Report Title:

Taxpayer Non-Compliance Identification Program; Establishment

 

Description:

Requires the department of taxation to enter into a contract for a taxpayer non-compliance identification program to use high speed information processing to identify taxpayers who may have underreported their state tax liability. (HD1)

 


HOUSE OF REPRESENTATIVES

H.B. NO.

1242

TWENTY-FIFTH LEGISLATURE, 2009

H.D. 1

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT


 

 

RELATING TO TAXATION.

 

 

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

 


     Section 1.  The purpose of this Act is to address taxation.  More specifically, this Act requires the department of taxation to enter into a contract for a taxpayer non-compliance identification program.

     SECTION 2.  Chapter 231, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§231‑    Contract for taxpayer identification non-compliance program.  (a)  The department of taxation shall enter into a contract with a private person for the establishment and operation of a taxpayer non-compliance identification program.  The term of the contract shall be from October 1, 2009, until June 30, 2011.

     (b)  For the purpose of this section, "potentially underreporting taxpayer" means a taxpayer who may have underreported the taxpayer's state tax liability.

     (c)  Under the taxpayer non-compliance identification program:

     (1)  The contractor shall identify potentially underreporting taxpayers through high-speed information processing that, at the least:

         (A)  Mines various data sources;

         (B)  Uses models predicting non-compliance with state tax statutes and rules; and

         (C)  Establishes audit priorities;

     (2)  The contractor shall notify the department of all potentially underreporting taxpayers who have been identified;

     (3)  The department shall be responsible for auditing the identified taxpayers' returns and collecting taxes discovered to be due and owing to the State; and

     (4)  The department shall pay the contractor a mutually agreed upon percentage of the taxes discovered by the contractor to be due and owing from the identified taxpayers and collected by the department.  The department shall not pay any other compensation to the contractor, but may provide to the contractor an advance amount mutually agreed upon by the department and the contractor for start-up expenses; provided that the entire advance shall be repaid to the department by the contractor within the term of the contract.

     (d)  Chapter 103D shall not apply to the contract required by this section.  The department shall award the contract in accordance with this section and terms and conditions deemed necessary by the department.

     (e)  When procuring the services of the contractor, the department shall provide a preference to an offeror who has access to the high performance computing center at the Maui high technology park.  The legislature finds that the preference is necessary to promote maximum use of the high performance computing center and retention of employment in the State.

     (f)  The department shall provide to the contractor all taxpayer income and general excise and use tax returns.  For the purpose of section 235‑116, section 237‑34(b), and section 238‑13, the contractor shall be deemed a person duly authorized to examine tax returns in connection with official duties.  The contractor shall keep confidential all returns and information on the returns unless the department authorizes disclosure."

     SECTION 3.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect upon its approval.