S.D. 1

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. 1195 entitled:

begs leave to report as follows:

The purpose of this measure is to make the tax laws consistent with respect to privileged taxpayer communications.

Your Committee finds that this measure is needed to correct inconsistencies within the Hawaii Revised Statutes as it relates to provisions in section 7525, Internal Revenue Code. This section of the Internal Revenue Code relates to the extension of attorney-client privileges to tax advice communications. Currently, the Hawaii Revised Statutes only allow this privilege for the income tax law, where it should really be applied to all state taxes. Thus, your Committee believes these amendments are necessary to apply the principles of section 7525 to all tax laws of the State.

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

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. 1195 and recommends that it pass Third Reading in the form attached hereto as S.B. No. 1195, S.D. 1.