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Tax Services

The Tax Office provides tax advice internally and monitors tax compliance for all aspects of tax matters within the University systemwide. 

  • Hawaii General Excise Tax
  • Tax Reporting of Scholarships and Fellowships
  • Travel and Moving Expenses
  • Unrelated Business Income Tax

Official name for all forms: University of Hawaii

Federal I. D. Number:  99-6000354

Other Important U.H. Numbers
Dun & Bradstreet (DUNS) Numbers:

  • UH Manoa - 965088057
  • UH Hilo - 195738039
  • UH West O'ahu - 195737551
  • UH Maui College - 95736207
  • UH System - 078495204
  • Hawai'i CC - 195737056
  • Honolulu CC - 195736801
  • Kapi'olani CC - 195736512
  • Kaua'i CC - 195736348
  • Leeward CC - 195736272
  • Windward CC - 195306753

 

Hawaii General Excise Tax (Sales)

The State of Hawaii does not impose a sales tax on the buyer, but a general excise tax (GET) is levied upon the seller. This excise tax is for the privilege of doing business in the State of Hawaii. GET is levied on gross receipts or gross income derived from all business activities in the State. Furthermore, an out-of-state vendor is subject to the general excise tax if the vendor has sufficient presence in the State; presence in the State is established if the vendor has an office, inventory, property, employees, or other representation located in the State. If the vendor meets the criteria of conducting business within the State of Hawaii, the GET is imposed upon the vendor. The vendor may then pass the GET onto the University.

For the official State of Hawaii explanation, please refer to this site.
To search on a vendor's Hawaii tax license, please refer to this site.

Unrelated Business Income Tax

As a state instrumentality, University of Hawaii is generally tax exempt under Internal Revenue Code (IRC) section 115. However, IRC §511 and corresponding Treasury Regulations place a tax on income that is not related to the University’s exempt purposes. For income to be unrelated business income and taxable (UBTI), the activity generating the income must be:

  1. A trade or business – conducted with intent to generate profit.
  2. That is regularly carried on –Determined by looking to frequency, continuity, and whether manner conducted is consistent with the manner of a commercial taxable organization.
  3. And not substantially related to the exempt purpose of the organization – Does not contribute importantly to furthering the University’s purposes; motivated primarily for the production of income.

For further explanation and official guidance, please refer to this site

 

 

FAQs

General Tax +

Q: What is the purpose for Form 6166?

A: Click here for answer.

Q: Is University of Hawaii an IRC §501(c)(3) organization?
A:  University of Hawaii (UH) is considered a governmental tax exempt entity. It is exempt from federal income taxes under Internal Revenue Code (IRC) §115(1).  UH is not an IRC §501(c)(3) organization. Contributions to the University are deductible by donors under IRC §170.
Q: Does UH have a memorandum explaining the tax status of the University?
A: Click "here" for copy .
Q: What is Form W-9?  Who can sign such at UH?
A: When a department at UH is receiving payment, a Form W-9 may be requested by the payor for UH's federal identification number.  Tax Office at UH can prepare such form and sign it,  and provide the address of your office and an email address where such signed form will be forwarded to.

Moving Expenses +

Q: What tests must be met in order to deduct moving expenses on a personal tax return?

A: Distance Test – In order for expenses to be deductible, your new main job location must be at least 50 miles further from your former home than your old main job location was from your former home.
Time Test – In order for expenses to be deductible, you must work full time for at least 39 weeks during the first 12 months after you arrive in the general area of your new job location.
Q: What expenses are considered deductible moving expenses?
A: Reasonable Expenses – You can deduct only those expenses that are reasonable for the circumstances of your move. The cost of travelling from your former home to your new one should be by the shortest, most direct route available by conventional transportation. If travelling by car, actual expenses or 10 cents per mile can be deducted as moving expenses. Also moving expenses can be deducted for any member of your household who has both your former and new home as his or her home.

Household Goods and Personal Effects –


1) The cost of packing, crating and transporting your household goods and personal effects from your former home to your new home is deductible.

