REPORT TITLE:
GET, Repeal


DESCRIPTION:
Repeals general excise tax.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           2540
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO TAXATION.



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

 1      SECTION 1.  The general excise tax is a broad-based tax that
 
 2 affects every business and consumer in Hawaii.  It has
 
 3 contributed substantially to the high cost of living in the
 
 4 State.  After eight years of the economic downturn we have
 
 5 experienced, it is time to take serious measures to revive
 
 6 Hawaii's economy.  The purpose of this Act is to repeal the
 
 7 general excise tax.
 
 8      SECTION 2.  Section 36-32, Hawaii Revised Statutes, is
 
 9 repealed.
 
10      ["36-32  State educational facilities improvement special
 
11 fund.(a)  There is created in the treasury of the State the
 
12 state educational facilities improvement special fund, into which
 
13 shall be deposited a portion of all general excise tax revenues
 
14 collected by the department of taxation under section 237-31.
 
15 The special fund shall be used solely to plan, design, acquire
 
16 lands for and to construct public school facilities and to
 
17 provide equipment and technology infrastructure to improve public
 
18 schools and other facilities under the jurisdiction of the
 
19 department of education, except public libraries.  In addition,
 

 
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 1 activities of the department of education intended to eliminate
 
 2 the gap between the facility needs of schools and available
 
 3 resources shall be eligible for funding from the special fund.
 
 4 Expenditures from the special fund shall be limited to projects
 
 5 authorized by the legislature and shall be subject to sections
 
 6 37-31, and 37-33 through 37-40.  Appropriations or authorizations
 
 7 from the special fund shall be expended by the comptroller.
 
 8      (b)  The department of accounting and general services shall
 
 9 submit an annual report to the legislature, which shall include a
 
10 financial statement of the special fund and the status of
 
11 projects undertaken pursuant to this section, no later than
 
12 twenty days prior to the convening of each regular session."]
 
13      SECTION 3.  Section 39-151, Hawaii Revised Statutes, is
 
14 repealed.
 
15      ["[39-151]  Compound interest bond reserve fund.(a)
 
16 There is hereby established the Hawaii compound interest bond
 
17 reserve fund, as a trust fund in the state treasury for the
 
18 benefit of the State, to be held and administered by the
 
19 department of budget and finance.  The director, from time to
 
20 time, may transfer a portion of general excise tax revenues
 
21 collected pursuant to section 237-31 to the credit of the
 
22 compound interest bond reserve fund, up to but not in excess of
 
23 $5,000,000 during any fiscal year.  Not fewer than thirty days
 

 
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 1 before the convening of each regular session of the legislature,
 
 2 the director shall submit to the legislature a report of all
 
 3 funds transferred to the credit of the compound interest bond
 
 4 reserve fund.
 
 5      (b)  The moneys in the compound interest bond reserve fund
 
 6 shall be held exclusively for the payment of principal of and
 
 7 interest on compound interest bonds.  The moneys shall be
 
 8 invested in such amounts and in a manner as will assure the
 
 9 availability to the State of moneys in an amount, together with
 
10 other moneys available therefor, sufficient to make payments of
 
11 principal of and interest on compound interest bonds as the same
 
12 become due.  The director of finance may invest and reinvest
 
13 moneys deposited in the compound interest bond reserve fund only
 
14 in a manner that will not cause the interest on any series of
 
15 compound interest bonds to be includable in gross income for
 
16 federal income tax purposes for any reason, including, without
 
17 limitation, by causing any compound interest bond to be subjected
 
18 to treatment as an "arbitrage bond", as defined in section 148(a)
 
19 of the Internal Revenue Code of 1986, as amended, and applicable
 
20 regulations."]
 
21      SECTION 4.  Section 46-15.1, Hawaii Revised Statutes, is
 
22 amended by amending subsection (a) to read as follows:
 
23      "(a)  Any law to the contrary notwithstanding, any county
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1 shall have and may exercise the same powers, subject to
 
 2 applicable limitations, as those granted the housing and
 
 3 community development corporation of Hawaii pursuant to chapter
 
 4 201G insofar as such powers may be reasonably construed to be
 
 5 exercisable by a county for the purpose of developing,
 
 6 constructing, and providing low and moderate income housing;
 
 7 provided that no county shall be empowered to cause the State to
 
 8 issue general obligation bonds to finance a project pursuant to
 
 9 this section; [provided further that county projects shall be
 
10 granted an exemption from general excise or receipts taxes in the
 
11 same manner as projects of the housing and community development
 
12 corporation of Hawaii pursuant to section [201G-116]; and]
 
13 provided further that the provisions of section 201G-15 shall not
 
14 apply to this section unless federal guidelines specifically
 
15 provide local governments with that authorization and the
 
16 authorization does not conflict with any state laws.  The powers
 
17 shall include the power, subject to applicable limitations, to:
 
18      (1)  Develop and construct dwelling units, alone or in
 
19           partnership with developers;
 
20      (2)  Acquire necessary land by lease, purchase, exchange, or
 
21           eminent domain;
 
22      (3)  Provide assistance and aid to a public agency or person
 
23           in developing and constructing new housing and
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1           rehabilitating old housing for elders of low and
 
 2           moderate income, other persons of low and moderate
 
 3           income, and persons displaced by any governmental
 
 4           action, by making long-term mortgage or interim
 
 5           construction loans available;
 
 6      (4)  Contract with any eligible bidders to provide for
 
 7           construction of urgently needed housing for persons of
 
 8           low and moderate income;
 
 9      (5)  Guarantee the top twenty-five per cent of the principal
 
10           balance of real property mortgage loans, plus interest
 
11           thereon, made to qualified borrowers by qualified
 
12           lenders;
 
13      (6)  Enter into mortgage guarantee agreements with
 
14           appropriate officials of any agency or instrumentality
 
15           of the United States in order to induce those officials
 
16           to commit to insure or insure mortgages under the
 
17           provisions of the National Housing Act, as amended;
 
18      (7)  Make a direct loan to any qualified buyer for the
 
19           downpayment required by a private lender to be made by
 
20           the borrower as a condition of obtaining a loan from
 
21           the private lender in the purchase of residential
 
22           property;
 
23      (8)  Provide funds for a share, not to exceed fifty per cent
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1           of the principal amount of a loan made to a qualified
 
 2           borrower by a private lender who is unable otherwise to
 
 3           lend the borrower sufficient funds at reasonable rates
 
 4           in the purchase of residential property; and
 
 5      (9)  Sell or lease completed dwelling units.
 
 6      For purposes of this section, a limitation is applicable to
 
 7 the extent that it may reasonably be construed to apply to a
 
 8 county."
 
 9      SECTION 5.  Section 103-53, Hawaii Revised Statutes, is
 
10 amended by amending subsection (d) to read as follows:
 
11      "(d)  Any assignment of a contract shall require the
 
12 assignee, as a condition precedent to the assignment, to first
 
13 obtain a [bulk sales certificate if required under section
 
14 237-43, and present the certificate, or] tax clearance as
 
15 provided under subsection (a) [if a bulk sales certificate is not
 
16 required,] and present it to the state or county contracting
 
17 officer or agent."
 
18      SECTION 6.  Section 103D-1002, Hawaii Revised Statutes, is
 
19 amended by amending subsection (a) to read as follows:
 
20      "(a)  A purchasing agency shall review all specifications in
 
21 a bid or proposal for purchase from the Hawaii products list
 
22 where these products are available; provided that the products:
 
23      (1)  Meet the minimum specifications and the selling price
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1           f.o.b. jobsite;
 
 2      (2)  Unloaded [including applicable general excise tax and
 
 3           use tax] does not exceed the lowest delivered price in
 
 4           Hawaii f.o.b. jobsite; and
 
 5      (3)  Unloaded[, including applicable general excise tax and
 
 6           use tax,] does not exceed the lowest delivered price of
 
 7           a similar non-Hawaii product by more than:
 
 8           (A)  Three per cent where class I Hawaii products are
 
 9                involved;
 
10           (B)  Five per cent where class II Hawaii products are
 
11                involved; or
 
12           (C)  Ten per cent where class III Hawaii products are
 
13                involved."
 
14      SECTION 7.  Section 201G-116, Hawaii Revised Statutes, is
 
15 repealed.
 
16      ["201G-116  Exemption from general excise taxes.(a)  In
 
17 accordance with section 237-29, the corporation may approve and
 
18 certify for exemption from general excise taxes any qualified
 
19 person or firm involved with a newly constructed, or moderately
 
20 or substantially rehabilitated project:
 
21      (1)  Developed under this subpart;
 
22      (2)  Developed under a government assistance program
 
23           approved by the corporation, including but not limited
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1           to, the United States Department of Agriculture 502
 
 2           program and Federal Housing Administration 235 program;
 
 3           or
 
 4      (3)  Developed under the sponsorship of a private nonprofit
 
 5           corporation providing home rehabilitation or new homes
 
 6           for qualified families in need of decent, low-cost
 
 7           housing.
 
 8      (b)  All claims for exemption under this section shall be
 
 9 filed with and certified by the corporation and forwarded to the
 
10 department of taxation.  Any claim for exemption that is filed
 
11 and approved, shall not be considered a subsidy for the purpose
 
12 of this subpart.
 
13      (c)  For the purposes of this section, "moderate
 
14 rehabilitation" means rehabilitation to upgrade a unit to a
 
15 decent, safe, and sanitary condition, or to repair or replace
 
16 major building systems or components in danger of failure.
 
17 "Substantial rehabilitation" means the improvement of a property
 
18 to a decent, safe, and sanitary condition that requires more than
 
19 routine or minor repairs or improvements and may include, but is
 
20 not limited to, the gutting and extensive reconstruction of a
 
21 unit or cosmetic improvements coupled with the curing of a
 
22 substantial accumulation of deferred maintenance.  "Substantial
 
23 rehabilitation" also includes renovation, alteration, or
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1 remodeling to convert or adapt structurally sound property to the
 
 2 design and condition required for a specific use (e.g.,
 
 3 conversion of a hotel to housing for elders)."]
 
 4      SECTION 8.  Section 201G-459, Hawaii Revised Statutes, is
 
 5 amended to read as follows:
 
 6      "[[]201G-459[]]  Exemptions.  [(a)  Any compensation
 
 7 received by a provider agency for services rendered to homeless
 
 8 families or individuals, or in operating or managing a homeless
 
 9 facility authorized by this part, is exempt from taxes under
 
10 chapter 237.
 
11      (b)] (a)  Any county mayor may exempt by executive order,
 
12 donors and homeless provider agencies from real property taxes,
 
13 water and sewer development fees, rates collected for water
 
14 supplied to consumers and for use of sewers, and any other county
 
15 taxes, charges, or fees; provided that any county may enact
 
16 ordinances to regulate the exemptions granted by this subsection.
 
17      [(c)] (b)  Any provider agency operating or managing a
 
18 homeless facility, or any other program for the homeless
 
19 authorized by this part, is exempt, for purposes of those
 
20 facilities or programs, from any requirements contained in part
 
21 VIII of chapter 346 and chapters 467 and 521."
 
22      SECTION 9.  Section 207-12, Hawaii Revised Statutes, is
 
23 amended to read as follows:
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1      "207-12  Exemptions and immunities.  A foreign lender which
 
 2 (1) does not maintain a place of business in this State, (2)
 
 3 conducts its principal activities outside this State, and (3)
 
 4 complies with this part, does not by engaging in this State in
 
 5 any or all of the activities specified in section 207-13, violate
 
 6 the laws of this State relating to doing business or doing a
 
 7 banking, trust, or insurance business, or become subject to
 
 8 chapter 412, 415, or 431, or become subject to any taxation which
 
 9 would otherwise be imposed for doing business in or doing a
 
10 banking, trust, or insurance business in, or having gross income
 
11 or receipts from sources in, property in, or the conduct of any
 
12 activity in, this State, or become subject to any taxation under
 
13 chapter 235[, 237,] or 241, and no income or receipts of any
 
14 foreign lender arising out of any of the activities specified in
 
15 the following section shall constitute income from sources in,
 
16 property in, or activities conducted in this State for the
 
17 purposes of any tax imposed by this State; provided that nothing
 
18 in this part shall be construed to exempt the real property of a
 
19 foreign lender from taxation to the same extent, according to its
 
20 value, as other real property is taxed, or to preclude the
 
21 inclusion of the dividends or other income from foreign lenders
 
22 in the income of individuals taxable under chapter 235 to the
 
23 same extent as is included dividends and other income from
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1 domestic lenders; and provided further that if any such foreign
 
 2 lender shall acquire any property in this State in enforcement of
 
 3 the rights of the foreign lender in the event of a default by any
 
 4 borrower, as permitted by section 207-13(4), then commencing one
 
 5 year after title to such property has vested in the foreign
 
 6 lender, the rents or other receipts received by the foreign
 
 7 lender from, and the proceeds of sale by the foreign lender of,
 
 8 such property shall be subject to taxation under [chapters]
 
 9 chapter 235 [and 237] in the same manner and to the same extent
 
10 as if the rents, other receipts, or proceeds were received by a
 
11 resident of this State; and provided further that if any such
 
12 foreign lender shall otherwise acquire any property in this State
 
13 or engage in any business or activities in this State not
 
14 specified in section 207-13, then the rents and other receipts
 
15 received by the foreign lender from such property and the
 
16 proceeds of sale by the foreign lender of such property and all
 
17 income and receipts from the foreign lender's business or
 
18 activities in this State not specified in section 207-13 shall be
 
19 subject to taxation under [chapters] chapter 235 [and 237] in the
 
20 same manner and to the same extent as if such rents, other
 
21 receipts, proceeds, and income were received by a resident of
 
22 this State, but such other activities and business shall not
 
23 deprive the foreign lender of the immunities and exemptions from
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1 taxation hereinabove stated with respect to the activities
 
 2 specified in section 207-13."
 
