Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2006

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 2379 entitled:

begs leave to report as follows:

The purpose of this measure is to require employers to file a quarterly informational return for state income tax withholding purposes.

The bill also clarifies the time schedule for remitting withheld taxes.

Your Committee finds that employers are required to file returns for the payment of state income taxes withheld from employees and to file returns for reconciliation purposes. Your Committee also finds that the Department of Taxation has reported that the lack of clarity in income tax withholding laws has resulted in enforcement problems with delinquent employers.

This bill clarifies the income tax withholding law to allow the Department of Taxation to enforce applicable provisions and also alleviates much of the administrative burden of filing returns by requiring all employers to submit quarterly returns, rather than on a more frequent basis.

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. 2379 and recommends that it pass Second Reading and be placed on the calendar for Third Reading.