Requires businesses who apply for tax credits that are related to their commercial activities to sign a release statement allowing the Department of Taxation to publicly disclose their names and the names and amounts of such tax credits claimed. Requires the Department of Taxation to publicly disclose businesses that receive such tax credits.

A BILL FOR AN ACT

SECTION 1. The legislature finds that tax incentives are a useful tool in spurring economic growth. However, there is currently no publicly available document or report that reveals the actual businesses that are benefiting from the tax credits. Improved accountability and transparency are necessary to ensure that the tax incentives established by the legislature are successful in promoting economic growth and development.

The purpose of this Act is to require:

SECTION 2. Chapter 231, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§231- Disclosure; tax credits for commercial activities. (a) Notwithstanding any law to the contrary, every business applying for a state tax credit related to the business's commercial activities shall agree, in a signed statement, to allow the department to publicly disclose the name of the business and the name and amount of each tax credit claimed; provided that any business that does not agree to allow public disclosure shall not be eligible to receive any tax credits.

(b) On or before October 31 of each year, the department shall submit a report to the legislature that shall also be made available to the public in written and electronic formats. The report shall contain:

(b) For the purposes of this section, "business" means an entity that is required to obtain a license under section 237-2."

SECTION 3. Section 235-116, Hawaii Revised Statutes, is amended to read as follows:

"§235-116 Disclosure of returns unlawful; penalty. All tax returns and return information required to be filed under this chapter shall be confidential, including any copy of any portion of a federal return which may be attached to a state tax return, or any information reflected in the copy of such federal return[.]; except that information on tax returns necessary to comply with section 231- shall be made available to the public. It shall be unlawful for any person, or any officer or employee of the State to make known intentionally information imparted by any income tax return or estimate made under sections 235-92, 235-94, 235-95, and 235-97 or wilfully to permit any income tax return or estimate so made or copy thereof to be seen or examined by any person other than the taxpayer or the taxpayer's authorized agent, persons duly authorized by the State in connection with their official duties, the Multistate Tax Commission or the authorized representative thereof, except as provided by law, and any offense against the foregoing provisions shall be punished by a fine not exceeding $500 or by imprisonment not exceeding one year, or both."

SECTION 4. Section 237-34, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) All tax returns and return information required to be filed under this chapter, and the report of any investigation of the return or of the subject matter of the return, shall be confidential[.]; except that information on tax returns necessary to comply with section 231- shall be made available to the public. It shall be unlawful for any person or any officer or employee of the State to intentionally make known information imparted by any tax return or return information filed pursuant to this chapter, or any report of any investigation of the return or of the subject matter of the return, or to wilfully permit any such return, return information, or report so made, or any copy thereof, to be seen or examined by any person; provided that for tax purposes only the taxpayer, the taxpayer's authorized agent, or persons with a material interest in the return, return information, or report may examine them. Unless otherwise provided by law, persons with a material interest in the return, return information, or report shall include:

Any violation of this subsection shall be a misdemeanor."

SECTION 5. Section 237D-13, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) All tax returns and return information required to be filed under this chapter, and the report of any investigation of the return or of the subject matter of the return, shall be confidential[.]; except that information on tax returns necessary to comply with section 231- shall be made available to the public. It shall be unlawful for any person or any officer or employee of the State to intentionally make known information imparted by any tax return or return information filed pursuant to this chapter, or any report of any investigation of the return or of the subject matter of the return, or to wilfully permit any return, return information, or report so made, or any copy thereof, to be seen or examined by any person; provided that for tax purposes only the taxpayer, the taxpayer's authorized agent, or persons with a material interest in the return, return information, or report may examine them. Unless otherwise provided by law, persons with a material interest in the return, return information, or report shall include:

Any violation of this subsection shall be a misdemeanor. Nothing in this subsection shall prohibit the publication of statistics so classified as to prevent the identification of particular reports or returns and the items of the reports or returns."

SECTION 6. Section 431:7-205, Hawaii Revised Statutes, is amended to read as follows:

"§431:7-205 Reports to department of taxation. The commissioner shall promptly report to the department of taxation all amounts of taxes collected under section 431:7-201 to section 431:7-204 and section 431:8-315 and all amounts of refunds of such taxes made under section 431:7-203. Notwithstanding any other provision of this chapter to the contrary, including confidentiality provisions under sections 431:2-209 and 431:2-305(f), the commissioner shall furnish the department of taxation with tax-related information to the extent that is necessary for the department of taxation to comply with the requirements under section 231- ."

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect upon its approval.