2) The cost of storing and insuring household goods and personal effects within any period of 30 consecutive days after the day your things are moved from your former home and before they are delivered to your new home is deductible.

3) Any costs of connecting or disconnecting utilities required because you are moving household goods and personal effects is deductible.

4) Costs of shipping an automobile or household pets to a new home is deductible.

5) The cost of moving household goods and personal effects from a place other than your former home is deductible; however, the deduction is limited to the amount it would have cost to move them from your former home.

Travel Expenses –

The costs of transportation and lodging for yourself and members of your household while travelling from your former home to your new home will be deductible, including any expenses for the day that you arrive. You can also include any lodging expenses you had in the area of your former home within one day after you could not live in your former home because your furniture had been moved. Only expenses for one trip to your new home for yourself and members of your household will be deductible.

Q: What expenses are considered non-deductible moving expenses?
A: Non-Deductible Moving Expenses may include the following:

• Any part of the purchase price of your new home
• Car tags
• Driver’s license
• Expenses of buying or selling a new home
• Expenses of getting or breaking a lease
• Home improvements to help sell your home
• Loss on the sale of your home
• Losses from disposing of memberships in clubs
• Meal expenses
• Mortgage penalties
• Pre-move househunting expenses
• Real estate taxes
• Refitting of carpets and draperies
• Security deposits
• Storage charges except those incurred in-transit
• Temporary living expenses

Q: What will happen if my employer reimburses me for moving expenses?
A: Your employer should not include in your wages reimbursements paid under an accountable plan for moving expenses that you:

(1) could deduct if you had paid or incurred them, and
(2) did not deduct in an earlier year.

These reimbursements are fringe benefits excludable from your income as qualified moving expense reimbursements and will be reported on box 13 of Form W-2.
If your employer reimburses you for both deductible and nondeductible moving expenses, your employer will determine the amount of the reimbursement that is not taxable and not subject to withholding. Any remaining amount will be treated as taxable wages and income tax, social security tax and Medicare tax will be withheld.

Q: What rules must be met in order for a reimbursement to be treated as paid under and accountable plan?
A: Under an accountable plan, all three of the following rules must be met:

a) Your expenses must be of the type for which a deduction would be allowed had you paid them yourself.

b) You must adequately account to your employer for these expenses within a reasonable period of time.

c) You must return any excess reimbursement or allowance within a reasonable time.

Operational Topics +

Q: Are there tax implications when the University of Hawai'i provides qualified campus lodging to its employees or students?
A: Yes, there are potential tax implications.  Qualified campus lodging by IRS definition is "lodging furnished to the university employees, their spouses, or one of their dependents by, or on behalf of, the institution or center for use as a home.  The lodging must be located on or near a campus of the educational institution or academic health center."  The federal tax law allows an exemption for the value of qualified campus lodging for amounts in excess of:
   1.  Five percent of the appraised value of the qualified campus lodging OR
   2.  The average rent paid by individuals for lodging provided by the institution (other than lodging provided to employees or students) during the year for comparable lodging - in other words, the fair market value of residential rental space.  For example, a faculty member pays $200 a month for lodging.  Other employees pay $400 for similar lodging.  The appraised value of the lodging is $55,000.  Five percent of this amount is $2,750.  The faculty employee would have to include a total of $350 in his income for the year ($2,750 - (12 x $200)).
Q: For vendors who are LLCs, what is the essential source document to obtain for creating vendor information in KFS?
A: LLC stands for Limited Liability Company.  It is a form of a business entity that a vendor may have chosen for his or her business.

For tax purposes, a LLC could be treated as a sole proprietor if it has a single member.  In contrast, if a LLC has more than one member, then it could elect to be taxed as a corporation, partnership or S corporation.

Fiscal administrators should check for missing information on Form W-9 from vendors who are listed as LLC.  The UH Disbursing Office relies on the information from Form W-9 for KFS processing.  If Form W-9 is not adequately completed, fiscal administrators should follow up with the LLC vendors on missing information (i.e. missing SSN, FEIN or spelling of vendor name).  If there is uncertainty in the KFS vendor setup, information on the completed Form W-9 should be used as the reference source.

