STAND. COM. REP. NO. 348

 

Honolulu, Hawaii

                  

 

RE:    S.B. No. 1106

       S.D. 1

 

 

 

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fifth State Legislature

Regular Session of 2009

State of Hawaii

 

Madam:

 

     Your Committee on Commerce and Consumer Protection, to which was referred S.B. No. 1106 entitled:

 

"A BILL FOR AN ACT RELATING TO TAXATION,"

 

begs leave to report as follows:

 

     The purpose of this measure is to strengthen the Hawaii Real Property Tax Act withholding requirements by requiring that the buyer of real property provide a tax clearance certificate to be furnished to the Bureau of Conveyance as a condition of recording a transfer of title.

 

     Your Committee received testimony in opposition to this measure from Hawaii Association of Realtors and Title Guaranty of Hawaii, Inc.  Testimony with comments was received from the Department of Taxation.  Written testimony presented to the Committee may be reviewed on the Legislature's website.

 

     Your Committee finds that it is especially important in these difficult economic times that the State be able to collect the full amount of revenue due to it under the law.  Your Committee further finds that out-of-state interests, as sellers of real property, are sometimes able to circumvent their obligations under existing Hawaii tax laws.  Your Committee finds that this measure will allow the State to collect the appropriate taxes due to it without placing the burden of enforcing the law on the real estate profession.

 

     Your Committee notes that the Department of Taxation has expressed concerns with the effectiveness of the current law that places the entire burden of ensuring tax compliance on the buyer of real property.  The Department of Taxation noted in its testimony that shifting the burden of obtaining a tax clearance certificate to the seller will assist the Department of Taxation in collecting all the revenue from the various state taxes that may be due to it.  Your Committee further notes that this change in the current law will likely require procedural changes in the conduct of real property transactions, especially in the escrow process.  Your Committee recommends that the Committee on Ways and Means investigate this issue further. 

 

     Your Committee has amended this measure by:

 

(1)  Shifting the responsibility of obtaining a tax clearance certificate from the transferee (buyer) in a real estate transaction to the transferor (seller) in order to conform to the requirements of the Hawaii Real Property Tax Act; and

 

(2)  Making technical, nonsubstantive changes for the purpose of clarity and accuracy in the language of this measure.

 

     As affirmed by the record of votes of the members of your Committee on Commerce and Consumer Protection that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1106, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1106, S.D. 1, and be referred to the Committee on Ways and Means.

 

Respectfully submitted on behalf of the members of the Committee on Commerce and Consumer Protection,

 

 

 

____________________________

ROSALYN H. BAKER, Chair