 3      SECTION 10.  Section 209E-2, Hawaii Revised Statutes, is
 
 4 amended by amending the definition of "qualified business" to
 
 5 read as follows:
 
 6      ""Qualified business" means any corporation, partnership, or
 
 7 sole proprietorship authorized to do business in the State which
 
 8 is qualified under section 209E-9 and is:
 
 9      (1)  Subject to the state corporate or individual income tax
 
10           under chapter 235;
 
11      (2)  Engaged in manufacturing, the wholesale sale of
 
12           tangible personal property [as defined in section 237-
 
13           4], or a service business as defined in this chapter;
 
14           or
 
15      (3)  Engaged in producing agricultural products where the
 
16           business is a producer as defined in section 237-5[.]
 
17           as that section existed on January 1, 2000."
 
18      SECTION 11.  Section 209E-10, Hawaii Revised Statutes, is
 
19 amended by amending subsection (a) to read as follows:
 
20      "(a)  The department shall certify annually to the
 
21 department of taxation the applicability of the tax credit
 
22 provided in this chapter for a qualified business against any
 
23 taxes due the State.  [Except for the general excise tax, the]
 

 
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 1 The credit shall be eighty per cent of the tax due for the first
 
 2 tax year, seventy per cent of the tax due for the second tax
 
 3 year, sixty per cent of the tax due for the third year, fifty per
 
 4 cent of the tax due the fourth year, forty per cent of the tax
 
 5 due the fifth year, thirty per cent of the tax due the sixth
 
 6 year, and twenty per cent of the tax due the seventh year.  Any
 
 7 tax credit not usable shall not be applied to future tax years."
 
 8      SECTION 12.  Section 212-8, Hawaii Revised Statutes, is
 
 9 amended to read as follows:
 
10      "212-8 Exemption from taxes.  Notwithstanding any law to
 
11 the contrary, sales of all products which are categorized as
 
12 privileged foreign merchandise, nonprivileged foreign
 
13 merchandise, domestic merchandise, or zone-restricted
 
14 merchandise, and which are admitted into a foreign-trade zone, as
 
15 more specifically set forth in the Act of Congress, and any rules
 
16 and regulations promulgated thereunder, made directly to any
 
17 common carrier in interstate or foreign commerce, or both,
 
18 whether ocean-going or air, for consumption out-of-state by the
 
19 crew or passengers on the shipper's vessels or airplanes, or for
 
20 use out-of-state by the vessels or airplanes, shall be exempt
 
21 from those taxes imposed under chapters [237, 238,] 243, 244D,
 
22 and 245."
 
23      SECTION 13.  Section 231-9.4, Hawaii Revised Statutes, is
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1 amended to read as follows:
 
 2      "[[]231-9.4  Credit or debit card remittances.[]] In
 
 3 addition to sections [237-31,] 237D-6.5[,] and 251-5, as well as
 
 4 any other form of payment allowed under provisions of title 14
 
 5 administered by the department, the director, by rules adopted
 
 6 pursuant to chapter 91, may permit the use of credit or debit
 
 7 cards for remittances made to the department.  A service fee
 
 8 shall not be required by the department for the use of debit
 
 9 cards for remittances, but may be required by the department for
 
10 the use of credit cards for remittances.
 
11      For purposes of this section:
 
12      "Credit card" shall have the same meaning as provided in
 
13 section 478-1.
 
14      "Debit card" means any card, plate, or other single credit
 
15 device issued with or without a fee to a cardholder to purchase
 
16 goods or services or to obtain cash that is debited from the
 
17 cardholder's checking or other bank account."
 
18      SECTION 14.  Section 231-19.5, Hawaii Revised Statutes, is
 
19 amended by amending subsection (a) to read as follows:
 
20      "(a)  Written opinions shall be open to public inspection
 
21 and copying as provided in this section, notwithstanding sections
 
22 235-116, 236D-15, [237-34,] and 237D-13 and any other law
 
23 restricting disclosure of tax returns or tax return information
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1 to the contrary.  Except as provided in subsection (f), regarding
 
 2 the disclosure of the text of written opinions, chapter 92F shall
 
 3 not apply to tax returns and tax return information.
 
 4      A written opinion may not be used or cited as precedent
 
 5 unless otherwise provided by department rules."
 
 6      SECTION 15.  Section 233-3, Hawaii Revised Statutes, is
 
 7 amended to read as follows:
 
 8      "233-3 Selling personal property, defined.  As used in
 
 9 this chapter "the business of selling tangible personal property"
 
10 includes [both] business classed as such [under chapter 237] and
 
11 also the rendering of a service which involves the consumption or
 
12 use of tangible personal property furnished by the "potential
 
13 employer" referred to in section 233-1."
 
14      SECTION 16.  Section 235-6, Hawaii Revised Statutes, is
 
15 amended by amending subsection (a) to read as follows:
 
16      "(a)  For the purposes of sections 235-21 to 235-39, a
 
17 foreign corporation engaged in the business of manufacturing
 
18 without the State, having its manufactured products warehoused in
 
19 this State by another person who is engaged in the business of
 
20 warehousing in this State and whose compensation for providing
 
21 the warehousing is included in the measure of the tax imposed by
 
22 chapter [237 or] 239, shall not be deemed to be carrying on a
 
23 trade or business in this State if all of the following
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1 requirements are met:
 
 2      (1)  Every delivery of sale of such products so warehoused
 
 3           is made at the warehouse to fill an order for such
 
 4           property procured by a representative (as defined in
 
 5           subsection (b)) from a seller [licensed under chapter
 
 6           237 and] purchasing such property for purposes of
 
 7           resale;
 
 8      (2)  Every order so procured was made subject to acceptance
 
 9           and was accepted by the corporation at an office
 
10           located out of this State;
 
11      (3)  No collection for the payment of the products delivered
 
12           as described in paragraph (1) is made in this State by
 
13           any of its employees or agents or by any
 
14           representative; and
 
15      (4)  Except as provided in this section, it is not carrying
 
16           on a trade or business in this State within the meaning
 
17           of sections 235-21 to 235-39."
 
18      SECTION 17.  Section 235-55.6, Hawaii Revised Statutes, is
 
19 amended by amending subsection (e) to read as follows:
 
20      "(e)  Special rules.  For purposes of this section:
 
21      (1)  Maintaining household.  An individual shall be treated
 
22           as maintaining a household for any period only if over
 
23           half the cost of maintaining the household for the
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1           period is furnished by the individual (or, if the
 
 2           individual is married during the period, is furnished
 
 3           by the individual and the individual's spouse).
 
 4      (2)  Married couples must file joint return.  If the
 
 5           taxpayer is married at the close of the taxable year,
 
 6           the credit shall be allowed under subsection (a) only
 
 7           if the taxpayer and the taxpayer's spouse file a joint
 
 8           return for the taxable year.
 
 9      (3)  Marital status.  An individual legally separated from
 
10           the individual's spouse under a decree of divorce or of
 
11           separate maintenance shall not be considered as
 
12           married.
 
13      (4)  Certain married individuals living apart.  If:
 
14           (A)  An individual who is married and who files a
 
15                separate return:
 
16                (i)  Maintains as the individual's home a
 
17                     household that constitutes for more than one-
 
18                     half of the taxable year the principal place
 
19                     of abode of a qualifying individual, and
 
20               (ii)  Furnishes over half of the cost of
 
21                     maintaining the household during the taxable
 
22                     year, and
 
23           (B)  During the last six months of the taxable year the
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1                individual's spouse is not a member of the
 
 2                household, the individual shall not be considered
 
 3                as married.
 
 4      (5)  Special dependency test in case of divorced parents,
 
 5           etc.  If:
 
 6           (A)  Paragraph (2) or (4) of section 152(e) of the
 
 7                Internal Revenue Code of 1986, as amended, applies
 
 8                to any child with respect to any calendar year,
 
 9                and
 
10           (B)  The child is under age thirteen or is physically
 
11                or mentally incompetent of caring for the child's
 
12                self,
 
13           in the case of any taxable year beginning in the
 
14           calendar year, the child shall be treated as a
 
15           qualifying individual described in subsection (b)(1)(A)
 
16           or (B) (whichever is appropriate) with respect to the
 
17           custodial parent (within the meaning of section
 
18           152(e)(1) of the Internal Revenue Code of 1986, as
 
19           amended), and shall not be treated as a qualifying
 
20           individual with respect to the noncustodial parent.
 
21      (6)  Payments to related individuals.  No credit shall be
 
22           allowed under subsection (a) for any amount paid by the
 
23           taxpayer to an individual:
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1           (A)  With respect to whom, for the taxable year, a
 
 2                deduction under section 151(c) of the Internal
 
 3                Revenue Code of 1986, as amended (relating to
 
 4                deduction for personal exemptions for dependents)
 
 5                is allowable either to the taxpayer or the
 
 6                taxpayer's spouse, or
 
 7           (B)  Who is a child of the taxpayer (within the meaning
 
 8                of section 151(c)(3) of the Internal Revenue Code
 
 9                of 1986, as amended) who has not attained the age
 
10                of nineteen at the close of the taxable year.
 
11           For purposes of this paragraph, the term "taxable year"
 
12           means the taxable year of the taxpayer in which the
 
13           service is performed.
 
14      (7)  Student.  The term "student" means an individual who,
 
15           during each of five calendar months during the taxable
 
16           year, is a full-time student at an educational
 
17           organization.
 
18      (8)  Educational organization.  The term "educational
 
19           organization" means a school operated by the department
 
20           of education under chapter 302A, an educational
 
21           organization described in section 170(b)(1)(A)(ii) of
 
22           the Internal Revenue Code of 1986, as amended, or a
 
23           university, college, or community college.
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1      (9)  Identifying information required with respect to
 
 2           service provider.  No credit shall be allowed under
 
 3           subsection (a) for any amount paid to any person
 
 4           unless:
 
 5           (A)  The name, address, and taxpayer identification
 
 6                number, [and general excise tax license number] of
 
 7                the person are included on the return claiming the
 
 8                credit,
 
 9           (B)  If the person is located outside the State, the
 
10                name, address, and taxpayer identification number,
 
11                if any, of the person and a statement indicating
 
12                that the service provider is located outside the
 
13                State and that [the general excise tax license
 
14                and, if applicable,] the taxpayer identification
 
15                [numbers are] number is not required, or
 
16           (C)  If the person is an organization described in
 
17                section 501(c)(3) of the Internal Revenue Code and
 
18                exempt from tax under section 501(a) of the
 
19                Internal Revenue Code, the name and address of the
 
20                person are included on the return claiming the
 
21                credit.
 
22           In the case of a failure to provide the information
 
23           required under the preceding sentence, the preceding
 

 
Page 21                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1           sentence shall not apply if it is shown that the
 
 2           taxpayer exercised due diligence in attempting to
 
 3           provide the information so required."
 
 4      SECTION 18.  Section 235-61, Hawaii Revised Statutes, is
 
 5 amended by amending subsection (e) to read as follows:
 
 6      "(e)  The department, by rule, may require the deduction and
 
 7 withholding of tax from any remuneration or compensation paid for
 
 8 or attributable to services [that are not subject to the general
 
 9 excise tax imposed by chapter 237,] whether or not such
 
10 withholding is provided for hereinabove.  Every person so
 
11 required to deduct and withhold tax, or from whom tax is required
 
12 to be deducted and withheld, shall be subject to sections 235-61
 
13 to 235-67, and every person so required to deduct and withhold
 
14 tax shall be deemed an employer for the purposes of this chapter.
 