Q: Are there tax implications for the employees receiving cash awards?
A: Employees receiving cash awards (i.e. excellence in teaching, service awards, etc.) need to be aware of the tax implications to their paycheck.

In general, the cash award is given to the employee before the recording and processing of such amount into the payroll.  Because of this subsequent process in payroll, the employee may see a smaller pay check due to the additional increase in taxes withheld in the employee's paycheck.

Prior to awarding the cash award to the deserving employee, department personnel should inform the prospective awardee that taxes will be withheld in an upcoming paycheck for receipt of cash award and to be aware of any adjustment in their paycheck.

At the end of the tax year, the amount received for these cash award will be reported in the individual's IRS form W-2 as wages in kind.

In KFS, cash awards should be processed as a Disbursement Voucher (DV) using payment reason code "A" and object code 7244.

Q: What are the proper State of Hawai'i tax forms to file for employees working outside of Hawai'i?
A: If a UH department hires someone who works solely outside of Hawai'i, it is important that the proper tax forms are filed in a timely manner so that no Hawai'i state taxes are withheld for the employee in the payroll process.  These forms have to be approved by the Hawai'i Department of Taxation before exempting state tax withholding.

Completed HW-6 and HW-7 forms must be filed with the Hawai'i Department of Taxation. Employees working outside of Hawai'i will need to complete Form HW-6, while department personnel for these employees will need to complete Form HW-7. Once both forms are completed, the departments shall mail both forms to the Hawai'i Department of Taxation.

Q: Are travel costs paid by the University of Hawai'i for someone interviewing for a job at the University of Hawai'i be taxable?
A: No, travel costs paid by University of Hawai'i for job interviewees are not taxable.

Pursuant to IRS Revenue Ruling 63-77, reimbursements (to the extent that they do not exceed the actual expenses incurred) made to individuals by a prospective employer like the University of Hawai'i for expenses incurred in connection with the interviews for possible employment are not includible in the gross income of such individuals and are not taxable.

To reimburse interviewees, complete the DISB NE-Inv form (Non-Employee Invoice) and process a purchase order in KFS with the corresponding object codes.

Q: Since the University of Hawai'i will no longer be issuing IRS Form 1099-MISC to scholarship / fellowship recipients who are U.S. citizens or resident aliens, is there a document that can be accessed by the department personnel to provide adequate information for the recipient to reference from?
A: With the implementation of AP 8.561 (Tax Treatment of Non-Service Financial Assistance for Individuals), the University of Hawai'i will no longer be issuing IRS Form 1099-MISC for scholarship / fellowship payment made to U.S. citizens or resident aliens.  Although IRS Form 1099-MISC will not be issued to scholarship / fellowship recipients, they are still responsible for self-reporting the amounts received on their individual tax returns.  As such, per AP 8.561, each department is responsible for responding to any scholarship / fellowship recipient's inquiries regarding the amount of financial assistance provided to the recipient.

To assist departments in responding to recipient inquiries, a report has been developed to capture the recipients' payment information. This procedure will guide you on how to access to the report titled Scholarship / Fellowship Payment Inquiry by Last Name in eThority. 

