HOUSE OF REPRESENTATIVES

H.B. NO.

2883

TWENTY-FIFTH LEGISLATURE, 2010

 

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 temporarily impose the general excise tax at the rate of one per cent on the sale of certain real property.  This provision takes effect on July 1, 2010 and sunsets on June 30, 2015.

     SECTION 2.  Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§237-A  Tax on certain real property sales.  (a)  Except as provided under subsections (b) and (c), there is hereby levied, and shall be assessed and collected annually, a privilege tax against a sole proprietorship, partnership, corporation, or limited liability entity that, as a business or part of a business, sells real property owned in fee simple by the sole proprietorship, partnership, corporation, or limited liability entity to another person.  The tax shall be equal to one per cent of the gross proceeds received from the sale of the real property less deductions for any:

     (1)  Commission paid from the gross proceeds by the seller to a real estate broker or salesperson who is subject to the tax under section 237-13(6); and

     (2)  Tax paid under chapter 247 on the conveyance of the real property.

     (b)  Gross proceeds from the casual sale of real property shall be exempt from the tax under subsection (a).  The exemption shall apply whether the casual sale is made by a person licensed or unlicensed under this chapter.

     (c)  This section shall not affect the tax imposed under section 237-13(3)(D) on a person engaged in contracting.  The gross proceeds of sale of a person engaged in the business activity described under section 237-13(3)(D) shall be subject to taxation in accordance with and at the rate prescribed under section 237-13(3)(D).

     (d)  This section shall be repealed on June 30, 2015."

     SECTION 3.  Section 237-1, Hawaii Revised Statutes, is amended by amending the definition of "casual sale" to read as follows:

     ""Casual sale" means an occasional or isolated sale or transaction involving:

     (1)  Tangible personal property or real property by a person who is not required to be licensed under this chapter[, or];

     (2)  Tangible personal property which is not ordinarily sold in the business of a person who is regularly engaged in business[.]; or

     (3)  Real property:

         (A)  The seller of which held a home exemption or homeowner's classification for county real property tax purpose on the day before the closing of the sale;

         (B)  The seller of which became the owner of the real property by devise or bequest; or

         (C)  The seller of which did not receive or derive any gross income or gross proceeds from leasing the real property within the one-year period immediately preceding the closing of the sale.

          This paragraph shall apply to a seller, even if licensed under this chapter."

     SECTION 4.  Section 237-3, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

     "(a)  "Gross income" means the gross receipts, cash or accrued, of the taxpayer received as compensation for personal services and the gross receipts of the taxpayer derived from trade, business, commerce, or sales and the value proceeding or accruing from the sale of tangible personal property, or service, or both, and all receipts, actual or accrued as hereinafter provided, by reason of the investment of the capital of the business engaged in, including interest, discount, rentals, royalties, fees, or other emoluments however designated and without any deductions on account of the cost of property sold, the cost of materials used, labor cost, taxes, royalties, interest, or discount paid or any other expenses whatsoever.  Every taxpayer shall be presumed to be dealing on a cash basis unless the taxpayer proves to the satisfaction of the department of taxation that the taxpayer is dealing on an accrual basis and the taxpayer's books are so kept, or unless the taxpayer employs or is required to employ the accrual basis for the purposes of the tax imposed by chapter 235 for any taxable year in which event the taxpayer shall report the taxpayer's gross income for the purposes of this chapter on the accrual basis for the same period.

     "Gross proceeds of sale" means the value actually proceeding from the sale of tangible personal property or real property without any deduction on account of the cost of property sold or expenses of any kind.

     (b)  The words "gross income" and "gross proceeds of sales" shall not be construed to include:  gross receipts from the sale of securities as defined in 15 United States Code section 78c or similar laws of jurisdictions outside the United States, contracts for the sale of a commodity for future delivery and other agreements, options, and rights as defined in 7 United States Code section 2 that are permitted to be traded on a board of trade designated by the Commodities Futures Trading Commission under the Commodity Exchange Act, or evidence of indebtedness [or, except as otherwise provided, from the sale of land in fee simple, improved or unimproved,]; dividends as defined by chapter 235; cash discounts allowed and taken on sales; the proceeds of sale of goods, wares, or merchandise returned by customers when the sale price is refunded either in cash or by credit; or the sale price of any article accepted as part payment on any new article sold, if the full sale price of the new article is included in the "gross income" or "gross proceeds of sales"; gross receipts from the sale or transfer of materials or supplies, interest on loans, or the provision of engineering, construction, maintenance, or managerial services by one "member" of an "affiliated public service company group" to another "member" of the same group as such terms are defined in section 239-2.  Accounts found to be worthless and actually charged off for income tax purposes may be deducted, at corresponding periods, from gross proceeds of sale, or gross income, within this chapter, so far as they reflect taxable sales made, or gross income earned, after July 1, 1935, but shall be added to gross proceeds of sale or gross income when and if afterwards collected."

     SECTION 5.  In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

     SECTION 6.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 7.  This Act shall take effect on July 1, 2010, and shall be repealed on June 30, 2015; provided that:

     (1)  Sections 237-1 and 237-3(a) and (b), Hawaii Revised Statutes, shall be reenacted in the form in which they read on the day prior to the effective date of this Act; and

     (2)  Section 237-A, Hawaii Revised Statutes, shall not be reenacted after June 30, 2015.

 

INTRODUCED BY:

_____________________________

 

 


 


 

Report Title:

Real Property Sales; General Excise Taxation

 

Description:

Imposes the general excise tax at the rate of 1.0% on the gross proceeds from the sale of real property less deductions for real estate salespersons' commissions and conveyance tax payments.  Takes effect on 07/01/10 and sunsets on 06/30/15.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.