Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 1193 entitled:

begs leave to report as follows:

The purpose of this measure is to simplify the application process for nonprofit organizations seeking exemption from the payment of general excise taxes and reduce the filing burden for these organizations.

Your Committee received testimony in favor of this measure from the Department of Taxation and Chun, Kerr, Dodd, Beaman & Wong, a Limited Liability Law Company. Also, your Committee received comments on this measure from the Tax Foundation of Hawaii.

Your Committee finds that registration procedures for nonprofit organizations under current law are not consistent with federal income tax exempt registration procedures that most people understand. The current law is unforgiving when it comes to late registrations, which is a disincentive for organizations to come forward with any registration problems. Nonprofit organizations typically have volunteer boards that cannot pay proper attention to these registration details. This measure changes the procedures to remove traps for the unwary and to be more accommodating to our nonprofit institutions.

Your Committee adopted the recommendation of the Department of Taxation to amend the measure to clarify the types of organizations that qualify for the minimal registration requirements.

Your Committee has also amended this measure by making technical, nonsubstantive amendments for clarity.

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. 1193, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1193, S.D. 1, and be placed on the calendar for Third Reading.