Report Title:

Taxes; Nonresident Withholdings

 

Description:

Requires the Department of Taxation to develop and adopt rules for all nonresident taxpayers involved in pass-through entities, such as partnerships, s-corporations, and limited liability companies to ensure fair and equitable payment of state taxes

 


HOUSE OF REPRESENTATIVES

H.B. NO.

1035

TWENTY-FOURTH LEGISLATURE, 2007

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT


 

 

rELATING TO TAXES.

 

 

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

 


     SECTION 1.  The department of taxation shall develop and adopt rules pursuant to chapter 91, Hawaii Revised Statutes, for all nonresident taxpayers involved in pass-through entities, such as partnerships, s-corporations, and limited liability companies to ensure fair and equitable payment of state taxes.  The rules shall not apply to trusts or estates.

     The department of taxation shall report to the legislature no later than twenty days prior to the regular session of 2008, and annually thereafter, on:

     (1)  The status of the development or adoption of the rules;

     (2)  Any positive or negative consequences of the development of such rules; and

     (3)  Any proposed legislation to assist in the process of developing or adopting the rules.

     As used in this section:

     "Limited liability company" means a limited liability company organized under this chapter 428, Hawaii Revised Statutes.

     "Nonresident" means residing in the state for a temporary or transitory purpose.  Every individual who is in the state less than two hundred days of the taxable year in the aggregate shall be presumed to be a nonresident of the State.  This presumption may be overcome by evidence satisfactory to the department of taxation that the individual maintains a permanent place of abode within the state and is in the state for other than a temporary or transitory purpose.  No person shall be deemed to have gained or lost a residence simply because of the person's presence or absence in compliance with military or naval orders of the United States, or while engaged in aviation or navigation, or while a student at any institution of learning.

     "Partnership" means an association of two or more persons to carry on as co-owners of a business for profit formed under section 425-109, Hawaii Revised Statutes, a predecessor law, or comparable law of another jurisdiction.

     "S corporation" means a corporation, limited liability company, or other eligible entity that meets the United States Internal Revenue Service requirements to be taxed under subchapter S of chapter 1 of the Internal Revenue Code.

     SECTION 2.  This Act shall take effect upon its approval.

 

INTRODUCED BY:

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