly or intermittently, owns any property, maintains any place of business, or uses any representative in the State, irrespective of whether the person has qualified to do business in the State.

(D) For purposes of this section, a seller shall be presumed to be "engaging or continuing within this State in business" within the meaning of subparagraph (A) if an affiliated person has substantial nexus in the state or if any person, other than a person acting in its capacity as a common carrier, that has substantial nexus in this State:

(i) Sells a similar line of products as the seller and does so under the same or a similar business name;

(ii) Maintains an office, distribution facility, warehouse, storage place, or similar place of business in the State to facilitate the delivery of property or services sold by the seller to the seller's customers;

(iii) Uses trademarks, service marks, or trade names in the State that are the same or substantially similar to those used by the seller;

(iv) Delivers, installs, assembles, or performs maintenance services for the seller's customers within the State;

(v) Facilitates the seller's delivery of property to customers in the State by allowing the seller's customers to pick up property sold by the seller at an office, distribution facility, warehouse, storage place, or similar place of business maintained by the person in the State; or

(vi) Conducts any other activities in the State that are significantly associated with the seller's ability to establish and maintain a market in the State for the seller's sales.

(E) The presumption that a seller is "engaging or continuing in business within this State" within the meaning of subparagraph (D) of this section may be rebutted by demonstrating that the activities of the person or affiliated person in the State are not significantly associated with the seller's ability to establish or maintain a market in this State for the seller's sales.

(F) For purposes of this section, a seller shall be presumed to be "engaging or continuing in business within this State" if the seller enters into an agreement with one or more residents of this State under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link on an internet website, by telemarketing, by an in-person oral presentation, or otherwise, to the seller, if the cumulative gross receipts from sales by the seller to customers in the State who are referred to the seller by all residents with this type of an agreement with the seller is in excess of $10,000 during the preceding twelve months.

(G) The presumption that a seller is "engaging or continuing in business within this State" within the meaning of subparagraph (F) may be rebutted by submitting proof that the residents with whom the seller has an agreement did not engage in any activity within the State that was significantly associated with the seller's ability to establish or maintain the seller's market in this State during the preceding twelve months. Such proof may consist of sworn written statements from all of the residents with whom the seller has an agreement stating that they did not engage in any solicitation in this State on behalf of the seller during the preceding year; provided that such statements were provided and obtained in good faith. Subparagraph (F) shall take effect ninety days after the effective date of this Act and shall apply to sales made, uses occurring, and services rendered on or after the effective date of this Act in accordance with the applicable transition provisions and without regard to the date the seller and the resident entered into the agreement described in subparagraph (F); provided that the term "the preceding twelve months" as used in subparagraph (F) may include the twelve months commencing prior to the effective date of this Act.

(H) If any person sells or leases tangible personal property or services to the State, a state department, a state agency, or an agent thereof, that person and any affiliated person, as a prerequisite for any such sale or lease, shall register with the department of taxation as a seller required to collect tax and comply with all legal requirements imposed on such sellers, including the requirement to collect and remit the tax imposed by this chapter.

(I) For purposes of this section, the term "affiliated person" means any person that is a member of the same "controlled group of corporations" as defined in section 1563(a) of the Internal Revenue Code as the seller or any other entity that, notwithstanding its form of organization, bears the same ownership relationship to the seller as a corporation that is a member of the same "controlled group of corporations" as defined in section 1563(a) of the Internal Revenue Code.

[~~(C)~~] (J) No manufacturer or producer, engaged in such business in the State and selling the manufacturer's or producer's products for delivery outside of the State (for example, consigned to a mainland purchaser via common carrier f.o.b. Honolulu), shall be required to pay the tax imposed in this chapter for the privilege of so selling the products, and the value or gross proceeds of sales of the products shall be included only in determining the measure of the tax imposed upon the manufacturer or producer.

[~~(D)~~] (K) When a manufacturer or producer, engaged in such business in the State, also is engaged in selling the manufacturer's or producer's products in the State at wholesale, retail, or in any other manner, the tax for the privilege of engaging in the business of selling the products in the State shall apply to the manufacturer or producer as well as the tax for the privilege of manufacturing or producing in the State, and the manufacturer or producer shall make the returns of the gross proceeds of the wholesale, retail, or other sales required for the privilege of selling in the State, as well as making the returns of the value or gross proceeds of sales of the products required for the privilege of manufacturing or producing in the State. The manufacturer or producer shall pay the tax imposed in this chapter for the privilege of selling its products in the State, and the value or gross proceeds of sales of the products, thus subjected to tax, may be deducted insofar as duplicated as to the same products by the measure of the tax upon the manufacturer or producer for the privilege of manufacturing or producing in the State; provided that no producer of agricultural products who sells the products to a purchaser who will process the products outside the State shall be required to pay the tax imposed in this chapter for the privilege of producing or selling those products.

