§235-68 Withholding of tax on the disposition of real property by nonresident persons. (a) As used in this section:
"Nonresident person" means every person other than a resident person.
"Property" or "real property" has the meaning as the same term is defined in section 231-1.
"Resident person" means any:
"Transferee" means any person, the State and the counties and their respective subdivisions, agencies, authorities, and boards, acquiring real property which is located in Hawaii.
"Transferor" means any person disposing real property that is located in Hawaii.
(b) Unless otherwise provided in this section, every transferee shall deduct and withhold a tax equal to 7.25 per cent of the amount realized on the disposition of Hawaii real property. Every person required to withhold a tax under this section is made liable for the tax and is relieved of liability for or upon the claim or demand of any other person for the amount of any payments to the department made in accordance with this section.
(c) Every transferee required by this section to withhold tax under subsection (b) shall make a return of the amount withheld to the department of taxation not more than twenty days following the transfer date.
(d) No person shall be required to deduct and withhold any amount under subsection (b), if the transferor furnishes to the transferee an affidavit by the transferor stating the transferor's taxpayer identification number and:
This subsection shall not apply if the transferee has actual knowledge that the affidavit referred to in this subsection is false.
(e) An application for a withholding certificate may be submitted by the transferor to the department setting forth:
Upon receipt of the application, the department shall determine whether the transferor has realized or will realize any gain with respect to the transfer, or whether there will be insufficient proceeds to pay the withholding. If the department is satisfied that no gain will be realized or that there will be insufficient proceeds to pay the withholding, it shall issue a withholding certificate stating the amount to be withheld, if any.
The submission of an application for a withholding certificate to the department does not relieve the transferee of its obligation to withhold or to make a return of the tax under subsections (b) and (c).
(f) No person shall be required to deduct and withhold any amount under subsection (b) if one or more individual transferors furnishes to the transferee an affidavit by the transferor stating the transferor's taxpayer identification number, that for the year preceding the date of the transfer the property has been used by the transferor as a principal residence, and that the amount realized for the property does not exceed $300,000.
(g) The department may enter into written agreements with persons who engage in more than one real property transaction in a calendar year or other persons to whom meeting the withholding requirements of this section are not practicable. The written agreements may allow the use of a withholding method other than that prescribed by this section or may waive the withholding requirement under this section. [L 1990, c 213, §1; am L 1991, c 279, §1; am L 1995, c 92, §8; am L 1997, c 178, §2; am L 2002, c 40, §6; am L 2003, c 210, §3; am L 2005, c 23, §1; am L 2018, c 122, §1]