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HOUSE OF REPRESENTATIVES |
H.B. NO. |
798 |
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TWENTY-SIXTH LEGISLATURE, 2011 |
H.D. 1 |
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STATE OF HAWAII |
S.D. 2 |
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A BILL FOR AN ACT
RELATING TO TAXATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Act 105, Session Laws of Hawaii 2011, temporarily suspended certain exemptions from the general excise tax for a period of two years, and these exemptions are scheduled to sunset on June 30, 2013. One of the suspended exemptions is for the general excise tax imposed on tangible personal property, including computer hardware, computer software, and telecommunications equipment, that is sold by a person licensed under chapter 237, Hawaii Revised Statutes, to the United States and to any state-chartered credit union, pursuant to section 237-25(a)(3), Hawaii Revised Statutes. The legislature finds that a consequence of not providing the exemption is that Hawaii businesses that sell computer hardware, computer software, and telecommunications equipment to the federal government must pay the general excise tax on those goods but cannot pass the amount of the tax on to the federal government, which in effect creates a financial burden for state businesses and puts them at a disadvantage when competing with out-of-state businesses.
Rather than crippling local businesses, the legislature finds that Hawaii needs to promote the growth of local businesses, including businesses that sell goods to the federal government, which tends to make large purchases from local vendors.
The purpose of this Act is to:
(1) Restore the general excise tax exemption for sales of computer hardware, computer software, and telecommunications equipment to the United States and state-chartered credit unions, pursuant to section 237-25(a)(3); and
(2) Make a housekeeping amendment to Act 105, Session Laws of Hawaii 2011, to comply with federal law.
SECTION 2. Act 105, Session Laws of Hawaii 2011, is amended by amending section 2 to read as follows:
""SECTION 2. Chapter 237, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:
"§237- Temporary suspension of exemption of certain amounts; levy of tax. (a) Notwithstanding any other law to the contrary, the exemption of the following amounts from taxation under this chapter shall be suspended from July 1, 2011, through June 30, 2013:
(1) Amounts deducted from the gross income received by contractors as described under section 237-13(3)(B);
(2) Reimbursements received by federal cost-plus contractors for the costs of purchased materials, plant, and equipment as described under section 237-13(3)(C);
[(3) Gross receipts of home service
providers acting as service carriers providing mobile telecommunications
services to other home service providers as described under section
237-13(6)(D);
(4)] (3) Amounts deducted from the
gross income of real property lessees because of receipt from sublessees as
described under section 237-16.5;
[(5)] (4) The value or gross income
received by nonprofit organizations from certain conventions, conferences,
trade show exhibits, or display spaces as described under section 237-16.8;
[(6)] (5) Amounts received by sugarcane
producers as described under section 237-24(14);
[(7)] (6) Amounts received from the
loading, transportation, and unloading of agricultural commodities shipped
interisland as described under section 237-24.3(1);
[(8)] (7) Amounts received from the sale
of intoxicating liquor, cigarettes and tobacco products, and agricultural,
meat, or fish products to persons or common carriers engaged in interstate or
foreign commerce as described under section 237-24.3(2);
[(9)] (8) Amounts received or accrued
from the loading or unloading of cargo as described under section
237-24.3(4)(A);
[(10)] (9) Amounts received or accrued
from tugboat and towage services as described under section 237-24.3(4)(B);
[(11)] (10) Amounts received or accrued
from the transportation of pilots or government officials and other
maritime-related services as described under section 237-24.3(4)(C);
[(12)] (11) Amounts received by labor
organizations for real property leases as described under section 237-24.3(10);
[(13)] (12) Amounts received as rent for
aircraft or aircraft engines used for interstate air transportation as described
under section 237-24.3(12);
[(14)] (13) Amounts received by exchanges
and exchange members as described under section 237-24.5;
[(15)] (14) Amounts received as high
technology research and development grants under section 206M-15 as described under
section 237-24.7(10);
[(16)] (15) Amounts received from the
servicing and maintenance of aircraft or construction of aircraft service and
maintenance facilities as described under section 237-24.9;
[(17)] (16) Gross proceeds from the sale
of the following:
(A) Intoxicating liquor to the United States (including any agency or instrumentality of the United States that is wholly owned or otherwise so constituted as to be immune from the levy of a tax under chapter 238 or 244D, but not including national banks) or any organization to which the sale is permitted by the proviso of "Class 3" of section 281-31 that is located on any Army, Navy, or Air Force reservation as described under section 237-25(a)(1);
(B) Tobacco products and cigarettes to the United States (including any agency or instrumentality thereof that is wholly owned or otherwise so constituted as to be immune from the levy of tax under chapter 238 or 245, but not including national banks) as described under section 237-25(a)(2); and