[~~(E)~~] (L) A taxpayer selling to a federal cost-plus contractor may make the election provided for by paragraph (3)(C), and in that case the tax shall be computed pursuant to the election, notwithstanding this paragraph or paragraph (1) to the contrary.

[~~(F)~~] (M) The department, by rule, may require that a seller take from the purchaser of tangible personal property a certificate, in a form prescribed by the department, certifying that the sale is a sale at wholesale; provided that:

(i) Any purchaser who furnishes a certificate shall be obligated to pay to the seller, upon demand, the amount of the additional tax that is imposed upon the seller whenever the sale in fact is not at wholesale; and

(ii) The absence of a certificate in itself shall give rise to the presumption that the sale is not at wholesale unless the sales of the business are exclusively at wholesale.

(3) Tax upon contractors.

(A) Upon every person engaging or continuing within the State in the business of contracting, the tax shall be equal to four per cent of the gross income of the business.

(B) In computing the tax levied under this paragraph, there shall be deducted from the gross income of the taxpayer so much thereof as has been included in the measure of the tax levied under subparagraph (A), on:

(i) Another taxpayer who is a contractor, as defined in section 237-6;

(ii) A specialty contractor, duly licensed by the department of commerce and consumer affairs pursuant to section 444-9, in respect of the specialty contractor's business; or

(iii) A specialty contractor who is not licensed by the department of commerce and consumer affairs pursuant to section 444-9, but who performs contracting activities on federal military installations and nowhere else in this State;

provided that any person claiming a deduction under this paragraph shall be required to show in the person's return the name and general excise number of the person paying the tax on the amount deducted by the person.

(C) In computing the tax levied under this paragraph against any federal cost-plus contractor, there shall be excluded from the gross income of the contractor so much thereof as fulfills the following requirements:

(i) The gross income exempted shall constitute reimbursement of costs incurred for materials, plant, or equipment purchased from a taxpayer licensed under this chapter, not exceeding the gross proceeds of sale of the taxpayer on account of the transaction; and

(ii) The taxpayer making the sale shall have certified to the department that the taxpayer is taxable with respect to the gross proceeds of the sale, and that the taxpayer elects to have the tax on gross income computed the same as upon a sale to the state government.

(D) A person who, as a business or as a part of a business in which the person is engaged, erects, constructs, or improves any building or structure, of any kind or description, or makes, constructs, or improves any road, street, sidewalk, sewer, or water system, or other improvements on land held by the person (whether held as a leasehold, fee simple, or otherwise), upon the sale or other disposition of the land or improvements, even if the work was not done pursuant to a contract, shall be liable to the same tax as if engaged in the business of contracting, unless the person shows that at the time the person was engaged in making the improvements the person intended, and for the period of at least one year after completion of the building, structure, or other improvements the person continued to intend to hold and not sell or otherwise dispose of the land or improvements. The tax in respect of the improvements shall be measured by the amount of the proceeds of the sale or other disposition that is attributable to the erection, construction, or improvement of such building or structure, or the making, constructing, or improving of the road, street, sidewalk, sewer, or water system, or other improvements. The measure of tax in respect of the improvements shall not exceed the amount which would have been taxable had the work been performed by another, subject as in other cases to the deductions allowed by subparagraph (B). Upon the election of the taxpayer, this paragraph may be applied notwithstanding that the improvements were not made by the taxpayer, or were not made as a business or as a part of a business, or were made with the intention of holding the same. However, this paragraph shall not apply in respect of any proceeds that constitute or are in the nature of rent; all such gross income shall be taxable under paragraph (9); provided that insofar as the business of renting or leasing real property under a lease is taxed under section 237-16.5, the tax shall be levied by section 237-16.5.

(4) Tax upon theaters, amusements, radio broadcasting stations, etc.

(A) Upon every person engaging or continuing within the State in the business of operating a theater, opera house, moving picture show, vaudeville, amusement park, dance hall, skating rink, radio broadcasting station, or any other place at which amusements are offered to the public, the tax shall be equal to four per cent of the gross income of the business[~~, and in the case of a sale of an amusement at wholesale under section 237-4(a)(13), the tax shall be subject to section 237-13.3~~].

