STAND. COM. REP. NO. 2465

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2947
                                        




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred
S.B. No. 2947 entitled:

     "A BILL FOR AN ACT RELATING TO DISCLOSURE OF TAX
     INFORMATION,"

begs leave to report as follows:

     The purpose of this measure is to allow the disclosure of
general excise/use tax return and tax return information to a
person contractually obligated to pay general excise and use
taxes assessed against another person.

     Testimony in support of the measure was received from the
Department of Taxation.  The Tax Foundation submitted comments on
the measure.

     Your Committee finds that under existing law, general excise
and use tax return information is considered confidential and
available only to the taxpayer, its authorized agents, or those
with a material interest, such as trustees or partners.  However,
existing law does not consider a person who is contractually
obligated to pay general excise and use taxes assessed against
another as having a material interest and therefore, that person
is unable to access this information.

     Your Committee is aware this measure permits the Department
of Taxation to share tax information with those liable under
contract for someone else's tax liability.  A committee member
asked if this situation addressed in this measure could be

 
a                                                     SB2947
                                   STAND. COM. REP. NO. 2465
                                   Page 2


remedied by withholding the 4% GET at the source.  The Department
noted that, while such an approach would be effective, it has
been met with strong opposition in the past on grounds that it
would impose a regulatory burden without evidence of significant
tax revenues to be gained.  Your Committee believes that it is
advisable to move this vehicle without provision for withholding
at the source to cleanly address the fairness issue involved, but
urges the Department to further consider the option of
withholding at the source.

     Your Committee believes that the measure rectifies an unfair
situation for persons under contractual obligation and allows the
Department of Taxation to resolve such issues more expeditiously
by allowing the Department to discuss these issues with, and
provide information to, the person under the contractual
obligation to pay the tax during the administrative process prior
to tax assessment.

     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attached to this report, your
Committee is in accord with the intent and purpose of
S.B. No. 2947 and recommends that it pass Second Reading and be
placed on the calendar for Third Reading.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,



                                 ________________________________
                                 CAROL FUKUNAGA, Co-Chair



                                 ________________________________
                                 ANDREW LEVIN, Co-Chair

 
a                                                     SB2947