15      The department, by rule, may exempt any employer from the
 
16 requirement of deduction and withholding of taxes, even though
 
17 the requirement is imposed by this section, if and to the extent
 
18 that the department finds the requirement unduly onerous or
 
19 impracticable of enforcement."
 
20      SECTION 19.  Section 235-110.7, Hawaii Revised Statutes, is
 
21 repealed.
 
22      ["235-110.7  Capital goods excise tax credit.(a)  There
 
23 shall be allowed to each taxpayer subject to the tax imposed by
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1 this chapter a capital goods excise tax credit which shall be
 
 2 deductible from the taxpayer's net income tax liability, if any,
 
 3 imposed by this chapter for the taxable year in which the credit
 
 4 is properly claimed.
 
 5      The amount of the tax credit shall be determined by the
 
 6 application of the following rates against the cost of the
 
 7 eligible depreciable tangible personal property used by the
 
 8 taxpayer in a trade or business and placed in service within
 
 9 Hawaii after December 31, 1987.  For calendar years beginning
 
10 after:  December 31, 1987, the applicable rate shall be three per
 
11 cent; December 31, 1988, and thereafter, the applicable rate
 
12 shall be four per cent, except that for the period January 1,
 
13 1993, through December 31, 2002, and for eligible depreciable
 
14 tangible personal property used in a trade or business that is
 
15 purchased in a county in which the county general excise and use
 
16 tax surcharge is in effect and placed in service in any county
 
17 the applicable rate shall be four and one-half per cent.  For
 
18 taxpayers with fiscal taxable years, the applicable rate shall be
 
19 the rate for the calendar year in which the eligible depreciable
 
20 tangible personal property used in the trade or business is
 
21 placed in service within Hawaii.
 
22      In the case of a partnership, S corporation, estate, or
 
23 trust, the tax credit allowable is for eligible depreciable
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1 tangible personal property which is placed in service by the
 
 2 entity.  The cost upon which the tax credit is computed shall be
 
 3 determined at the entity level.  Distribution and share of credit
 
 4 shall be determined by rules.
 
 5      In the case of eligible depreciable tangible personal
 
 6 property for which a credit for sales or use taxes paid to
 
 7 another state is allowable under section 238-3(i), the amount of
 
 8 the tax credit allowed under this section shall not exceed the
 
 9 amount of use tax, and for the period January 1, 1993, through
 
10 December 31, 2002, the amount of the county general excise and
 
11 use tax surcharge, actually paid under chapter 238 relating to
 
12 such tangible personal property.
 
13      If a deduction is taken under section 179 (with respect to
 
14 election to expense certain depreciable business assets) of the
 
15 Internal Revenue Code of 1954, as amended, no tax credit shall be
 
16 allowed for that portion of the cost of property for which the
 
17 deduction was taken.
 
18      (b)  If the tax credit is claimed by a taxpayer at the rate
 
19 of four and one-half per cent, and the tangible personal property
 
20 is purchased in a county in which the county general excise and
 
21 use tax surcharge is not in effect, there shall be added to and
 
22 become part of the tax liability of the taxpayer:
 
23      (1)  The amount of the tax credit claimed under this section
 

 
Page 24                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1           multiplied by three; or
 
 2      (2)  Ten per cent of the income tax liability for the
 
 3           taxable year for which the income tax return is being
 
 4           filed,
 
 5 whichever is greater.
 
 6      If the capital goods excise tax credit allowed under
 
 7 subsection (a) exceeds the taxpayer's net income tax liability,
 
 8 the excess of credit over liability shall be refunded to the
 
 9 taxpayer; provided that no refunds or payment on account of the
 
10 tax credit allowed by this section shall be made for amounts less
 
11 than $1.
 
12      All claims for tax credits under this section, including any
 
13 amended claims, must be filed on or before the end of the twelfth
 
14 month following the close of the taxable year for which the
 
15 credits may be claimed.  Failure to comply with the foregoing
 
16 provision shall constitute a waiver of the right to claim the
 
17 credit.
 
18      (c)  Application for the capital goods excise tax credit
 
19 shall be upon forms provided by the department of taxation.
 
20      (d)  Sections 47 (with respect to dispositions of section 38
 
21 property and the recapture percentages) of the Internal Revenue
 
22 Code of 1954, as amended, as of December 31, 1984, and 280F as
 
23 operative for this chapter (with respect to limitation on
 

 
Page 25                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 investment tax credit and depreciation for luxury automobiles;
 
 2 limitation where certain property used for personal purposes) of
 
 3 the Internal Revenue Code of 1954, as amended, shall be operative
 
 4 for purposes of this section.
 
 5      (e)  As used in this section, the definition of section 38
 
 6 property (with respect to investment in depreciable tangible
 
 7 personal property) as defined by section 48(a)(1)(A), (a)(1)(B),
 
 8 (a)(3), (a)(4), (a)(7), (a)(8), (a)(10)(A), (b), (c), (f), (l),
 
 9 (m), and (s) of the Internal Revenue Code of 1954, as amended as
 
10 of December 31, 1984, is operative for the purposes of this
 
11 section only.
 
12      As used in this section:
 
13      "Cost" means (1) the actual invoice price of the tangible
 
14 personal property, or (2) the basis from which depreciation is
 
15 taken under section 167 (with respect to depreciation) or from
 
16 which a deduction may be taken under section 168 (with respect to
 
17 accelerated cost recovery system) of the Internal Revenue Code of
 
18 1954, as amended, whichever is less.
 
19      "Eligible depreciable tangible personal property" is section
 
20 38 property as defined by the operative provisions of section 48
 
21 and having a depreciable life under section 167 or for which a
 
22 deduction may be taken under section 168 of the federal Internal
 
23 Revenue Code of 1954, as amended.
 

 
Page 26                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1      "Placed in service" means the earliest of the following
 
 2 taxable years:
 
 3      (1)  The taxable year in which, under the:
 
 4           (A)  Taxpayer's depreciation practice, the period for
 
 5                depreciation; or
 
 6           (B)  Accelerated cost recovery system, a claim for
 
 7                recovery allowances;
 
 8                with respect to such property begins; or
 
 9      (2)  The taxable year in which the property is placed in a
 
10           condition or state of readiness and availability for a
 
11           specifically assigned function.
 
12      "Purchase" means an acquisition of property.
 
13      "Tangible personal property" means tangible personal
 
14 property which is placed in service within Hawaii after
 
15 December 31, 1987, and the purchase or importation of which
 
16 resulted in a transaction which was subject to the imposition and
 
17 payment of tax at the rate of four per cent, except that for the
 
18 period January 1, 1993, through December 31, 2002, and if the
 
19 county general excise and use tax surcharge is in effect the tax
 
20 rate shall be four and one-half per cent, under chapter 237 or
 
21 238.  "Tangible personal property" does not include tangible
 
22 personal property which is an integral part of a building or
 
23 structure or tangible personal property used in a foreign trade
 

 
Page 27                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 zone, as defined under chapter 212."]
 
 2      SECTION 20.  Section 237D-1, Hawaii Revised Statutes, is
 
 3 amended by amending the definition of "gross rental" or "gross
 
 4 rental proceeds" to read as follows:
 
 5      ""Gross rental" or "gross rental proceeds" means the gross
 
 6 receipts, cash or accrued, of the taxpayer received as
 
 7 compensation for the furnishing of transient accommodations and
 
 8 the value proceeding or accruing from the furnishing of such
 
 9 accommodations without any deductions on account of the cost of
 
10 property or services sold, the cost of materials used, labor
 
11 cost, taxes, royalties, interest, discounts, or any other
 
12 expenses whatsoever.  Every taxpayer shall be presumed to be
 
13 dealing on a cash basis unless the taxpayer proves to the
 
14 satisfaction of the department of taxation that the taxpayer is
 
15 dealing on an accrual basis and the taxpayer's books are so kept,
 
16 [or unless the taxpayer employs or is required to employ the
 
17 accrual basis for the purposes of the tax imposed by chapter 237]
 
18 for any taxable year in which event the taxpayer shall report the
 
19 taxpayer's gross income for the purposes of this chapter on the
 
20 accrual basis for the same period.
 
21      The words "gross rental" or "gross rental proceeds" shall
 
22 not be construed to include the amounts of taxes imposed by
 
23 [chapter 237 or] this chapter on operators of transient
 

 
Page 28                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 accommodations and passed on, collected, and received from the
 
 2 consumer as part of the receipts received as compensation for the
 
 3 furnishing of transient accommodations.  Where transient
 
 4 accommodations are furnished through arrangements made by a
 
 5 travel agency or tour packager at noncommissionable negotiated
 
 6 contract rates and the gross income is divided between the
 
 7 operator of transient accommodations on the one hand and the
 
 8 travel agency or tour packager on the other hand, gross rental or
 
 9 gross rental proceeds to the operator means only the respective
 
10 portion allocated or distributed to the operator, and no more.
 
11 For purposes of this definition, where the operator maintains a
 
12 schedule of rates for identifiable groups of individuals, such as
 
13 kamaainas, upon which the accommodations are leased, let, or
 
14 rented, gross rental or gross rental proceeds means the receipts
 
15 collected and received based upon the scheduled rates and
 
16 recorded as receipts in its books and records."
 
17      SECTION 21.  Section 237D-6, Hawaii Revised Statutes, is
 
18 amended by amending subsection (a) to read as follows:
 
19      "(a)  On or before the last day of each calendar month,
 
20 every operator taxable, or plan manager liable under this chapter
 
21 during the preceding calendar month shall file a sworn return
 
22 with the director in such form as the director shall prescribe
 
23 together with a remittance for the amount of the tax in the form
 

 
Page 29                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 required by section 237D-6.5.  [Sections 237-30 and 237-32 shall
 
 2 apply to returns and penalties made under this chapter to the
 
 3 same extent as if the sections were set forth specifically in
 
 4 this section.]"
 
 5      SECTION 22.  Section 237D-8.5, Hawaii Revised Statutes, is
 
 6 amended to read as follows:
 
 7      "[[]237D-8.5[]]  Collection of rental by third party;
 
 8 filing with department; statement required.(a)  Every person
 
 9 authorized under an agreement by the owner of transient
 
10 accommodations located within this State to collect rent on
 
11 behalf of such owner shall be subject to this section.
 
12      (b)  Every written rental collection agreement shall have on
 
13 the first page of the agreement the name, address, social
 
14 security or federal identification number, and, if available, the
 
15 [general excise tax license and] transient accommodations tax
 
16 registration numbers of the owner of the transient accommodations
 
17 being rented, the address of the property being rented, and the
 
18 following statement which shall be set forth in bold print and in
 
19 ten-point type size:
 
20 "HAWAII TRANSIENT ACCOMMODATIONS TAXES MUST BE PAID ON THE GROSS
 
21 RENTS COLLECTED BY ANY PERSON RENTING TRANSIENT ACCOMMODATIONS IN
 
22 THE STATE OF HAWAII.  A COPY OF THE FIRST PAGE OF THIS AGREEMENT,
 
23 OR OF FEDERAL INTERNAL REVENUE FORM 1099 STATING THE AMOUNT OF
 

 


 

Page 30                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 RENTS COLLECTED, SHALL BE FILED WITH THE HAWAII DEPARTMENT OF
 
 2 TAXATION."
 
 3      Every person entering an oral rental collection agreement
 
 4 shall furnish the department of taxation the information required
 
 5 under this subsection and shall give the owner of the property a
 
 6 copy of the notice required by this subsection.  [The statement
 
 7 required by this subsection may be combined with the statement
 
 8 required under section 237-30.5 by adding in bold print and in
 
 9 ten-point type size to the front of the statement in section
 
10 237-30.5 the following:
 
11           "HAWAII TRANSIENT ACCOMMODATIONS TAXES AND".]
 
12      (c)  Every person authorized to collect rent for another
 
13 person shall file a copy of the first page of the rental
 
14 collection agreement with the department of taxation within
 
15 ninety days after June 9, 1988, or within thirty days after
 
16 entering into the agreement, or shall file a copy of federal
 
17 Internal Revenue form 1099, the property owner's social security
 
18 or federal identification number, and, if available, the general
 
19 excise tax license and transient accommodations tax registration
 
20 numbers of the owner of such property being rented with the
 
21 department of taxation at the same time as such forms must be
 
22 filed with the Internal Revenue Service for the applicable tax
 
23 year.  The person also shall notify the owner that such
 

 
Page 31                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 information is being furnished and give the owner a copy of the
 
 2 notice required by subsection (b).
 