Stipends, Scholarship, Fellowship +

In the subsequent Q&As, scholarship/fellowship will be abbreviated as S/F

Q: Who needs to fill out University of Hawaii Form WH-1 when S/F is given?
A: Only recipients who are nonresident aliens are required to fill out UH Form WH-1 when receiving non-qualified scholarship or fellowship. However, it is recommended that the Program Office identifies the residency status (i.e. via S/F application) for U.S. citizen, permanent resident, and resident alien, before making a payment. Furthermore, Pacific Islanders (such as residents of Palau, Marshall Island, Federated States of Micronesia, and American Samoa) should also complete U.H. Form WH-1 since they are not U.S. Citizen. For U.S. corporations or U.S. citizen, permanent resident, or resident alien, Form W-9 is also acceptable alternative for initiating payments.
Q: Where should department process non-qualified scholarship or fellowship for U.H. students who are U.S. citizen, permanent resident or resident alien?
A: A. If the student receives federal financial aid, it is preferable to process nonqualified scholarship or fellowship by U.H.’s Cashier Office or Financial Aid Office through the Banner student information system, which allows the Banner to capture all scholarship and fellowship payments that need to be disclosed to the student payee’s home campus Financial Aid Office as required by federal Title IV regulations. Alternatively, a disbursement voucher (DV) can be processed through the Kuali Financial Systems.
Q: A community college is planning to provide a culinary school student with an all-expenses-paid trip to compete in a national culinary competition. If the winner is selected from a local competition, would the all-expenses-paid trip be reportable to the IRS? Is there a situation where the all-expenses-paid trip would not be reportable?
A: As described, the all-expenses-paid trip is considered a prize that is subject to reporting. However, if participation in the culinary competition was instead a part of the class curriculum as described in the Culinary School’s course catalog, the trip expenses would be a program expense for the class, and would not be considered income to the student selectee. Therefore, it is important to make a link between the payment provided and the academic program, particularly in the event of IRS audit, if the payment is not reportable.
Q: The University is planning to pay for the travelling expenses of a student to present his paper at a conference relating to his field of studies in class. The trip is not an annual recurring situation for the department. Explain the tax treatment of the travel expenses.
A: The travel expenses would be treated as a "non-qualified" scholarship for the student, based on the fact that the conference is not a normal, recurring expense of the University, and the student is benefitting from the trip.If the student is a U.S. citizen, permanent resident, or resident alien, the University is not required to report the value of the trip, but the expenses are considered “income” to the student.If student is a nonresident alien, the University is required to report the value of the trip on an IRS Form 1042-S, and tax withholding may also be required. If the student is on an F, J, M or Q visa, the standard withholding rate of 30% is reduced to 14%. The tax withholding amount may also be reduced or eliminated depending on the student’s country’s tax treaty status.
Q: UH Hilo is planning to send a group of undergraduate computer science students to compete in a computer programming competition on Oahu. This competition is an annual event and all costs are included in the UH Hilo computer science department budget. Explain the tax treatment of the travel costs for the students.
A: The travel expenses are operational business expenses of the UH Hilo computer science department. To the extent that only actual costs are paid, no IRS reporting is required, and the trip is not considered income to the students.
Q: UH Manoa is planning to send student officers of the Associated Students of the University of Hawaii (ASUH) to an annual conference in California for student government officers of various universities. The ASUH is a part of the Chartered Student Organization (CSO), and CSO related events are included in the University’s budget. Explain the tax treatment of the travel costs for the students.
A: The costs are considered an operational business expense of the University. To the extent that only actual costs are paid, no IRS reporting is required and the trip is not considered income to the students.
Q: The UH Law School is sending a group of law students to participate in a moot court competition on the mainland. Explain the tax treatment of the travel costs for the students.
A: Moot court competitions are a part of the Law School’s curriculum, and the students are educated in classes to compete in moot court competitions. The travel cost is thus an operational business expense for the Law School. To the extent that only actual costs are paid, no IRS reporting is required, and the trip is not considered income to the students.
Q: A UH program is paying for the overnight lodging costs (i.e., travel costs) for middle school students to visit a UH campus. The event is not a recurring event, and is not a class requirement or part of a course curriculum. Explain the tax treatment of the travel costs for the students.
A: The travel costs are considered non-qualified S/F expense and constitute a form of financial assistance to the middle school student. However, UH is not required to report on Form 1099-Misc for U.S. Citizen, permanent resident, and resident alien. For nonresident aliens, the amount of the non-S/F expense has to be reported in Form 1042S with proper federal tax withholding.
Q: How should UH treat undocumented alien students who receive scholarship/fellowship?

A: UH has a Board of Regents policy allowing undocumented alien students to pay in state resident tuition if they meet certain criteria.
http://www.hawaii.edu/policy/?action=viewPolicy&policySection=rp&policyChapter=6&policyNumber=209

As stated in this Board of Regents Policy in the above website, the undocumented students need to establish residency by domiciling and being physically present in Hawaii for 12 months, as per Hawaii Administrative Rules 20-4. Furthermore, the undocumented students also need to attend a public or private high school in the United States for at least three years, and graduated from a public or private high school or attained the equivalent thereof in the United States. Based on those criteria, the undocumented students would have qualified as “resident alien” for tax purposes using the substantial presence test in accordance with Internal Revenue Service. Consequently, the reporting of scholarship or fellowship would be similar as to that of a resident alien.

