STAND. COM. REP. NO. 142

 

Honolulu, Hawaii

                  

 

RE:    S.B. No. 500

       S.D. 1

 

 

 

Honorable Donna Mercado Kim

President of the Senate

Twenty-Seventh State Legislature

Regular Session of 2013

State of Hawaii

 

Madam:

 

     Your Committees on Commerce and Consumer Protection and Tourism and Hawaiian Affairs, to which was referred S.B. No. 500 entitled:

 

"A BILL FOR AN ACT RELATING TO TRANSIENT ACCOMMODATIONS,"

 

beg leave to report as follows:

 

     The purpose and intent of this measure is to:

 

     (1)  Clarify that an association's duty to report to the Department of Taxation is limited to the relevant information an association actually receives from a transient accommodation operator; and

 

     (2)  Limit the fines imposed on an association while also holding an owner or operator of a transient accommodation accountable for failure to report.

 

     Your Committees received testimony in support of this measure from the Department of Taxation, Community Associations Institute Hawaii Chapter, and three individuals.  Your Committees received comments on this measure from the Hawaii Association of Vacation Rental Managers.

 

     Your Committees find that concerns have been raised about Act 326, Session Laws of Hawaii 2012 (Act 326), and whether it could be read to suggest that associations have an affirmative duty to investigate the actions of association members and determine whether those members were engaged in any taxable conduct.  This measure amends Act 326 to clarify that associations do not have an affirmative duty to collect information on owners in an association who may be operating transient accommodations.  This measure also amends the penalty provisions in Act 326 to a civil fine of up to $2,500.

 

     Your Committees note that a similar measure, S.B. No. 1186 (Regular Session of 2013), which was heard by your Committees, also amends Act 326 by replacing the criminal penalty provisions with civil fines.  Testimony received by your Committees on S.B. No. 1186 indicated that amendments to Act 326 were necessary because existing criminal penalty language in the Act created an inconsistency with section 231-35, Hawaii Revised Statutes.  Your Committees further find that the imposition of a $1,000 civil penalty, as proposed by S.B. No. 1186, is more appropriate than criminal penalties and should be sufficient to bring operators of transient accommodations into compliance with the State's transient accommodations tax law.

 

     Your Committees additionally find that it is appropriate to combine the language contained in this measure with the amendments to the penalty provisions of Act 326 as suggested by S.B. No. 1186, and note that this measure is preferable because of its broader title.

 

     Accordingly, your Committees have amended this measure by:

 

     (1)  Modifying penalties for wilfully failing to supply information required under section 237D‑   (b), (c), and (e), Hawaii Revised Statutes, established by section 2 of Act 326, from criminal penalties to civil penalties and specifying that the civil penalties shall be imposed no more than once per year;

 

     (2)  Requiring nongovernmental entities to provide the Department of Taxation with the name, address, and contact information of local contacts designated by operators, in addition to the relevant information received by operators;

 

     (3)  Specifying that a nongovernmental entity's duty to report shall be limited to relevant information and the name, address, and contact information of local contacts, if any, received from operators; and

 

     (4)  Amending the purpose section of this measure for clarity.

 

     As affirmed by the records of votes of the members of your Committees on Commerce and Consumer Protection and Tourism and Hawaiian Affairs that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 500, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 500, S.D. 1, and be referred to the Committee on Ways and Means.

 

Respectfully submitted on behalf of the members of the Committees on Commerce and Consumer Protection and Tourism and Hawaiian Affairs,

 

____________________________

BRICKWOOD GALUTERIA, Chair

 

____________________________

ROSALYN H. BAKER, Chair