 3      [(d)  If a person complies with the provisions of this
 
 4 section, the person shall be deemed to have complied with section
 
 5 237-30.5.]"
 
 6      SECTION 23.  Section 237D-8.6, Hawaii Revised Statutes, is
 
 7 amended to read as follows:
 
 8      "[[]237D-8.6[]]  Reconciliation; form requirement.(a)  On
 
 9 or before the twentieth day of the fourth month following the
 
10 close of the taxable year, every person who has become liable for
 
11 the payment of taxes under this chapter during the preceding
 
12 taxable year and who has furnished transient accommodations which
 
13 were exempt, for any portion of the taxable year, from the tax
 
14 imposed under this chapter, shall file a reconciliation for
 
15 transient accommodations as prescribed by the director indicating
 
16 the amount of gross income that was subject to [such] the tax
 
17 [and the amount that was subject to the general excise tax
 
18 imposed under chapter 237].
 
19      (b)  On or before the twentieth day of the fourth month
 
20 following the close of the taxable year, every plan manager who
 
21 has become liable for the payment of taxes under this chapter
 
22 during the preceding taxable year shall file a reconciliation
 
23 indicating the period of time that the owner of a resort time
 

 
Page 32                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 share vacation unit was subject to the [general excise tax or
 
 2 the] tax under section 237D-2(a)."
 
 3      SECTION 24.  Section 237D-16 Hawaii Revised Statutes, is
 
 4 amended by amending subsection (a) to read as follows:
 
 5      "(a)  The director of taxation shall administer and enforce
 
 6 this chapter.  In respect of:
 
 7      (1)  The examinations of books and records and of taxpayers
 
 8           and other persons,
 
 9      (2)  Procedure and powers upon failure or refusal by a
 
10           taxpayer to make a return or proper return, and
 
11      (3)  The general administration of this chapter,
 
12 the director of taxation shall have all rights and powers
 
13 conferred by chapter 237 with respect to taxes thereby or
 
14 thereunder imposed; and, without restriction upon these rights
 
15 and powers, sections 237-8 and 237-36 to 237-41 are made
 
16 applicable to and with respect to the taxes, taxpayers, tax
 
17 officers, and other persons, and the matters and things affected
 
18 or covered by this chapter, insofar as not inconsistent with this
 
19 chapter, in the same manner, as nearly as may be, as in similar
 
20 cases covered by chapter 237.  As used in this section, any
 
21 references to chapter 237 or any section therein shall be to
 
22 chapter 237 or the particular section therein, as the case may
 
23 be, in the form in which it existed on January 1, 2000."
 

 
Page 33                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1      SECTION 25.  Section 244D-13, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "244D-13  Other provisions applicable.  All of the
 
 4 provisions of [chapters] chapter 235 and chapter 237 in the form
 
 5 in which it existed on January 1, 2000 that are not inconsistent
 
 6 with this chapter and which may appropriately be applied to the
 
 7 taxes, persons, circumstances, and situations involved in this
 
 8 chapter, including (without prejudice to the generality of the
 
 9 foregoing) provisions as to penalties and interest, and
 
10 provisions granting administrative powers to the director of
 
11 taxation, and provisions for the assessment, levy, and collection
 
12 of taxes, shall be applicable to the taxes imposed by this
 
13 chapter, and to the assessment, levy, and collection thereof,
 
14 except that returns, return information, or reports under this
 
15 chapter and relating only to this chapter may be made known to
 
16 the liquor commission by the department of taxation, if not in
 
17 conflict with section 231-18."
 
18      SECTION 26.  Section 245-11, Hawaii Revised Statutes, is
 
19 amended to read as follows:
 
20      "245-11  Chapter 235 and former chapter 237 applicable.
 
21 All of the provisions of chapter 235 and chapter 237 in the form
 
22 in which it existed on January 1, 2000 that are not inconsistent
 
23 with this chapter and which may appropriately be applied to the
 

 
Page 34                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 taxes, persons, circumstances, and situations involved in this
 
 2 chapter, including (without prejudice to the generality of the
 
 3 foregoing) provisions as to penalties and interest, and
 
 4 provisions granting administrative powers to the department of
 
 5 taxation, and provisions for the assessment, levy, and collection
 
 6 of taxes, shall be applicable to the taxes imposed by this
 
 7 chapter, and to the assessment, levy, and collection thereof."
 
 8      SECTION 27.  Section 246-34.5, Hawaii Revised Statutes, is
 
 9 amended to read as follows:
 
10      "246-34.5  Exemptions for air pollution control facility.
 
11 The value of all property in the State (not including a building
 
12 and its structural components, other than a building which is
 
13 exclusively a treatment facility) actually and solely used or to
 
14 be used as an air pollution control facility [as the term is
 
15 defined in chapter 237] shall be exempted from the measure of the
 
16 taxes imposed by this chapter; provided, however, the property
 
17 exemption shall be applicable only with respect to a certified
 
18 facility which is property (1) the construction, reconstruction
 
19 or erection of which is completed by the taxpayer after June 30,
 
20 1969, or, (2) acquired by the taxpayer after June 30, 1969, if
 
21 the original use of the property commences with the taxpayer
 
22 after June 30, 1969; provided further the facility is placed in
 
23 service by the taxpayer before July 1, 1975.
 

 
Page 35                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1      Application for the exemption provided herein shall first be
 
 2 made with the director of health who shall, if satisfied that the
 
 3 facility meets the pollution emission criteria established by the
 
 4 department of health, certify to that fact.  Upon receipt of the
 
 5 certification from the department of health, the director of
 
 6 taxation shall exempt the facility from the tax imposed by this
 
 7 chapter.  A new certificate shall be obtained from the director
 
 8 of health and filed with the director of taxation every two years
 
 9 certifying that the pollution control facility complies with the
 
10 pollutant emission criteria established by the department of
 
11 health.  The director of taxation shall furnish all forms
 
12 required by this section. 
 
13      The director of taxation shall, pursuant to chapter 91,
 
14 promulgate rules and regulations necessary to administer this
 
15 section."
 
16      SECTION 28.  Section 251-1, Hawaii Revised Statutes, is
 
17 amended by amending the definition of "person" to read as
 
18 follows:
 
19      ""Person" has the same meaning as defined in section
 
20 [237-1.] 1-19."
 
21      SECTION 29.  Section 251-4, Hawaii Revised Statutes, is
 
22 amended by amending subsection (a) to read as follows:
 
23      "(a)  On or before the last day of each calendar month,
 

 
Page 36                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 every person taxable under this chapter during the preceding
 
 2 calendar month shall file a sworn return with the director in
 
 3 such form as the director shall prescribe together with a
 
 4 remittance for the amount of the surcharge tax in the form
 
 5 required by section 251-5.  Sections 237-30 and 237-32, as those
 
 6 sections existed on January 1, 2000, shall apply to returns and
 
 7 penalties made under this chapter to the same extent as if the
 
 8 sections were set forth specifically in this section."
 
 9      SECTION 30.  Section 251-15, Hawaii Revised Statutes, is
 
10 amended by amending subsection (a) to read as follows:
 
11      "(a)  The director shall administer and enforce this chapter
 
12 in respect of:
 
13      (1)  The examination of books and records and of lessors,
 
14           tour vehicle operators, and other persons;
 
15      (2)  Procedure and powers upon failure or refusal by a
 
16           person to make a return or proper return; and
 
17      (3)  The general administration of this chapter.
 
18 All of the provisions of chapter 237 in the form in which it
 
19 existed on January 1, 2000, not inconsistent with this chapter
 
20 and which may appropriately be applied to the taxes, persons,
 
21 circumstances, and situations involved in this chapter, including
 
22 (without prejudice to the generality of the foregoing) provisions
 
23 as to penalties and interest, and provisions granting
 

 
Page 37                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 administrative powers to the department, and provisions for the
 
 2 assessment, levy, and collection of taxes, shall be applicable to
 
 3 the surcharge taxes imposed by this chapter, and to the
 
 4 assessment, levy, and collection thereof."
 
 5      SECTION 31.  Section 329-62, Hawaii Revised Statutes, is
 
 6 amended by amending subsection (b) to read as follows:
 
 7      "(b)  For the purposes of this section, "proper
 
 8 identification" means a motor vehicle operator's license or other
 
 9 official state-issued identification of the purchaser which
 
10 contains a photograph of the purchaser; the residential or
 
11 mailing address of the purchaser other than a post office box
 
12 number, or the tax map key number if no other address is
 
13 available; the motor vehicle license number of any motor vehicle
 
14 owned or operated by the purchaser; a letter of authorization
 
15 from the business for which any substance specified in section
 
16 329-61 is being furnished, which includes the [general excise
 
17 license number and] address of the business; a full description
 
18 of how the substance is to be used; and the signature of the
 
19 purchaser.  The person selling, transferring, or otherwise
 
20 furnishing any substance specified in section 329-61 shall sign
 
21 as a witness to the signature and identification of the
 
22 purchaser."
 
23      SECTION 32.  Section 346E-1, Hawaii Revised Statutes, is
 

 
Page 38                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 amended by amending the definition of "nursing facility income"
 
 2 to read as follows:
 
 3      ""Nursing facility income" means the total compensation
 
 4 received for furnishing nursing facility services, including all
 
 5 receipts from "ancillary services" (as defined in 42 Code of
 
 6 Federal Regulations 413.53(b)) to the provision of nursing
 
 7 facility services, and receipts from items supplied in connection
 
 8 with these services.  "Nursing facility income" shall not include
 
 9 the following:  compensation received from services covered by
 
10 Title XVIII of the federal Social Security Act (including
 
11 copayments and deductibles received from beneficiaries of the
 
12 Medicare program); income from an affiliated entity that operates
 
13 as a prepaid health maintenance organization; settlements from
 
14 third party payors for services delivered or items supplied prior
 
15 to the effective date of this Act (such as settlements of cost
 
16 reports or decisions on rate reconsideration requests); income
 
17 from services provided by separately licensed units (such as
 
18 distinct part intermediate care facilities for the mentally
 
19 retarded); income from the provision of adult day health and
 
20 adult day care programs; income from the provision of home health
 
21 agency services; income from the provision of "nursing homes
 
22 without walls" programs; income from the provision of inpatient
 
23 hospital services; income from grants, bequests, donations,
 

 
Page 39                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 endowments, or investments; or amounts of taxes imposed by
 
 2 [chapter 237 or] this chapter and passed on, collected, and
 
 3 received from the consumer as part of nursing facility income."
 
 4      SECTION 33.  Section 346E-3, Hawaii Revised Statutes, is
 
 5 amended by amending subsection (a) to read as follows:
 
 6      "(a)  On or before the fifteenth day of February, May,
 
 7 August, and November, or for fiscal year taxpayers on or before
 
 8 the forty-fifth day after the close of the fiscal quarter, every
 
 9 operator taxable under this chapter during the preceding calendar
 
10 or fiscal quarter shall file a sworn return with the director in
 
11 such form as the director shall prescribe, together with a
 
12 remittance for the amount of the tax in the form of cash, bank
 
13 draft, cashier's check, money order, or certificate of deposit.
 
14 In lieu of the remittance, the operator may request withholding
 
15 from payments made to the operator by the department under
 
16 section 346E-4.  Sections 237-30 and 237-32, as they existed on
 
17 January 1, 2000, shall apply to returns and penalties made under
 
18 this chapter to the same extent as if the sections were set forth
 
19 specifically in this section."
 
20      SECTION 34.  Section 346E-13, Hawaii Revised Statutes, is
 
21 amended by amending subsection (a) to read as follows:
 
22      "(a)  The director shall administer and enforce this
 
23 chapter.  [With respect to:
 

 
Page 40                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1      (1)  The examinations of books and records, and operators
 
 2           and other persons;
 
 3      (2)  Procedures and powers upon failure or refusal by an
 
 4           operator to make a return or proper return; and
 
 5      (3)  The general administration of this chapter;
 
 6 the director shall have all rights, powers, and duties conferred
 
 7 by chapters 231 and 237 with respect to powers and duties or with
 
 8 respect to taxes imposed under chapter 237.  Without restriction
 
 9 upon these rights and powers, [section 237-8 and] sections 237-36
 
10 to 237-41 are made applicable to and with respect to taxes,
 
11 operators, department officers, and other persons, and the
 
12 matters and things affected or covered by this chapter, insofar
 
13 as these sections are not inconsistent with this chapter, in the
 
14 same manner, as nearly as may be, as in similar cases covered by
 
15 chapter 237.  As used in this section, any references to chapter
 
16 237 or any section therein shall be to chapter 237 or the
 
17 particular section therein, as the case may be, in the form in
 
18 which it existed on January 1, 2000."
 
