REPORT TITLE:
General Excise Tax


DESCRIPTION:
Amends definition of gross income to allow taxpayers to deal on a
cash basis.  (SD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO GENERAL EXCISE TAX.


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

 1      SECTION 1.  Section 237-3, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "§237-3 "Gross income", "gross proceeds of sale", defined.
 
 4 (a)  "Gross income" means the gross receipts, cash or accrued, of
 
 5 the taxpayer received as compensation for personal services and
 
 6 the gross receipts of the taxpayer derived from trade, business,
 
 7 commerce, or sales and the value proceeding or accruing from the
 
 8 sale of tangible personal property, or service, or both, and all
 
 9 receipts, actual or accrued as hereinafter provided, by reason of
 
10 the investment of the capital of the business engaged in,
 
11 including interest, discount, rentals, royalties, fees, or other
 
12 emoluments however designated and without any deductions on
 
13 account of the cost of property sold, the cost of materials used,
 
14 labor cost, taxes, royalties, interest, or discount paid or any
 
15 other expenses whatsoever.  Every taxpayer shall be presumed to
 
16 be dealing on a cash basis unless the taxpayer proves to the
 
17 satisfaction of the department of taxation that the taxpayer is
 
18 dealing on an accrual basis and the taxpayer's books are so kept,
 
19 or unless the taxpayer employs or is required to employ the
 
20 accrual basis for the purposes of the tax imposed by chapter 235
 

 
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 1 for any taxable year in which event the taxpayer shall report the
 
 2 taxpayer's gross income for the purposes of this chapter on the
 
 3 accrual basis for the same period.
 
 4      "Gross proceeds of sale" means the value actually proceeding
 
 5 from the sale of tangible personal property without any deduction
 
 6 on account of the cost of property sold or expenses of any kind.
 
 7      (b)  The words "gross income" and "gross proceeds of sales"
 
 8 shall not be construed to include:  gross receipts from the sale
 
 9 of securities as defined in 15 United States Code section 78c or
 
10 similar laws of jurisdictions outside the United States,
 
11 contracts for the sale of a commodity for future delivery and
 
12 other agreements, options, and rights as defined in 7 United
 
13 States Code section 2 that are permitted to be traded on a board
 
14 of trade designated by the Commodities Futures Trading Commission
 
15 under the Commodity Exchange Act, or evidence of indebtedness or,
 
16 except as otherwise provided, from the sale of land in fee
 
17 simple, improved or unimproved, dividends as defined by
 
18 chapter 235; cash discounts allowed and taken on sales; the
 
19 proceeds of sale of goods, wares, or merchandise returned by
 
20 customers when the sale price is refunded either in cash or by
 
21 credit; or the sale price of any article accepted as part payment
 
22 on any new article sold, if the full sale price of the new
 
23 article is included in the "gross income" or "gross proceeds of
 

 
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 1 sales"; gross receipts from the sale or transfer of materials or
 
 2 supplies, interest on loans, or the provision of engineering,
 
 3 construction, maintenance, or managerial services by one "member"
 
 4 of an "affiliated public service company group" to another
 
 5 "member" of the same group as such terms are defined in
 
 6 section 239-2.  Accounts found to be worthless and actually
 
 7 charged off for income tax purposes may, at corresponding
 
 8 periods, be deducted from gross proceeds of sale, or gross
 
 9 income, within this chapter, so far as they reflect taxable sales
 
10 made, or gross income earned, after July 1, 1935, but shall be
 
11 added to gross proceeds of sale or gross income when and if
 
12 afterwards collected. 
 
13      (c)  For purposes of the tax imposed by this chapter,
 
14 subject to subsection (a), a taxpayer under section 237-13(3) may
 
15 report on a cash basis; provided the taxpayer notifies the
 
16 department of taxation of the basis upon which the tax imposed by
 
17 this chapter is to be reported."
 
18      SECTION 2.  New statutory material is underscored.
 
19      SECTION 3.  This Act shall take effect on January 1, 2001.