(B) The department may require that the person rendering an amusement at wholesale take from the licensed seller a certificate, in a form prescribed by the department, certifying that the sale is a sale at wholesale; provided that:

(i) Any licensed seller who furnishes a certificate shall be obligated to pay to the person rendering the amusement, upon demand, the amount of additional tax that is imposed upon the seller whenever the sale is not at wholesale; and

(ii) The absence of a certificate in itself shall give rise to the presumption that the sale is not at wholesale unless the person rendering the sale is exclusively rendering the amusement at wholesale.

(5) Tax upon sales representatives, etc. Upon every person classified as a representative or purchasing agent under section 237-1, engaging or continuing within the State in the business of performing services for another, other than as an employee, there is likewise hereby levied and shall be assessed and collected a tax equal to four per cent of the commissions and other compensation attributable to the services so rendered by the person.

(6) Tax on service business.

(A) Upon every person engaging or continuing within the State in any service business or calling including professional services not otherwise specifically taxed under this chapter, there is likewise hereby levied and shall be assessed and collected a tax equal to four per cent of the gross income of the business, and in the case of a wholesaler under section 237-4(a)(10), the tax shall be equal to one-half of one per cent of the gross income of the business. [~~Notwithstanding the foregoing, a wholesaler under section 237‑4(a)(10) shall be subject to section 237‑13.3.~~]

(B) The department may require that the person rendering a service at wholesale take from the licensed seller a certificate, in a form prescribed by the department, certifying that the sale is a sale at wholesale; provided that:

(i) Any licensed seller who furnishes a certificate shall be obligated to pay to the person rendering the service, upon demand, the amount of additional tax that is imposed upon the seller whenever the sale is not at wholesale; and

(ii) The absence of a certificate in itself shall give rise to the presumption that the sale is not at wholesale unless the person rendering the sale is exclusively rendering services at wholesale.

(C) Where any person is engaged in the business of selling interstate or foreign common carrier telecommunication services within and without the State, other than as a home service provider, the tax shall be imposed on that portion of gross income received by a person from service which is originated or terminated in this State and is charged to a telephone number, customer, or account in this State notwithstanding any other state law (except for the exemption under section 237-23(a)(1)) to the contrary. If, under the Constitution and laws of the United States, the entire gross income as determined under this paragraph of a business selling interstate or foreign common carrier telecommunication services cannot be included in the measure of the tax, the gross income shall be apportioned as provided in section 237-21; provided that the apportionment factor and formula shall be the same for all persons providing those services in the State.

(D) Where any person is engaged in the business of a home service provider, the tax shall be imposed on the gross income received or derived from providing interstate or foreign mobile telecommunications services to a customer with a place of primary use in this State when such services originate in one state and terminate in another state, territory, or foreign country; provided that all charges for mobile telecommunications services which are billed by or for the home service provider are deemed to be provided by the home service provider at the customer's place of primary use, regardless of where the mobile telecommunications originate, terminate, or pass through; provided further that the income from charges specifically derived from interstate or foreign mobile telecommunications services, as determined by books and records that are kept in the regular course of business by the home service provider in accordance with section 239-24, shall be apportioned under any apportionment factor or formula adopted under subparagraph (C). Gross income shall not include:

(i) Gross receipts from mobile telecommunications services provided to a customer with a place of primary use outside this State;

(ii) Gross receipts from mobile telecommunications services that are subject to the tax imposed by chapter 239;

(iii) Gross receipts from mobile telecommunications services taxed under section 237-13.8; and

(iv) Gross receipts of a home service provider acting as a serving carrier providing mobile telecommunications services to another home service provider's customer.

For the purposes of this paragraph, "charges for mobile telecommunications services", "customer", "home service provider", "mobile telecommunications services", "place of primary use", and "serving carrier" have the same meaning as in section 239-22.

(7) Tax on insurance producers. Upon every person engaged as a licensed producer pursuant to chapter 431, there is hereby levied and shall be assessed and collected a tax equal to 0.15 per cent of the commissions due to that activity.

(8) Tax on receipts of sugar benefit payments. Upon the amounts received from the United States government by any producer of sugar (or the producer's legal representative or heirs), as defined under and by virtue of the Sugar Act of 1948, as amended, or other Acts of the Congress of the United States relating thereto, there is hereby levied a tax of one-half of one per cent of the gross amount received; provided that the tax levied hereunder on any amount so received and actually disbursed to another by a producer in the form of a benefit payment shall be paid by the person or persons to whom the amount is actually disbursed, and the producer actually making a benefit payment to another shall be entitled to claim on the producer's return a deduction from the gross amount taxable hereunder in the sum of the amount so disbursed. The amounts taxed under this paragraph shall not be taxable under any other paragraph, subsection, or section of this chapter.