19      SECTION 35.  Section 349-10, Hawaii Revised Statutes, is
 
20 amended to read as follows:
 
21      "349-10  Annual senior citizen's fair.  Each county may
 
22 hold an annual senior citizen's fair in its respective county.
 
23 The county shall be responsible for the planning, organizing, and
 

 
Page 41                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 coordinating of the fair in every respect.  The state policy
 
 2 advisory board for elder affairs may assist the county in any
 
 3 aspect upon request.  [Proceeds earned from this fair are deemed
 
 4 to be proceeds earned from casual sales as defined in chapter
 
 5 237.]  The county shall distribute such proceeds to the various
 
 6 senior citizen organizations and individuals who participate in
 
 7 the fair in accordance with appropriate methods of distribution
 
 8 as determined by the county."
 
 9      SECTION 36.  Section 358D-12, Hawaii Revised Statutes, is
 
10 amended to read as follows:
 
11      "358D-12  Exemptions.(a)  [Any compensation received by a
 
12 provider agency for services rendered to homeless families or
 
13 individuals, or in operating or managing a homeless facility
 
14 authorized by this chapter, is exempt from taxes under chapter
 
15 237.
 
16      (b)]  Any county mayor may exempt by executive order, donors
 
17 and homeless provider agencies from real property taxes, water
 
18 and sewer development fees, rates collected for water supplied to
 
19 consumers and for use of sewers, and any other county taxes,
 
20 charges, or fees; provided that any county may enact ordinances
 
21 to regulate the exemptions granted by this subsection.
 
22      [(c)] (b)  Any provider agency operating or managing a
 
23 homeless facility, or any other program for the homeless
 

 
Page 42                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 authorized by this chapter, is exempt, for purposes of those
 
 2 facilities or programs, from any requirements contained in part
 
 3 VIII of chapter 346, chapter 467, and chapter 521."
 
 4      SECTION 37.  Section 421-23, Hawaii Revised Statutes, is
 
 5 amended to read as follows:
 
 6      "421-23  Taxation.  Domestic associations organized under
 
 7 this chapter shall pay an annual license fee of $10 to the
 
 8 director of commerce and consumer affairs (and which shall be a
 
 9 general realization of the State) which shall be in lieu of all
 
10 other corporation, franchise, and income taxes, and taxes and
 
11 charges upon reserves held by the association for distribution to
 
12 members, including without limitation upon the generality of the
 
13 foregoing any taxes imposed under chapter 235. 
 
14      To obtain the exemptions from taxation granted by this
 
15 section or any other law, the association annually shall file
 
16 with the director of taxation a copy of its report made under
 
17 section 421-22[, and in addition thereto, within ninety days
 
18 after the close of its fiscal year, shall file with the tax
 
19 assessor of each district in which there are persons doing
 
20 business to whom it has paid, during the preceding fiscal year,
 
21 any proceeds of goods marketed, a report showing the name of each
 
22 person to whom the proceeds were paid, the total proceeds of
 
23 sales for which such person is taxable under chapter 237 for the
 

 
Page 43                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 fiscal year, and the rate or rates of such tax applicable thereto
 
 2 or to the several amounts thereof, as the case may be]."
 
 3      SECTION 38.  Section 421H-4, Hawaii Revised Statutes, is
 
 4 amended by amending subsection (c) to read as follows:
 
 5      "(c)  The membership shares and cooperative fees are
 
 6 interests in real property for purposes of[:
 
 7      (1)  Cooperative] cooperative housing corporations under
 
 8           section 216 of the federal Internal Revenue Code of
 
 9           1954, as amended[; and
 
10      (2)  Exemption from state general excise tax under section
 
11           237-24(16)]."
 
12      SECTION 39.  Section 431:7-204, Hawaii Revised Statutes, is
 
13 amended to read as follows:
 
14      "431:7-204  In lieu provision.  As to insurers, the taxes
 
15 and fees imposed by section 431:7-201 to section 431:7-204, and
 
16 the fees imposed by this code, when paid shall be in settlement
 
17 of and in lieu of all demands for taxes, licenses, or fees of
 
18 every character imposed by the laws of this State, the ordinances
 
19 or other laws, rules, or regulations of any county of this State,
 
20 except:
 
21      (1)  As expressly otherwise provided;
 
22      (2)  Taxes on real property;
 
23      (3)  Taxes on the purchase, use, or ownership of tangible
 

 
Page 44                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1           personal property; and
 
 2      (4)  Taxes on gross income, gross proceeds, gross rental, or
 
 3           gross rental proceeds under chapter [237 or] 237D.
 
 4 Nothing in this section shall be deemed to exempt insurers from
 
 5 liability for withholding taxes payable by their employees and
 
 6 paying the same to the proper collection officers, or from
 
 7 keeping such records, and making such returns and reports, as may
 
 8 be required in the case of other persons enjoying tax exemption."
 
 9      SECTION 40.  Section 431:10C-312, Hawaii Revised Statutes,
 
10 is repealed.
 
11      ["431:10C-312  Payment of excise tax and certificate of
 
12 ownership fee.(a)  When a replacement vehicle is provided under
 
13 section 431:10C-310 or section 431:10C-311, the insurer shall pay
 
14 the applicable general excise tax and ownership fee as follows:
 
15      (1)  If a cash settlement is provided, and if within thirty
 
16           days of the receipt of the settlement by the insured,
 
17           the insured has purchased a vehicle, the insurer shall
 
18           reimburse the insured for the applicable general excise
 
19           tax and certificate of ownership fee incurred on
 
20           account of the purchase of the vehicle, but not
 
21           exceeding the amount payable on account of the value of
 
22           the total loss vehicle.
 
23      (2)  If the insured purchases a vehicle with a market value
 

 
Page 45                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1           less than the amount of the settlement, then the
 
 2           insurer shall reimburse only the amount of the
 
 3           applicable general excise tax and certificate of
 
 4           ownership fee incurred by the insured.
 
 5      (b)  If the insured cannot substantiate the purchase and the
 
 6 payment of the taxes and fee, by submission to the insurer of
 
 7 appropriate documentation within thirty-three days after the
 
 8 receipt of settlement, the insurer shall not be required to
 
 9 reimburse the insured for the taxes or fee.
 
10      (c)  In lieu of the reimbursement procedure set out in
 
11 subsection (a), the insurer may directly pay the required amounts
 
12 of general excise taxes and certificate of ownership fee to the
 
13 insured at the time of settlement.
 
14      (d)  Written notice of the payment procedure outlined in
 
15 this section shall be communicated to the insured at the time of
 
16 settlement, together with any form required by the insurer for
 
17 applying for the reimbursement."]
 
18      SECTION 41.  Section 432:2-503, Hawaii Revised Statutes, is
 
19 amended to read as follows:
 
20      "432:2-503  Taxation.  Every society organized and
 
21 operating or licensed under this article shall be, from the time
 
22 of such organization, exempt from every state, county, and
 
23 municipal tax, except real property taxes and unemployment
 

 
Page 46                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 compensation taxes; provided that nothing in this section shall
 
 2 be deemed to exempt the association or society from liability to
 
 3 withhold such taxes payable by its employees and pay the same to
 
 4 the proper collection officers, and to keep such records and make
 
 5 such returns and reports, as may be required in the case of other
 
 6 corporations, associations, or societies similarly exempt from
 
 7 the taxes hereinabove first mentioned[; provided further, that
 
 8 the exemption hereby granted as to general excise taxes under
 
 9 chapter 237 shall not apply to any activity the primary purpose
 
10 of which is to produce income]."
 
11      SECTION 42.  Section 437B-13, Hawaii Revised Statutes, is
 
12 amended to read as follows:
 
13      "437B-13  Invoices; supplying crash parts or used parts;
 
14 customer's copy.  All work done by a motor vehicle repair dealer,
 
15 mechanic, or apprentice, including all warranty work, shall be
 
16 recorded on an invoice and shall describe all service work done
 
17 and parts supplied.  Service work and parts shall be listed
 
18 separately on the invoice, which shall also state separately the
 
19 subtotal prices for service work and for parts, [not including
 
20 the general excise tax,] and shall state separately the tax, if
 
21 any, applicable to parts and service work.  If any crash, used,
 
22 rebuilt, or reconditioned parts are supplied, the invoice shall
 
23 clearly state that fact.  If a part of a component system is
 

 
Page 47                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 composed of new and used, crash, rebuilt, or reconditioned parts,
 
 2 the invoice shall clearly state that fact.  One copy shall be
 
 3 given to the customer and one copy shall be retained by the motor
 
 4 vehicle repair dealer."
 
 5      SECTION 43.  Section 437D-8.4, Hawaii Revised Statutes, is
 
 6 amended to read as follows:
 
 7      "437D-8.4  License and registration fees.(a)
 
 8 Notwithstanding any law to the contrary, a lessor may visibly
 
 9 pass on to a lessee:
 
10      (1)  [The general excise tax attributable to the
 
11           transaction;
 
12      (2)] The vehicle license and registration fee and weight
 
13           taxes, prorated at 1/365th of the annual vehicle
 
14           license and registration fee and weight taxes actually
 
15           paid on the particular vehicle being rented for each
 
16           full or partial twenty-four hour rental day that the
 
17           vehicle is rented; provided the total of all vehicle
 
18           license and registration fees charged to all lessees
 
19           shall not exceed the annual vehicle license and
 
20           registration fee actually paid for the particular
 
21           vehicle rented;
 
22     [(3)] (2)  The rental motor vehicle surcharge tax as provided
 
23           in section 251-2 attributable to the transaction; and
 

 
Page 48                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1     [(4)] (3)  The rents or fees paid to the department of
 
 2           transportation under concession contracts, negotiated
 
 3           pursuant to chapter 102, or service permits, granted
 
 4           pursuant to title 19, Hawaii Administrative Rules,
 
 5           provided that:
 
 6           (A)  The rents or fees are limited to amounts that can
 
 7                be attributed to the proceeds of the particular
 
 8                transaction;
 
 9           (B)  The rents or fees shall not exceed the lessor's
 
10                net payments to the department of transportation
 
11                made under concession contract or service permit;
 
12           (C)  The lessor submits to the department of
 
13                transportation and the department of commerce and
 
14                consumer affairs a statement, verified by a
 
15                certified public accountant as correct, that
 
16                reports the amounts of the rents or fees paid to
 
17                the department of transportation pursuant to the
 
18                applicable concession contract or service permit:
 
19                (i)  For all airport locations; and
 
20               (ii)  For each airport location;
 
21           (D)  The lessor submits to the department of
 
22                transportation and the department of commerce and
 
23                consumer affairs a statement, verified by a
 

 
Page 49                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1                certified public accountant as correct, that
 
 2                reports the amounts charged to lessees:
 
 3                (i)  For all airport locations;
 
 4               (ii)  For each airport location; and
 
 5              (iii)  For each lessee;
 
 6           (E)  The lessor includes in these reports the
 
 7                methodology used to determine the amount of fees
 
 8                charged to each lessee; and
 
 9           (F)  The lessor submits the above information to the
 
10                department of transportation and the department of
 
11                commerce and consumer affairs within three months
 
12                of the end of the preceding annual accounting
 
13                period or contract year as determined by the
 
14                applicable concession agreement or service permit.
 
15           The respective departments, in their sole discretion,
 
16           may extend the time to submit the statement required in
 
17           this subsection.  If the director determines that an
 
18           examination of the lessor's information is
 
19           inappropriate under this subsection and the lessor
 
20           fails to correct the matter within ninety days, the
 
21           director may conduct an examination and charge a lessor
 
22           an examination fee based upon the cost per hour per
 
23           examiner for evaluating, investigating, and verifying
 

 
Page 50                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1           compliance with this subsection, as well as additional
 
 2           amounts for travel, per diem, mileage, and other
 
 3           reasonable expenses incurred in connection with the
 
 4           examination, which shall relate solely to the
 
 5           requirements of this subsection, and which shall be
 
 6           billed by the departments as soon as feasible after the
 
 7           close of the examination.  The cost per hour shall be
 
 8           $40 or as may be established by rules adopted by the
 
 9           director.  The lessor shall pay the amounts billed
 
10           within thirty days following the billing.  All moneys
 
11           collected by the director shall be credited to the
 
12           compliance resolution fund.
 
