STAND

STAND. COM. REP. NO. 162

Honolulu, Hawaii

, 2005

RE: S.B. No. 1685

S.D. 1

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Intergovernmental Affairs, to which was referred S.B. No. 1685 entitled:

"A BILL FOR AN ACT RELATING TO TAX,"

begs leave to report as follows:

The purpose of this measure is to allow the counties to obtain from the Department of Taxation income tax and transient accommodation tax information on taxpayers.

Your Committee received testimony in support of this measure from the Department of Taxation, Honolulu Department of Budget and Fiscal Services, Maui Department of Finance, and Hawaii County Finance Department.

Your Committee finds that allowing the counties to obtain information about taxpayers within their jurisdiction is an important resource to strengthen county tax collection efforts. The counties are unable to audit their own tax exemptions and credits for residents filing within their own county. With access to state tax information, such as taxpayers filing as residents in a particular county, they would be able to follow up on discrepancies with their property tax exemptions and credits.

Your Committee has amended this measure on the recommendation of the Department of Taxation by:

(1) Deleting sections 2 and 3, which allow a county access to income tax information and transient accommodation tax information, as unnecessarily removing the authority of the Director of Taxation to determine when, how, and under what circumstances to disclose tax return information; and

(2) Clarifying the discretionary authority of the Department of Taxation under the income tax law to allow counties to inspect income tax returns for tax purposes only.

As affirmed by the record of votes of the members of your Committee on Intergovernmental Affairs that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1685, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1685, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Intergovernmental Affairs,

		____________________________ DAVID Y. IGE, Chair