(9) Tax on other business. Upon every person engaging or continuing within the State in any business, trade, activity, occupation, or calling not included in the preceding paragraphs or any other provisions of this chapter, there is likewise hereby levied and shall be assessed and collected, a tax equal to four per cent of the gross income thereof. In addition, the rate prescribed by this paragraph shall apply to a business taxable under one or more of the preceding paragraphs or other provisions of this chapter, as to any gross income thereof not taxed thereunder as gross income or gross proceeds of sales or by taxing an equivalent value of products, unless specifically exempted."

SECTION 3. Section 237-25, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Nothing in this section shall be deemed to exempt any sales to or by a federal cost-plus contractor, as defined in chapter 237, or the gross proceeds thereof; with respect to all such activities and transactions, taxes shall be levied, returned, computed, and assessed the same as if this section had not been enacted, and in the case of an election made under sections [~~237-13(2)(F)~~] 237-13(2)(M) and 237-13(3)(C)(ii), the tax shall be computed the same as upon a sale to the state government."

SECTION 4. Section 238-1, Hawaii Revised Statutes, is amended by amending the definition of "representation" to read as follows:

""Representation" refers to any or all of the following:

(1) A seller being present in the State; and

(2) A seller having in the State a salesperson, commission agent, manufacturer's representative, broker, or other person who is authorized or employed by the seller to [~~assist~~] conduct activities in this State that are significantly associated with the seller's ability to establish or maintain a market in this State for the seller's sales, including assisting the seller in selling property, services, or contracting for use or consumption in the State, [by] procuring orders for the sales, and making collections or deliveries[~~, or otherwise; and~~

~~(3)~~ ~~A seller having in the State a person upon whom process directed to the seller from the courts of the State may be served, including the director of~~ ~~commerce and consumer affairs and the deputy director in the cases provided in section 414-64~~]."

SECTION 5. Section 238-6, Hawaii Revised Statutes, is amended to read as follows:

"§238-6 Collection of tax by seller; penalty. (a) For purposes of the taxes due under sections 238-2 and 238-2.3, every seller [~~having~~ ~~in the State, regularly~~]:

(1) Regularly or intermittently, owning any property, [~~tangible or intangible,~~] maintaining any place of business, or using any representation as hereinabove defined[,] in the State (and irrespective of the seller's having or not having qualified to do business in the State); or

(2) Who is otherwise engaged in business in the State as defined in subsection (g);

shall, if the seller is described under paragraph (1) and makes sales of property, services, or contracting for use in the State (whether or not the sales are made in the State), or if the seller is described under paragraph (2) and makes sales of tangible personal property for use in the State as described in section 238-2, collect from the purchaser the taxes imposed by sections 238-2 and 238-2.3, on the use of the property, services, or contracting, as applicable, so sold by the seller, if the seller is not subject to the use tax under this chapter on the importation of the property into the State. The collection shall be made within twenty days after the accrual of the tax or within such other period as shall be fixed by the director of taxation upon the application of the seller, and the seller shall give to the purchaser a receipt therefor in the manner and form prescribed by the director; provided that this subsection shall not apply to vehicles registered under section 286-50.

(b) The director, in the director's discretion, upon application therefor and under terms and conditions prescribed by the director, may relieve any seller of the duty of collecting and paying over the tax imposed by subsection (a) above, if the director is satisfied that the tax can be effectively collected by other means. Exemption from the duty of collecting the tax may be canceled at any time when the director finds that the tax cannot be effectively collected by other means. The director likewise may terminate the duty and authority of any seller to collect and pay over the tax imposed by subsection (a) above if the director finds, as to such seller, that the tax cannot be effectively collected by such means.

(c) The director, in the director's discretion, upon application therefor and under terms and conditions prescribed by the director, may authorize the collection of the tax imposed by this chapter by a seller not otherwise required to collect the tax. The seller, when so authorized, shall have the duty of collecting and paying over the tax in the same manner and subject to the same requirements as set out in subsection (a). The authority may be canceled at any time when, in the judgment of the director, the tax can more effectively be collected by other means.

(d) In case any seller required or authorized to collect the tax under this chapter fails to collect the same, or having collected the tax fails to pay over the same as provided by this chapter, the seller shall nevertheless be personally liable to the State for the amount of the tax, but it shall be a defense to such liability that the indebtedness for the price is a worthless account actually charged off for income tax purposes, if and to the extent that the collections of the price do not equal the tax.

