STAND. COM. REP. NO. 615
Honolulu, Hawaii
, 2005
RE: S.B. No. 834
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 Ways and Means, to which was referred S.B. No. 834 entitled:
"A BILL FOR AN ACT RELATING TO CONFORMITY OF THE HAWAII INCOME TAX LAW TO THE INTERNAL REVENUE CODE,"
begs leave to report as follows:
The purpose of this short form measure is to serve as a legislative vehicle to conform Hawaii's income tax law to the federal Internal Revenue Code.
Your Committee has amended the measure by inserting provisions that amend Chapter 235, Hawaii Revised Statutes, to conform with:
(1) Amendments contained in the Working Families Tax Relief Act of 2004 (P.L. No. 108-311; October 4, 2004) by:
(A) Making uniform the definition of "child." (Currently, Hawaii already closely follows the federal definition of "child" for net income tax purposes (e.g., determining whether a person is a dependent)); and
(B) Making permanent the research and development credit under section 41 of the Internal Revenue Code to which Hawaii's income tax law conforms, with modifications;
(2) Amendments contained in the American Jobs Creation Act of 2004 (P.L. No. 108-357, October 22, 2004) by:
(A) Extending the above-the-line deduction for expenses incurred by elementary and secondary schoolteachers for materials used by a teacher in the classroom available under section 62 of the Internal Revenue Code;
(B) Providing the taxpayer with an election to take an itemized deduction for state and local general sales taxes instead of an itemized deduction for state and local income taxes; and
(C) Imposing enhanced substantiation requirements for the charitable deduction under section 170 of the Internal Revenue Code, for contributions of motor vehicles, boats, and airplanes valued at more than $500 limited to charity's sales proceeds; and
(3) Amendments contained in the Pension Funding Equity Act of 2004 (P.L. No. 108-218, April 10, 2004) by temporarily replacing the thirty-year treasury rate with a rate based on long-term corporate bonds for determining the plan's current liability for funding and deduction purposes. (Hawaii has traditionally conformed to the interest provisions under section 412 of the Internal Revenue Code.)
In addition, the amended measure also makes operative a provision from P.L. No. 109-001 (the Act to accelerate the income tax benefits for charitable cash contributions for the relief of victims of the Indian Ocean tsunami), which was passed by Congress in 2005. The Department of Taxation has requested that this amendment be included in the measure, though it is not a law that was adopted by Congress during the 2004 calendar year. This amendment would ensure that taxpayers filing their 2004 tax returns may claim the deduction for contributions made in January 2005, as allowed on the federal level.
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. 834, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 834, S.D. 1, and be recommitted to the Committee on Ways and Means, for further consideration.
Respectfully submitted on behalf of the members of the Committee on Ways and Means,
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____________________________ BRIAN T. TANIGUCHI, Chair |
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