(C) "Other tangible personal property" to the United States (including any agency, instrumentality, or federal credit union thereof, but not including national banks) and any state-chartered credit union as described under section 237-25(a)(3); provided that this subparagraph shall not apply to the sale of computer hardware, computer software, or telecommunications equipment to the United States (including any agency, instrumentality, or federal credit union thereof, but not including national banks) and any state-chartered credit union;
[(18)] (17) Amounts received by petroleum
product refiners from other refiners for further refining of petroleum products
as described under section 237-27;
[(19)] (18) Gross proceeds received from
the construction, reconstruction, erection, operation, use, maintenance, or
furnishing of air pollution control facilities, as described under section
237-27.5, that do not have valid certificates of exemption on July 1, 2011;
[(20)] (19) Gross proceeds received from
shipbuilding and ship repairs as described under section 237-28.1;
[(21)] (20) Amounts received by
telecommunications common carriers from call center operators for interstate or
foreign telecommunications services as described under section 237-29.8;
[(22)] (21) Gross proceeds received by
qualified businesses in enterprise zones, as described under section 209E-11,
that do not have valid certificates of qualification from the department of
business, economic development, and tourism on July 1, 2011; and
[(23)] (22) Gross proceeds received by
contractors licensed under chapter 444 for construction within enterprise zones
performed for qualified businesses within the enterprise zones or businesses
approved by the department of business, economic development, and tourism to
enroll into the enterprise zone program, as described under section 209E-11.
(b) Except as otherwise provided under subsection (f), (g), or (h), there is levied, assessed, and collected annually against a taxpayer receiving or deriving previously exempt gross income or gross proceeds of sale from July 1, 2011, to June 30, 2013, a tax at the rate of four per cent on that previously exempt gross income or gross proceeds of sale.
(c) As used in this section, "previously
exempt gross income or gross proceeds of sale" means the amount of the
gross income or gross proceeds of sale, the exemption for which is suspended
under subsection (a). The term also includes the value received by a nonprofit
organization from conventions, conferences, trade show exhibits, and display
spaces, the exemption for which is suspended under subsection [(a)(5).] (a)(4).
(d) The taxpayer, against whom the tax is levied and assessed under this section, shall be responsible for payment of the tax to the director of taxation.
(e) Notwithstanding section 237-8.6, no county surcharge shall be levied, assessed, or collected on any previously exempt gross income or gross proceeds of sale that is subject to taxation under subsection (b).
(f) This section shall not apply to gross income or gross proceeds from binding written contracts entered into prior to July 1, 2011, that do not permit the passing on of increased rates of taxes.
(g) This section shall not apply to gross income or gross proceeds from stevedoring services and related services, as defined in section 382-1, furnished to a company by its wholly owned subsidiary.
(h) The tax imposed under subsection (b) shall not apply to any gross income or gross proceeds of sale that cannot legally be so taxed under the Constitution or laws of the United States, but only so long as, and only to the extent to which the State is without power to impose the tax.
To the extent that any exemption, exclusion, or apportionment is necessary to comply with the preceding sentence, the director of taxation shall:
(1) Exempt or exclude the gross income or gross proceeds of sale from the tax under subsection (b); or
(2) Apportion the gross income or gross proceeds of sale derived within the State by persons engaged in business both within and without the State to determine the gross income or gross proceeds of sale that is subject to taxation under this chapter for the purposes of section 237-21.
(i) This chapter shall apply to the payment, collection, enforcement, and appeal of the tax levied under this section.
The director of taxation may establish additional requirements, procedures, and forms pursuant to rules adopted under chapter 91, to effectuate this section.
§237- Information reporting. Beginning July 1, 2011, the director of taxation shall require information reporting on all exclusions or exemptions of all amounts, persons, or transactions from this chapter, except for the following:
(1) Amounts received that are exempt under section 237-24(1) through (7); and
(2) Any other amounts, persons, or transactions as determined by the director to be in the best interest of tax administration and made by official pronouncement.""
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect on July 1, 2050, and shall apply to gross income or gross proceeds received after June 30, 2012.
Report Title:
Taxation; General Excise Tax; Exemptions; Repeal
Description:
Repeals the temporary suspension under Act 105, SLH 2011, on the general excise tax exemption on sales of computer hardware, computer software, and telecommunications equipment sold to the federal government and state-chartered credit unions. Amends Act 105, SLH 2011, to comply with federal law. Effective 07/01/2050. (SD2)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.