(e) Every seller required or authorized to collect the tax shall make returns and payments of the tax at the same time and in the same manner as is provided with respect to taxpayer by section 238-5. All provisions of this chapter with respect to returns, reports, records, payments, penalties, and interest, appeals, investigations, and audits, assessments, tax collections procedure, criminal offenses, and the general administrative powers and duties of the director, shall apply to such sellers the same as to taxpayers.

(f) The tax collected pursuant to this section shall be held in trust for the State and for payment to the proper collecting officer in the manner and at the time required by this chapter. Any person collecting such tax who appropriates or converts the same to the person's own use or to any use other than the payment of the tax as herein provided, and who fails to pay over the amount of tax so collected at the time required by this chapter, shall be deemed guilty of an embezzlement of property of the State and shall be fined more than five times the amount of money so embezzled or imprisoned at hard labor not more than ten years, and any failure by the person so collecting the tax to pay the same over within the time provided by this chapter, after demand therefor, shall be taken and held to be prima facie evidence of the embezzlement.

(g) For purposes of this section, a seller shall be presumed to be "engaged in business in the State" if:

(1) Any person, other than a person acting in its capacity as a common carrier, that has substantial nexus in this State:

(A) Sells a similar line of products as the seller and does so under the same or a similar business name;

(B) Maintains an office, distribution facility, warehouse, storage place, or similar place of business in the State to facilitate the delivery of property or services sold by the seller to the seller's customers;

(C) Uses trademarks, service marks, or trade names in the State that are the same or substantially similar to those used by the seller;

(D) Delivers, installs, assembles, or performs maintenance services for the seller's customers within the State;

(E) Facilitates the seller's delivery of property to customers in the State by allowing the seller's customers to pick up property sold by the seller at an office, distribution facility, warehouse, storage place, or similar place of business maintained by the person in the State; or

(F) Conducts any other activities in the State that are significantly associated with the seller's ability to establish and maintain a market in the State for the seller's sales; or

(2) An affiliated person has substantial nexus in the State.

(h) The presumption that a seller is "engaged in business in the State" within the meaning of subsection (g) may be rebutted by demonstrating that the activities of the person or affiliated person in the State are not significantly associated with the seller's ability to establish or maintain a market in this State for the seller's sales.

(i) For purposes of this section, "engaged in business in the State" is also presumed to include every seller that has entered into an agreement with one or more residents of this State under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link on an internet website, by telemarketing, by an in-person oral presentation, or otherwise, to the seller, if the cumulative gross receipts from sales by the seller to customers in the State who are referred to the seller by all residents with this type of an agreement with the seller is in excess of $10,000 during the preceding twelve months.

(j) The presumption that a seller is "engaged in business in the State" within the meaning of subsection (i) may be rebutted by submitting proof that the residents with whom the seller has an agreement did not engage in any activity within the State that was significantly associated with the seller's ability to establish or maintain the seller's market in this State during the preceding twelve months. Such proof may consist of sworn written statements from all of the residents with whom the seller has an agreement stating that they did not engage in any solicitation in this State of behalf of the seller during the preceding year; provided that such statements were provided and obtained in good faith. Subsection (i) shall take effect ninety days after the effective date of this Act and shall apply to sales made, uses occurring, and services rendered on or after the effective date of this Act in accordance with the applicable transition provisions and without regard to the date the seller and the resident entered into the agreement described in subsection (i); provided that the term "the preceding twelve months" as used in subsection (i) may include the twelve months commencing prior to the effective date of this Act.

(k) If any person sells or leases tangible personal property or services to the State, a state department, a state agency, or an agent thereof, that person and any affiliated person, as a prerequisite for any such sale or lease, shall register with the department of taxation as a seller required to collect tax and comply with all legal requirements imposed on such sellers, including the requirement to collect and remit the tax imposed by this chapter.

(l) For purposes of this section, "affiliated person" means any person that is a member of the same "controlled group of corporations" as defined in section 1563(a) of the Internal Revenue Code as the seller or any other entity that, notwithstanding its form of organization, bears the same ownership relationship to the seller as a corporation that is a member of the same "controlled group of corporations" as defined in section 1563(a) of the Internal Revenue Code."

SECTION 6. The revisor of statutes shall insert the effective date of this Act in the appropriate places within this Act.

SECTION 7. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 9. This Act shall take effect on July 1, 2030.