13      (b)  A representation by the lessor to the lessee which
 
14 states that the visible pass on of the charges in this section is
 
15 mandatory or that it is a government assessment upon the consumer
 
16 shall be a per se violation of section 480-2."
 
17      SECTION 44.  Section 444-17, Hawaii Revised Statutes, is
 
18 amended to read as follows:
 
19      "444-17 Revocation, suspension, and renewal of licenses.
 
20 In addition to any other actions authorized by law, the board may
 
21 revoke any license issued pursuant to this section, or suspend
 
22 the right of a licensee to use a license, or refuse to renew a
 
23 license for any cause authorized by law, including but not
 

 
Page 51                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 limited to the following:
 
 2      (1)  Any dishonest, fraudulent, or deceitful act as a
 
 3           contractor that causes substantial damage to another;
 
 4      (2)  Engaging in any unfair or deceptive act or practice as
 
 5           prohibited by section 480-2;
 
 6      (3)  Abandonment of any construction project or operation
 
 7           without reasonable or legal excuse;
 
 8      (4)  Wilful diversion of funds or property received for
 
 9           prosecution or completion of a specific construction
 
10           project or operation, or for a specified purpose in the
 
11           prosecution or completion of any construction project
 
12           or operation, and the use thereof for any other
 
13           purpose;
 
14      (5)  Wilful departure from, or wilful disregard of plans or
 
15           specifications in any material respect without consent
 
16           of the owner or the owner's duly authorized
 
17           representative, that is prejudicial to a person
 
18           entitled to have the construction project or operation
 
19           completed in accordance with those plans and
 
20           specifications;
 
21      (6)  Wilful violation of any law of the State, or any
 
22           county, relating to building, including any violation
 
23           of any applicable rule of the department of health, or
 

 
Page 52                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1           of any applicable safety or labor law;
 
 2      (7)  Failure to make and keep records showing all contracts,
 
 3           documents, records, receipts, and disbursements by a
 
 4           licensee of all the licensee's transactions as a
 
 5           contractor for a period of not less than three years
 
 6           after completion of any construction project or
 
 7           operation to which the records refer or to permit
 
 8           inspection of those records by the board;
 
 9      (8)  When the licensee being a partnership or a joint
 
10           venture permits any partner, member, or employee of the
 
11           partnership or joint venture who does not hold a
 
12           license to have the direct management of the
 
13           contracting business thereof;
 
14      (9)  When the licensee being a corporation permits any
 
15           officer or employee of the corporation who does not
 
16           hold a license to have the direct management of the
 
17           contracting business thereof;
 
18     (10)  Misrepresentation of a material fact by an applicant in
 
19           obtaining a license;
 
20     (11)  Failure of a licensee to complete in a material respect
 
21           any construction project or operation for the agreed
 
22           price if the failure is without legal excuse;
 
23     (12)  Wilful failure in any material respect to comply with
 

 
Page 53                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1           this chapter or the rules adopted pursuant thereto;
 
 2     (13)  Wilful failure or refusal to prosecute a project or
 
 3           operation to completion with reasonable diligence;
 
 4     (14)  Wilful failure to pay when due a debt incurred for
 
 5           services or materials rendered or purchased in
 
 6           connection with the licensee's operations as a
 
 7           contractor when the licensee has the ability to pay or
 
 8           when the licensee has received sufficient funds
 
 9           therefor as payment for the particular operation for
 
10           which the services or materials were rendered or
 
11           purchased;
 
12     (15)  The false denial of any debt due or the validity of the
 
13           claim therefor with intent to secure for a licensee,
 
14           the licensee's employer, or other person, any discount
 
15           of the debt or with intent to hinder, delay, or defraud
 
16           the person to whom the debt is due;
 
17     (16)  Failure to secure or maintain workers' compensation
 
18           insurance, unless the licensee is authorized to act as
 
19           a self-insurer under chapter 386 or is excluded from
 
20           the requirements of chapter 386;
 
21     (17)  Entering into a contract with an unlicensed contractor
 
22           involving work or activity for the performance of which
 
23           licensing is required under this chapter;
 

 
Page 54                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1     (18)  Performing service on a residential or commercial air
 
 2           conditioner, utilizing CFCs, without using refrigerant
 
 3           recovery and recycling equipment;
 
 4     (19)  Performing service on any air conditioner after
 
 5           January 1, 1994, without successful completion of an
 
 6           appropriate training course in the recovery and
 
 7           recycling of CFC and HCFC refrigerants, which included
 
 8           instruction in the proper use of refrigerant recovery
 
 9           and recycling equipment that is certified by
 
10           Underwriters Laboratories, Incorporated;
 
11     (20)  Violating chapter 342C; and
 
12     (21)  Failure to pay delinquent taxes, interest, and
 
13           penalties assessed [under chapter 237] that relate to
 
14           the business of contracting, or to comply with the
 
15           terms of a conditional payment plan with the department
 
16           of taxation for the payment of such delinquent taxes,
 
17           interest, and penalties."
 
18      SECTION 45.  Section 445-232, Hawaii Revised Statutes, is
 
19 amended to read as follows:
 
20      "445-232  License.  Any person who engages in the business
 
21 as a scrap dealer shall be licensed with the treasurer.  The
 
22 treasurer shall have the power to grant license and to revoke
 
23 such license upon reasonable cause.  The annual license fee shall
 

 
Page 55                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 be $10. 
 
 2      Every license granted under this section shall designate the
 
 3 place where business is carried on and sufficient identifying
 
 4 information including the licensee's name, address, [general
 
 5 excise tax license number,] and other information which may be
 
 6 prescribed by the treasurer."
 
 7      SECTION 46.  Section 476-1, Hawaii Revised Statutes, is
 
 8 amended by amending the definition of "cash price" to read as
 
 9 follows:
 
10      ""Cash price" means the price at which the seller, in the
 
11 ordinary course of business, offers to sell for cash the goods or
 
12 services that are the subject of the credit sale.  At the
 
13 seller's option, the term may include the price of accessories,
 
14 services related to the sale, service contracts, [general excise]
 
15 and other taxes, and taxes and fees for license, title, and
 
16 registration.  The term does not include any finance charge."
 
17      SECTION 47.  Section 481I-2, Hawaii Revised Statutes, is
 
18 amended by amending the definition of "collateral charges" to
 
19 read as follows:
 
20      ""Collateral charges" means those additional charges to a
 
21 consumer wholly incurred as a result of the acquisition of the
 
22 motor vehicle.  For the purposes of this chapter, collateral
 
23 charges include, but are not limited to, manufacturer-installed
 

 
Page 56                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 or agent-installed items, [general excise tax,] license and
 
 2 registration fees, title charges, and similar government
 
 3 charges."
 
 4      SECTION 48.  Section 481I-3, Hawaii Revised Statutes, is
 
 5 amended by amending subsection (b) to read as follows:
 
 6      "(b)  If the manufacturer, its agents, distributors, or
 
 7 authorized dealers are unable to conform the motor vehicle to any
 
 8 applicable express warranty by repairing or correcting any defect
 
 9 or condition which substantially impairs the use, market value,
 
10 or safety of the motor vehicle after a reasonable number of
 
11 documented attempts, then the manufacturer shall provide the
 
12 consumer with a replacement motor vehicle or accept return of the
 
13 vehicle from the consumer and refund to the consumer the
 
14 following:  the full purchase price including but not limited to
 
15 charges for undercoating, dealer preparation, transportation and
 
16 installed options, and all collateral and incidental charges,
 
17 excluding finance and interest charges, and less a reasonable
 
18 offset for the consumer's use of the motor vehicle.
 
19      If either a replacement motor vehicle or a refund is
 
20 awarded, an "offset" may be made for damage to the vehicle not
 
21 attributable to normal wear and tear, if unrelated to the
 
22 nonconformity.  If a replacement motor vehicle is awarded, a
 
23 reasonable offset shall be made for the use of the motor vehicle
 

 
Page 57                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 and an additional offset may be made for loss to the fair market
 
 2 value of the vehicle resulting from damage beyond normal wear and
 
 3 tear, unless the damage resulted from the nonconformity.  When
 
 4 the manufacturer supplies a replacement motor vehicle, the
 
 5 manufacturer shall be responsible for the [general excise tax,
 
 6 and] license and registration fees.  Refunds made pursuant to
 
 7 this subsection shall be deemed to be refunds of the sales price
 
 8 [and treated as such for purposes of section 237-3].  Refunds
 
 9 shall be made to the consumer and lienholder, if any, as their
 
10 interests may appear on the records of ownership.  If applicable,
 
11 refunds shall be made to the lessor and lessee pursuant to rules
 
12 adopted by the department of commerce and consumer affairs."
 
13      SECTION 49.  Section 481K-1, Hawaii Revised Statutes, is
 
14 amended by amending the definition of "collateral charges" to
 
15 read as follows:
 
16      ""Collateral charges" means those additional charges to a
 
17 consumer [wholly] incurred as a result of the acquisition of the
 
18 assistive device.  For the purposes of this chapter, collateral
 
19 charges include but are not limited to items installed by the
 
20 manufacturer, its agent, assistive device dealer or assistive
 
21 device lessor, finance charges and financing costs, [general
 
22 excise tax,] and other governmental charges, taxes, or fees."
 
23      SECTION 50.  Section 501-151, Hawaii Revised Statutes, is
 

 
Page 58                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 amended to read as follows:
 
 2      "501-151  Pending actions, judgments; recording of, notice.
 
 3 No writ of entry, action for partition, or any action affecting
 
 4 the title to real property or the use and occupation thereof or
 
 5 the buildings thereon, and no judgment, nor any appeal or other
 
 6 proceeding to vacate or reverse any judgment, shall have any
 
 7 effect upon registered land as against persons other than the
 
 8 parties thereto, unless a full memorandum thereof, containing
 
 9 also a reference to the number of certificate of title of the
 
10 land affected is filed or recorded and registered.  Except as
 
11 otherwise provided, every judgment shall contain or have endorsed
 
12 on it the social security number, [State of Hawaii general excise
 
13 taxpayer identification number, or] federal employer
 
14 identification number for persons, corporations, partnerships or
 
15 other entities against whom the judgment is rendered.  If the
 
16 judgment debtor has no social security number[, State of Hawaii
 
17 general excise taxpayer identification number,] or federal
 
18 employer identification number, or if that information is not in
 
19 the possession of the party seeking registration of the judgment,
 
20 the judgment shall be accompanied by a certificate that provides
 
21 that the information does not exist or is not in the possession
 
22 of the party seeking registration of the judgment.  Failure to
 
23 disclose or disclosure of an incorrect social security number[,
 

 
Page 59                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 State of Hawaii general excise taxpayer identification number,]
 
 2 or federal employer identification number shall not in any way
 
 3 adversely affect or impair the lien created upon recording of the
 
 4 judgment.  This section does not apply to attachments, levies of
 
 5 execution, or to proceedings for the probate of wills, or for
 
 6 administration in a probate court; provided that in case notice
 
 7 of the pendency of the action has been duly registered it is
 
 8 sufficient to register the judgment in the action within sixty
 
 9 days after the rendition thereof.
 
10      As used in this chapter "judgment" includes an order or
 
11 decree having the effect of a judgment.
 
12      Notice of the pendency of an action in a United States
 
13 District Court, as well as a court of the State of Hawaii, may be
 
14 recorded."
 
15      SECTION 51.  Section 502-33, Hawaii Revised Statutes, is
 
16 amended to read as follows:
 
17      "502-33  Identification of reference to registration of
 
18 original.  The registrar shall not record any instrument
 
19 requiring a reference to a prior recorded instrument, unless the
 
20 same contains a reference to the book and page or document number
 
21 of the registration of the original recorded instrument or a
 
22 statement that the original instrument is unrecorded, as the case
 
23 may be.  Except as otherwise provided, every judgment shall
 

 
Page 60                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 contain or have endorsed on it the social security number, [State
 
 2 of Hawaii general excise taxpayer identification number,] or
 
 3 federal employer identification number for persons, corporations,
 
 4 partnerships, or other entities against whom the judgment is
 
 5 rendered.  If the judgment debtor has no social security number[,
 
 6 State of Hawaii general excise taxpayer identification number,]
 
 7 or federal employer identification number, or if that information
 
 8 is not in the possession of the party seeking registration of the
 
 9 judgment, the judgment shall be accompanied by a certificate that
 
10 provides that the information does not exist or is not in the
 
11 possession of the party seeking registration of the judgment.
 
