STAND. COM. REP. NO.  190

 

Honolulu, Hawaii

                , 2009

 

RE:   H.B. No. 1129

 

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Fifth State Legislature

Regular Session of 2009

State of Hawaii

 

Sir:

 

     Your Committee on Labor & Public Employment, to which was referred H.B. No. 1129 entitled:

 

"A BILL FOR AN ACT RELATING TO UNEMPLOYMENT CONTRIBUTION RATES,"

 

begs leave to report as follows:

 

     The purpose of this bill is to conform State Unemployment Insurance (UI) law to federal law by:

 

(1)  Ensuring that the state's experience rating system is applied uniformly to all business transfers, whether total or partial, or mandatory or voluntary; and

 

(2)  Amending a citation of federal law to reflect the correct section of the Internal Revenue Code, as amended.

 

     The Department of Labor and Industrial Relations testified in support of this bill.

 

     In 2004, Public Law 108-295 (P.L. 108-295) established a nationwide minimum to curb the use of a tax evasion scheme involving the manipulation of an employer's UI tax rate to achieve a lower rate and thereby pay less UI taxes.  This was accomplished through a variety of means, including business transfers, restructuring, payroll transfers, and shell transactions.

     In 2005, Hawaii passed legislation to conform state UI laws to the new requirements of P.L. 108-295.  However, an inconsistency in the time periods used to calculate an employer's UI tax rates under certain conditions still exists, which can result in multiple recalculations within a given year costing the State and employers time and money.  This measure corrects this problem.

 

     As affirmed by the record of votes of the members of your Committee on Labor & Public Employment that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1129 and recommends that it pass Second Reading and be referred to the Committee on Economic Revitalization, Business, & Military Affairs.

 

 

Respectfully submitted on behalf of the members of the Committee on Labor & Public Employment,

 

 

		____________________________ KARL RHOADS, Chair