Hawaii Production Tax Incentives Notice

Attention: Any production applying for the Hawaii Film Tax Credit!

As explained in EP’s last Production Incentives newsletter, Hawaii enacted a requirement for production company applicants under Hawaii’s Motion Picture, Digital Media and Film Production Income Tax Credit Act (Hawaii Film Tax Credit Act) starting January 1, 2023 to withhold and remit Hawaii general excise tax (HI GET) from loan-out company payments for Hawaii work activity on the participating project. Based on an Information Briefing Session held by the State on December 14, 2022, the State announced new rules and procedures for reporting and paying loan-out HI GET withholding, which we cover below.

IMPORTANT: A participating production company’s failure to make timely and accurate loan-out HI GET remittances risks forfeiture of the production company’s entire Hawaii film tax credit, not just the portion of the missed or incorrect loan-out HI GET withholding. Additionally, the participating production company is subject to a tax penalty equaling 100% of the entire GET withholding tax for failure to pay and report the full amount.

CLIENTS NEED TO CAREFULLY REVIEW AND FOLLOW THE INSTRUCTIONS BELOW FOR EP TO COMPLETE AND REPORT HI GET LOAN-OUT WITHHOLDING ON THEIR BEHALF.

Obtaining production company and loan-out HI GET account numbers

Though EP is paying the loan-out compensation for clients under EP’s tax ID, the Hawaii Department of Taxation (HI DoTax) requires the payroll company to submit the loan-out HI GET withholdings under the production company’s Federal Employer Identification Number (FEIN) and HI GET account number and include the subject loan-out’s HI GET account number and FEIN.

As a result, Hawaii film tax credit applicant production companies and affected loan-outs need to register for a HI GET account number BEFORE the production company starts any loan-outs for payroll with EP. Securing the HI GET accounts is mandatory to avoid possible Hawaii film tax credit forfeiture and/or the 100% tax penalty. To obtain a HI GET account number, affected clients and loan-outs will need to register their business with HI DoTax directly by completing Form BB-1, State of Hawaii Basic Business Application online HERE.

A $20 registration fee will apply, and DoTax has indicated that it will take about five to seven days to receive a HI GET account number if applied for online. The production company should obtain a copy of the loan-out’s HI DoTax-Issued GET License to verify the HI GET account and retain it for record-keeping purposes.

Providing production company and loan-out HI GET account numbers to EP

Hawaii film tax credit production clients will need to provide the production company’s HI GET account number to EP’s client setup team as part of show setup. Hawaii tax incentive clients will also need to email the HI GET account number of every loan-out with Hawaii work activity to EP’s Tax Department BEFORE the loan-out starts Hawaii work at EP_HI_GET@EP.COM. For those client shows already filming in Hawaii as of January 1, 2023, affected clients will need to email EP’s Tax Department at EP_HI_GET@EP.COM with their production company HI GET account numbers and complete list of loan-out GET account numbers as soon as possible and no later than Monday January 9, 2023 (the first week of January payroll processing). HI GET account information should be submitted in the proper GET Format (GE-XXX-XXX-XXXX-XX).

DoTax announced at the December 14 Information Session that it will reject any HI GET loan-out reporting and remittance that does not include the mandatory production company and loan-out HI GET account numbers. Hence, it is imperative for clients to promptly supply EP with all needed HI GET account numbers before loan-outs’ Hawaii work start date to avoid potential loss of the entire Hawaii film tax credit plus 100% penalty assessment for the HI GET withholding.

Until EP has completed programming to adjust the HI GET rate from 4.00% to 4.50% depending on HI local jurisdiction (all locations are at 4.50% except Maui at 4.00%), EP will withhold HI GET at the rate of 4.50%.

Summary of required client and loan-out HI GET data

Production company information for setup:

• Valid FEIN
• Production company name, address, contact phone number
• District location of project
• HI GET Number in proper GET Format (GE-XXX-XXX-XXXX-XX)

Loan-out company information before loan-out Hawaii start date (for loan-outs working on existing projects, EP requires information by January 9, 2023, as noted above)

• Completed Loan-Out Start/Close Form
• Valid FEIN
• HI GET Number in proper GET Format (GE-XXX-XXX-XXXX-XX)
• Production Company should retain a copy of the loan-out’s HI DoTax-Issued GET License

Upon request to EP_HI_GET@EP.COM, EP will provide a list of loan-outs paid by EP in 2022 to assist the production company in identifying any affected loan-outs with Hawaii work state activity.

To learn more, visit our Hawaii 2023 Loan Out GET Tax Rule FAQs.

For any questions about this notice, please contact the EP Incentives Team.