Tax Payments on Purchases +

Q: What kind of taxes does U.H. need to pay on its purchases?
A: U.H. will need to pay a Hawaii tax, "general excise tax".
Q: Does U.H. need to pay general excise tax to all vendors?
A: No, if vendors' business does NOT have nexus, U.H. should not pay general excise tax.  Vendors will have nexus in Hawaii if they have property in Hawaii (also affiliate offices), provide services in Hawaii or having business representatives in Hawaii.
Q: Is there a way to find out if vendor is licensed for general excise tax purposes?
A: Yes, type in name of vendor in Hawaii Department of Taxation's website and see if a general excise tax license numbers is found.  The website for such a search is "https://dotax.ehawaii.gov/tls/app "
Q: Is there written guidance by the State of Hawaii Department of Taxation that explains general excise tax?
A: Yes, please click here

Unrelated Business Income (UBI) +

Q: How is UBI identified? What qualties in the income generating activities would render UBI?
A: A college or university is generally deemed to have UBI when it realizes gross income from any regularly conducted trade or business that is not substantially related to its educational and other exempt purposes. Specifically, UBI exists only if ALL of the following qualities are met:
  1. Activity is a trade or business that exhibits an intent to profit; and
  2. Activity is regularly carried on; and
  3. Activity is substantially unrelated to the exempt purposes of the University.
Q: If facility is being rented out to non-University user, is the rental income consider UBI?
A: If rental only involves space within a facility (usage of the area), the rental income will be excluded from UBI. However, UBI may exist if:
  1. The facility has outstanding debts; or
  2. Additional services (e.g. hospitality services, cleaning or setup services) are rendered; or
  3. Profit is shared between the University and the renter
When equipment (i.e. furniture, audio-visual equipment, etc.) is part of the rental of the facility, the tax considerations are different if the rental value of equipment is equal to:
  1. 10% or lessof total rental income, then it is considered incidental and is not UBI;
  2. 11% to 50% of total rental income, then it is considered UBI in proportion to the percentage of equipment rental value to the total rent;
  3. 51% or more, then 100% of the rent amount is UBI.

Contact Us

University Tax Office
1408 Lower Campus Road, Room 55
Phone: (808) 956-7162
Email: kenlum@hawaii.edu

Questions related to Payroll:

Payroll Office:  (808) 956-7444
Email:  payroll@hawaii.edu

Questions related to accounts payable (Form 1099-Misc, foreign vendor payments and tax treaties):

Disbursing Office:  (808) 956-7126
Email: uhdisb@hawaii.edu

Questions Related to 1098T:

Contact the appropriate campus representative. For your 1098T campus contact, see 1098T Campus Contacts

Internal Revenue Code

§117  Qualified Scholarships

§511  Imposition of Tax on Unrelated Business Income of Charitable, etc. Organizations

§513  Unrelated Trade or Business

Hawai’i Revised Statutes

§235-2.4(z)  Taxatiion of business income of certain exempt organization
§237  General Excise Tax
§304A-101  Establishment of University of Hawai'i

Administrative Procedures

A8.561 - Tax Treatment of Non-Service Financial Assistance for Individual
A8.857 -  Scholarship / Grant Payments
A8.868  - Reporting and Withholding on Payment to Nonresident Aliens and Foreign Corporations

Process Documents

Scholarship Fellowship Brochure

Forms

Certification of UH Tax Status
Form 6166 - Certification of U.S. Tax Residency
Form 6166 instructions
Form W-9, Request for Taxpayer identification Number and Certification
Form W-9s, Request for Student’s or Borrower’s Taxpayer Identification Number and Certification

 

Training

Grant-in-Aid Tab for Scholarship/Fellowship Payment Process

State of Hawaii General Excise Tax