12 Failure to disclose or disclosure of an incorrect social security
 
13 number[, State of Hawaii general excise taxpayer identification
 
14 number,] or federal employer identification number shall not in
 
15 any way adversely affect or impair the lien created upon
 
16 registration of the judgment.  No amendment, continuation
 
17 statement, termination statement, statement of assignment, or
 
18 statement of release relating to security interests in goods
 
19 which are or are to become fixtures shall be filed unless it
 
20 complies with the requirements of the Uniform Commercial Code,
 
21 section 490:9-408.  This section does not apply to any document
 
22 mentioned herein executed prior to April 13, 1915."
 
23      SECTION 52.  Section 504-1, Hawaii Revised Statutes, is
 

 
Page 61                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 amended to read as follows:
 
 2      "504-1 Registration of federal judgments.  Judgments of
 
 3 United States courts may be registered, recorded, docketed, and
 
 4 indexed in the bureau of conveyances or with the assistant
 
 5 registrar of the land court in the same manner as judgments of
 
 6 the courts of the State.  Except as otherwise provided, every
 
 7 judgment shall contain or have endorsed on it the social security
 
 8 number[, State of Hawaii general excise taxpayer identification
 
 9 number,] or federal employer identification number for persons,
 
10 corporations, partnerships, or other entities against whom the
 
11 judgment is rendered.  If the judgment debtor has no social
 
12 security number[, State of Hawaii general excise taxpayer
 
13 identification number,] or federal employer identification
 
14 number, or if that information is not in the possession of the
 
15 party seeking the registration, recordation, docketing, or
 
16 indexing of the judgment, the judgment shall be accompanied by a
 
17 certificate that provides that the information does not exist or
 
18 is not in the possession of the party seeking registration,
 
19 recordation, docketing, or indexing of the judgment.  Failure to
 
20 disclose or disclosure of an incorrect social security number,
 
21 [State of Hawaii general excise taxpayer identification number,]
 
22 or federal employer identification number shall not in any way
 
23 adversely affect or impair the lien created upon the
 

 
Page 62                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 registration, recordation, docketing, or indexing of the
 
 2 judgment."
 
 3      SECTION 53.  Section 514E-3, Hawaii Revised Statutes, is
 
 4 amended by amending subsection (b) to read as follows:
 
 5      "(b)  [The acquisition agent and sales agent shall maintain
 
 6 records pertaining to the general excise tax of any independent
 
 7 contractors employed by them, their addresses and commissions
 
 8 paid during each calendar year.]  The plan manager shall maintain
 
 9 records of the [general excise and] transient accommodations
 
10 taxes due and owing with respect to any occupants or time share
 
11 units under the plan manager's management.  The records for any
 
12 year shall be retained for at least two years and be available
 
13 for inspection by the director or the director of taxation."
 
14      SECTION 54.  Section 521-43, Hawaii Revised Statutes, is
 
15 amended by amending subsection (h) to read as follows:
 
16      "(h)  Landlords shall provide [their general excise tax
 
17 number] necessary information to all tenants for the purpose of
 
18 filing for a low-income tax credit."
 
19      SECTION 55.  Section 636-3, Hawaii Revised Statutes, is
 
20 amended to read as follows:
 
21      "636-3  Judgment, lien when.  Any money judgment or decree
 
22 of a state court or the United States District Court for the
 
23 District of Hawaii shall be a lien upon real property when a copy
 

 
Page 63                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 thereof, certified as correct by a clerk of the court where it is
 
 2 entered, is recorded in the bureau of conveyances. No such lien
 
 3 shall continue beyond ten years after the date of the judgment.
 
 4 Except as otherwise provided, every judgment shall contain or
 
 5 have endorsed on it the social security number[, State of Hawaii
 
 6 general excise taxpayer identification number,] or federal
 
 7 employer identification number for persons, corporations,
 
 8 partnerships, or other entities against whom the judgment is
 
 9 rendered. If the judgment debtor has no social security number[,
 
10 State of Hawaii general excise taxpayer identification number,]
 
11 or federal employer identification number, or if that information
 
12 is not in the possession of the party seeking registration of the
 
13 judgment, the judgment shall be accompanied by a certificate that
 
14 provides that the information does not exist or is not in the
 
15 possession of the party seeking recordation of the judgment.
 
16 Failure to disclose or disclosure of an incorrect social security
 
17 number[, State of Hawaii general excise taxpayer identification
 
18 number,] or federal employer identification number shall not in
 
19 any way adversely affect or impair the lien created upon
 
20 recordation of the judgment. When any such judgment is fully
 
21 paid, the creditor or the creditor's attorney of record in the
 
22 action shall, at the expense of the debtor, execute, acknowledge,
 
23 and deliver to the debtor a satisfaction thereof, which may be
 

 
Page 64                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 recorded in the bureau. Every satisfaction or assignment of
 
 2 judgment shall contain a reference to the book and page or
 
 3 document number of the registration of the original judgment. The
 
 4 recording fees for a judgment and for each assignment or
 
 5 satisfaction of judgment shall be as provided by section 502-25.
 
 6      In the case of registered land, section 501-102 and sections
 
 7 501-241 to 501-248 shall govern."
 
 8      SECTION 56.  Section 842-11, Hawaii Revised Statutes, is
 
 9 amended to read as follows:
 
10      "842-11  Failure to report income; penalty.  Any law to the
 
11 contrary notwithstanding, no person shall wilfully fail to report
 
12 income derived, directly or indirectly, from a racketeering
 
13 activity or through collection of an unlawful debt, or to pay the
 
14 taxes due thereon as provided by chapter 235 [or 237].  Whoever
 
15 violates this section shall be guilty of a class B felony and in
 
16 addition shall be subject to any assessment and collection of
 
17 taxes, penalties, and interest to which the State may be entitled
 
18 under [chapters] chapter 235 [and 237]."
 
19      SECTION 57.  Section 46-16.7, Hawaii Revised Statutes, is
 
20 repealed.
 
21      ["46-16.7  County general excise and use tax surcharge.
 
22 (a)  Each county, except the county of Kalawao, may establish a
 
23 general excise and use tax surcharge of one-half per cent.  Each
 

 
Page 65                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1 county shall establish the general excise and use tax surcharge
 
 2 by ordinance adopted before October 1, 1992, which shall take
 
 3 effect on January 1, 1993, and remain in effect for ten years
 
 4 through December 31, 2002, unless earlier repealed, pursuant to
 
 5 subsection (c).  No ordinance shall be adopted until the county
 
 6 has conducted a public hearing on the proposed ordinance.  Notice
 
 7 of the public hearing shall be published in a newspaper of
 
 8 general circulation within the county at least twice within a
 
 9 period of thirty days immediately preceding the date of the
 
10 hearing.  If a county fails to adopt a county general excise and
 
11 use tax surcharge ordinance by October 1, 1992, the county shall
 
12 not be covered by this section.
 
13      (b)  Each county shall notify the director of taxation
 
14 within ten days after the county has adopted a general excise and
 
15 use tax surcharge ordinance, and the director of taxation shall
 
16 levy, assess, collect, and otherwise administer the general
 
17 excise and use tax surcharge for the taxable year beginning
 
18 January 1, 1993, and for taxable years thereafter through
 
19 December 31, 2002, as provided by chapters 237 and 238.
 
20      (c)  The general excise and use tax surcharges received from
 
21 the State by each county shall be used as follows:
 
22      (1)  The city and county of Honolulu shall use the
 
23           surcharges to develop a fixed rail rapid transit
 

 
Page 66                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1           system.  All private source revenues generated or
 
 2           pledged to develop a fixed rail rapid transit system
 
 3           that are received prior to the operation of the system
 
 4           shall be used as county matching funds for moneys
 
 5           requested from the transit capital development fund,
 
 6           pursuant to chapter 51D, before surcharges may be used.
 
 7           The director of finance shall determine whether or not
 
 8           private sources are adequate to meet county matching
 
 9           requirements.  The director of finance shall submit a
 
10           report of the findings to the legislature.  Upon
 
11           legislative acceptance of the findings, within sixty
 
12           days of the first regular legislative session convened
 
13           following the submittal of the findings, no additional
 
14           moneys may be expended from the transit fund; provided
 
15           that:
 
16           (A)  Such limitation on the expenditure of moneys from
 
17                the transit fund shall not occur prior to
 
18                December 31, 1992; and
 
19           (B)  Private source revenues received prior to the
 
20                operation of the system or received in each year
 
21                that the surcharge is in effect shall be committed
 
22                to the funding of the capital costs of the fixed
 
23                rail rapid transit system prior to any
 

 
Page 67                                                    
                                     S.B. NO.           2540
                                                        
                                                        

 
 1                determination regarding the duration of the
 
 2                surcharge.
 
 3      (2)  All surcharges collected by the State for the city and
 
 4           county of Honolulu but not used for the purpose of
 
 5           developing a fixed rail rapid transit system shall be
 
 6           deposited into the state treasury to be returned to the
 
 7           taxpayers who resided in the city and county of
 
 8           Honolulu for more than two hundred days of the taxable
 
 9           year in the aggregate during the time that the
 
10           surcharges were collected, in the form of an income tax
 
11           credit, the amount of the credit to be determined by
 
12           law.
 
13      (3)  The general excise and use tax surcharge shall be
 
14           repealed upon the determination by the director of
 
15           finance that all authorized capital costs of the fixed
 
16           rail rapid transit system or county projects under
 
17           paragraph (4) have been collected and distributed
 
18           pursuant to chapter 248.
 
19      (4)  The counties of Hawaii, Kauai, and Maui shall use the
 
20           surcharges for public transportation systems, including
 
21           mass transportation, sewage, or water development, and
 
22           parks, including park operation, maintenance,
 
23           infrastructure, or purchase.
 

 
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 1      (d)  As used in this section:
 
 2      "Capital costs" means nonrecurring costs required to
 
 3 construct a transit facility or system, including debt service,
 
 4 costs of land acquisition and development, acquiring of rights-
 
 5 of-way, planning, design, and construction, including equipping
 
 6 and furnishing the facility or system.
 
 7      "Private source revenue" means all funds, concessions,
 
 8 development rights, or those assets of value contractually agreed
 
 9 upon with the county from sources other than state, county, or
 
10 federal governments as a result of, or for the purposes of,
 
11 developing mass transportation."]
 
12      SECTION 58.  Section 182-16, Hawaii Revised Statutes, is
 
13 repealed.
 
14      ["[182-16]  Levy and assessment of general excise tax.
 
15 Notwithstanding any provision to the contrary, the levy and
 
16 assessment of the general excise tax on the gross proceeds from
 
17 any manner of sale of (1) geothermal resources or (2) electrical
 
18 energy produced by the geothermal resources producer from such
 
19 geothermal resources, shall be made only as a tax on the business
 
20 of a producer, at the rate assessed producers, under section
 
21 237-13(2)(A)."]
 
22      SECTION 59.  Section 209-11, Hawaii Revised Statutes, is
 
23 repealed.
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1      ["209E-11  State general excise and use tax exemptions.
 
 2 The department shall certify annually to the department of
 
 3 taxation that any qualified business is exempt from the payment
 
 4 of general excise taxes on the gross proceeds from the
 
 5 manufacture of tangible personal property, the wholesale sale of
 
 6 tangible personal property, or the engaging in a service business
 
 7 by a qualified business in the enterprise zone and exempt from
 
 8 the use tax for purchases by a qualified business.  The gross
 
 9 proceeds received by a contractor shall be exempt from the
 
10 general excise tax for construction within an enterprise zone
 
11 performed for a qualified business within an enterprise zone.
 
12 The exemption shall extend for a period not to exceed seven
 
13 years."]
 
14      SECTION 60.  Section 235-16, Hawaii Revised Statutes, is
 
15 repealed.
 
16      ["235-16  County surcharge excise tax credit.  (a)  If the
 
17 collection of the county general excise and use tax surcharge
 
18 starts on January 1, 1993, as provided in sections 46-16.7,
 
19 237-8.5, and 238-2.5, then for taxable years, in each year that
 
20 the surcharge is in effect, beginning after December 31, 1992,
 
21 and ending before January 1, 2003, each resident individual
 
22 taxpayer, who files an individual income tax return for a taxable
 
23 year, and who is not claimed or is not otherwise eligible to be
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1 claimed as a dependent by another taxpayer for federal or Hawaii
 
 2 state individual income tax purposes, may claim a county
 
 3 surcharge excise tax credit in the amount computed under this
 
 4 section against the resident taxpayer's individual income tax
 
 5 liability for the taxable year for which the individual income
 
 6 tax return is being filed; provided that a resident individual
 
 7 who has no income or no income taxable under this chapter and who
 
 8 is not claimed or is not otherwise eligible to be claimed as a
 
 9 dependent by a taxpayer for federal or Hawaii state individual
 
10 income tax purposes may claim this credit.
 
