Requires the department of taxation to work with the United States government and develop a system to enforce the collection of GET from U.S. mainland contractors working in Hawaii on federal projects requiring the payment of GET. Requires report to the legislature on necessary proposed legislation.

A BILL FOR AN ACT

SECTION 1. The legislature finds that in a number of cases over the years, contractors from the United States mainland who are working on federal construction projects in Hawaii have failed to pay general excise taxes, even, in some cases, when their contracts with the federal government specifically requires them to pay applicable state and local taxes. The legislature further finds that the state department of taxation is often unaware that these contractors are physically present in Hawaii, since there is generally no way for them to know or find out if these mainland contractors are in the State.

The purpose of this Act is therefore to require the state department of taxation to work with the federal government to devise a system to enforce the collection of these taxes, to request the assistance of the federal government in this matter, and to require the department to report back to the legislature on the need for any necessary proposed legislation.

SECTION 2. Collection of general excise taxes from United States mainland contractors working on federal projects. (a) The director of taxation shall develop a system to determine when contractors from the United States mainland are present in Hawaii to work on federal projects, including the starting and anticipated completion dates for these contracts, for the purpose of enforcing the laws relating to the collection of general excise taxes on these contractors that may be required under chapter 237, Hawaii Revised Statutes.

(b) The United States government is requested to provide the information necessary to ascertain the names and work dates of United States mainland contractors specified in subsection (a). The director of taxation shall work with the United States government as may be necessary to establish this information for the purposes of enforcement and collection of taxes.

(c) The system developed under subsection (a) shall include provisions allowing for the director to contract with bonded collection agencies under section 231-26(e), Hawaii Revised Statutes, in cases in which the mainland contractor owing delinquent general excise taxes to the State has moved from the State back to the United States mainland, and other collection provisions under chapter 231, Hawaii Revised Statutes, to pursue and collect the claims of the State.

(d) The director of taxation shall adopt rules pursuant to chapter 91 as may be necessary to implement this section.

SECTION 3. The director of taxation shall report on findings and recommendations, including any proposed necessary legislation, to the legislature no later than twenty days before the convening of the regular session of 2002.

SECTION 4. This Act shall take effect upon its approval.