11      (1)  Each resident individual taxpayer who resides for more
 
12           than two hundred days of the taxable year in the
 
13           aggregate in a county in which the county general
 
14           excise and use tax surcharge is in effect may claim the
 
15           tax credit according to the adjusted gross income
 
16           bracket shown in the following schedule:
 
17                        TAX CREDIT SCHEDULE
 
18           Adjusted Gross Income             Tax Credit
 
19                    Under $5,000                $ 25
 
20            $5,000 under $10,000                  45
 
21           $10,000 under $15,000                  65
 
22           $15,000 under $20,000                  90
 
23           $20,000 under $30,000                 110
 

 
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 1           $30,000 under $40,000                 125
 
 2           $40,000 under $50,000                 145
 
 3           $50,000 under $75,000                 185
 
 4          $75,000 under $100,000                 205
 
 5               $100,000 and over                 210
 
 6      (2)  Each resident individual taxpayer who resides for more
 
 7           than two hundred days of the taxable year in the
 
 8           aggregate in a county which has not adopted the county
 
 9           general excise and use tax surcharge may claim a tax
 
10           credit according to the adjusted gross income bracket
 
11           shown in the schedule below:
 
12                        TAX CREDIT SCHEDULE
 
13           Adjusted Gross Income             Tax Credit
 
14                    Under $5,000                 $ 5
 
15            $5,000 under $10,000                  10
 
16           $10,000 under $20,000                  15
 
17           $20,000 under $30,000                  20
 
18           $30,000 under $40,000                  25
 
19           $40,000 under $50,000                  30
 
20           $50,000 under $75,000                  35
 
21                $75,000 and over                  40
 
22      A husband and wife filing separate returns for a taxable
 
23 year for which a joint return could have been filed by them shall
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1 claim only the tax credit to which they would have been entitled
 
 2 had a joint return been filed.
 
 3      (b)  The tax credit under this section shall not be
 
 4 available to (1) any person who has been convicted of a felony
 
 5 and who has been committed to prison and has been physically
 
 6 confined for the full taxable year; (2) any person who would
 
 7 otherwise be eligible to be claimed as a dependent but who has
 
 8 been committed to a youth correctional facility and has resided
 
 9 at the facility for the full taxable year; or (3) any
 
10 misdemeanant who has been committed to jail and has been
 
11 physically confined for the full taxable year.
 
12      (c)  The tax credits claimed by a resident taxpayer pursuant
 
13 to this section shall be deductible from the resident taxpayer's
 
14 individual income tax liability, if any, for the tax year in
 
15 which they are properly claimed.  If the tax credits claimed by a
 
16 resident taxpayer exceed the amount of income tax payment due
 
17 from the resident taxpayer, the excess of credits over payments
 
18 due shall be refunded to the resident taxpayer; provided that tax
 
19 credits properly claimed by a resident individual who has no
 
20 income tax liability shall be paid to the resident individual.
 
21      (d)  If the tax credit is claimed by an individual who does
 
22 not reside in the appropriate county as set forth in subsection
 
23 (a)(1) or (a)(2), there shall be added to and become a part of
 

 
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 1 the tax liability of the individual:
 
 2      (1)  The amount of the tax credit claimed under this section
 
 3           multiplied by three; or
 
 4      (2)  Ten per cent of the income tax liability for the
 
 5           taxable year for which the individual income tax return
 
 6           is being filed,
 
 7 whichever is greater.
 
 8      All claims for tax credits under this section, including any
 
 9 amended claims, must be filed on or before the end of the twelfth
 
10 month following the close of the taxable year for which the
 
11 credits may be claimed.  Failure to comply with the foregoing
 
12 provision shall constitute a waiver of the right to claim the
 
13 credit."]
 
14      SECTION 61.  Section 238-2.5, Hawaii Revised Statutes, is
 
15 repealed.
 
16      ["238-2.5  County general excise and use tax surcharge;
 
17 administration.(a)  The county general excise and use tax
 
18 surcharge, upon the adoption of a county ordinance under section
 
19 46-16.7, shall be levied, assessed, and collected as provided in
 
20 this section on the value of property taxable under this chapter
 
21 at the four per cent tax rate under section 238-2(3) in a manner
 
22 that the combined state use tax and the county general excise and
 
23 use tax surcharge shall be four and one-half per cent in those
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1 counties adopting the surcharge.  All provisions of this chapter
 
 2 shall apply to the county general excise and use tax surcharge.
 
 3 With respect to the surcharge, the director shall have all the
 
 4 rights and powers provided under this chapter.  In addition, the
 
 5 director of taxation shall have the exclusive rights and power to
 
 6 determine the county or counties in which a person imports or
 
 7 purchases tangible personal property and, in the case of a person
 
 8 importing or purchasing tangible property in more than one
 
 9 county, the director shall determine through apportionment or
 
10 other means, that portion of the general excise and use tax
 
11 surcharge attributable to the importation or purchase in each
 
12 county.
 
13      (b)  Each county general excise and use tax surcharge shall
 
14 be levied as of January 1, 1993, and shall continue for a period
 
15 of ten years through December 31, 2002, or until earlier
 
16 repealed.
 
17      (c)  No county general excise and use tax surcharge shall be
 
18 established upon any use taxable under this chapter at the one-
 
19 half per cent tax rate or upon any use that is not subject to
 
20 taxation or that is exempt from taxation under this chapter.
 
21      (d)  The director of taxation shall revise the use tax forms
 
22 to provide for the clear and separate designation of the
 
23 imposition and payment of the county general excise and use tax
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1 surcharge.
 
 2      The taxpayer shall designate the taxation district to which
 
 3 the county general excise and use tax surcharge is assigned in
 
 4 accordance with rules adopted by the director of taxation under
 
 5 chapter 91.  The taxpayer shall file a schedule with the
 
 6 taxpayer's periodic and annual general excise and use tax returns
 
 7 summarizing the amount of taxes assigned to each taxation
 
 8 district.
 
 9      The penalties provided by section 231-39 for failure to file
 
10 a tax return shall be imposed on the amount of surcharge due on
 
11 the return being filed for the failure to file the schedule
 
12 required to accompany the return.  In addition, there shall be
 
13 added to the tax an amount equal to ten per cent of the amount of
 
14 the surcharge and tax due on the return being filed for the
 
15 failure to file the schedule or the failure to correctly report
 
16 the assignment of the use tax by taxation district on the
 
17 schedule required under this subsection.
 
18      (e)  All taxpayers who file on a fiscal year basis whose
 
19 fiscal year ends after December 31, 1992, or after December 31,
 
20 2002, shall file a short period annual return for the period
 
21 preceding January 1, 1993, or preceding January 1, 2003.  Each
 
22 fiscal year taxpayer shall also file a short period annual return
 
23 for the period starting after December 31, 1992, and ending
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1 before January 1, 1994, and for the period starting after
 
 2 December 31, 2002, and ending before January 1, 2004.
 
 3      All monthly, annual, and amended returns due under this
 
 4 chapter for any period preceding January 1, 2003, which are
 
 5 submitted to the department after December 31, 2002, shall
 
 6 include in payments submitted with the return any county general
 
 7 excise and use tax surcharge that may be due for the period
 
 8 preceding January 1, 2003."]
 
 9      SECTION 62.  Section 238-4, Hawaii Revised Statutes, is
 
10 repealed.
 
11      ["238-4 Certain property used by producers.  If a licensed
 
12 producer, or a cooperative association acting under the authority
 
13 of chapter 421 or 422, in order to sell to such producer, or a
 
14 licensed person, imports into the State or acquires in the State
 
15 commodities, materials, items, services, or living things
 
16 enumerated in section 237-4(3) and (5) to (7), then section 237-4
 
17 shall apply.  If section 237-4 applies and the producer is
 
18 engaged in the sale of the producer's products at retail or in
 
19 any manner other than at wholesale, then the tax upon use of
 
20 property in the State imposed by section 238-2(2) shall apply the
 
21 same as in the case of a purchaser who is a licensed retailer.
 
22 In other such cases no tax shall be imposed under this chapter."]
 
23      SECTION 63.  Section 239-6, Hawaii Revised Statutes, is
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1 repealed.
 
 2      ["239-6 Airlines, certain carriers.  There shall be levied
 
 3 and assessed upon each airline a tax of four per cent of its
 
 4 gross income each year from the airline business; provided that
 
 5 if an airline adopts a rate schedule for students in grade twelve
 
 6 or below travelling in school groups providing such students at
 
 7 reasonable hours a rate less than one-half of the regular adult
 
 8 fare, the tax shall be three per cent of its gross income each
 
 9 year from the airline business.  There shall be levied and
 
10 assessed upon each motor carrier, each common carrier by water,
 
11 and upon each contract carrier other than a motor carrier, a tax
 
12 of four per cent of its gross income each year from the motor
 
13 carrier or contract carrier business.  The tax imposed by this
 
14 section is a means of taxing the personal property of the airline
 
15 or other carrier, tangible and intangible, including going
 
16 concern value, and is in lieu of the tax imposed by chapter 237
 
17 but is not in lieu of any other tax."]
 
18      SECTION 64.  Section 248-2.5, Hawaii Revised Statutes, is
 
19 repealed.
 
20      ["[248-2.5]  County general excise and use tax surcharge;
 
21 disposition of proceeds.(a)  All county general excise and use
 
22 tax surcharges collected by the director of taxation shall be
 
23 paid into the state treasury each month within ten working days
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1 after collection, and shall be kept by the state director of
 
 2 finance in special accounts.  Out of the county general excise
 
 3 and use tax surcharges paid into the state treasury special
 
 4 accounts, the state director of finance shall retain, from time
 
 5 to time, sufficient amounts to reimburse the State for the costs
 
 6 of assessment, collection, and disposition of the county general
 
 7 excise and use tax surcharge incurred by the State.  Amounts
 
 8 retained shall be general fund realizations of the State.
 
 9      (b)  The costs of assessment, collection, and disposition of
 
10 county general excise and use tax surcharges shall be withheld
 
11 from payment to the several counties by the State out of the
 
12 county general excise and use tax surcharges collected for the
 
13 current calendar year.
 
14      The costs of assessment, collection, and disposition of the
 
15 county general excise and use tax surcharges shall be borne by
 
16 each of the several counties in an amount proportional to the
 
17 total amount of surcharges allocated to that county divided by
 
18 the total amount of surcharges collected for the entire State for
 
19 the preceding calendar year.
 
20      For the purpose of this section, the costs of assessment,
 
21 collection, and disposition of the county general excise and use
 
22 tax surcharges shall include any and all costs, direct or
 
23 indirect, which are deemed necessary and proper to effectively
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1 administer this section and sections 237-8.5 and 238-2.5.  Costs
 
 2 include refunds or reductions of income taxes under section
 
 3 235-110.7 attributable to the county general excise and use tax
 
 4 surcharge.
 
 5      (c)  After the deduction of the costs under subsection (b),
 
 6 the state director of finance shall pay the remaining balance on
 
 7 a monthly or quarterly basis to the director of finance for each
 
 8 county which has adopted a county general excise and use tax
 
 9 surcharge under section 46-16.7.  The payments shall be made as
 
10 soon as possible after the county general excise and use tax
 
11 surcharges have been paid into the state treasury special
 
12 accounts, or after the disposition of any tax appeal, as the case
 
13 may be.  All county general excise and use tax surcharges
 
14 collected shall be distributed by the state director of finance
 
15 to the county in which the county general excise tax surcharge is
 
16 generated and shall be a general fund realization of the county
 
17 to be used for the purposes specified in section 46-16.7 by each
 
18 of the several counties."]
 
19      SECTION 65.  Chapter 237, Hawaii Revised Statutes, is
 
20 repealed.
 
21      SECTION 66.  Chapter 238, Hawaii Revised Statutes, is
 
22 repealed.
 
23      SECTION 67.  The legislative reference bureau shall make
 

 
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                                     S.B. NO.           2540
                                                        
                                                        

 
 1 recommendations on additional changes to the statutes necessary
 
 2 to comply with the intent of this Act.  The legislative reference
 
 3 bureau shall submit its findings and proposed legislation to the
 
 4 legislature no later than twenty days prior to the convening of
 
 5 the regular session of 2002.
 
 6      SECTION 68.  Statutory material to be repealed is bracketed.
 
 7 New statutory material is underscored.
 
 8      SECTION 69.  This Act shall take effect on July 1, 2001.
 
 9 
 
10                           INTRODUCED BY:  _______________________