HB555.DOC

SECTION 1. The legislature finds that persons and firms that conduct business in the State without first obtaining a general excise tax license are benefitting from the privilege of doing business in this State while escaping from the obligation to pay for that privilege. The purpose of this Act is to establish a moratorium period for unlicensed firms and persons to obtain a general excise tax license and to strengthen penalties upon the termination of the moratorium period for firms and persons who conduct business in the State without a license.

SECTION 2. Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§237- Moratorium on licenses. No person who is required to obtain a license under section 237-9 and has not obtained such a license shall be subject to the penalties imposed under section 237-9 or 237-46; provided that the person applies for and obtains a license between the effective date of this Act and December 31, 2009."

SECTION 3. Section 237-9, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(a) Except as provided in this section, any person who has a gross income or gross proceeds of sales or value of products upon which a privilege tax is imposed by this chapter, as a condition precedent to engaging or continuing in such business, shall in writing apply for and obtain from the department of taxation, upon a one-time payment of the sum of $20, a license to engage in and to conduct such business, upon condition that the person shall pay the taxes accruing to the State under this chapter, and the person shall thereby be duly licensed to engage in and conduct the business. Any person licensed or holding a license under this chapter before January 1, 1990, shall pay a one-time license renewal fee of $20 on or before January 31, 1990, as a condition precedent to engaging or continuing in business. The license shall not be transferable and shall be valid only for the person in whose name it is issued and for the transaction of business at the place designated therein. The license may be inspected and examined, and shall at all times be conspicuously displayed at the place for which it is issued. Any person who fails to apply for and obtain a license as a condition precedent to engaging or continuing to engage in a business for which a privilege tax is imposed by this chapter shall be fined $50 for the first offense and $100 for each succeeding offense, in addition to any other penalties imposed by law."

2. By amending subsection (c) to read:

"(c) If the license fee is paid, the department shall not refuse to issue a license or revoke or cancel a license for the exercise of a privilege protected by the First Amendment of the Constitution of the United States, or for the carrying on of interstate or foreign commerce, or for any privilege the exercise of which, under the Constitution and laws of the United States, cannot be restrained on account of nonpayment of taxes, nor shall section 237-46 be invoked to restrain the exercise of such a privilege, or the carrying on of such commerce.

If the license fee is not paid, the department shall invoke section 237-46 to restrain the exercise of such a privilege, or the carrying on of such commerce."

SECTION 4. Section 237-46, Hawaii Revised Statutes, is amended to read as follows:

"§237-46 Collection by suit; injunction. (a) The department of taxation may collect taxes due and unpaid under this chapter, together with all accrued penalties, by action in assumpsit or other appropriate proceedings in the circuit court of the judicial circuit in which the privilege taxed has been exercised. After delinquency shall have continued for sixty days, [or if any person lawfully required so to do under this chapter shall fail to apply for and secure a license as provided by this chapter for a period of sixty days after the first date when the person was required under this chapter to secure the same,] the department may proceed in the circuit court of the judicial circuit in which the privilege taxed or taxable has been exercised, to obtain an injunction restraining the further exercise of the privilege until full payment shall have been made of all taxes and penalties and interest due under this chapter[~~, or until such license is secured, or both, as the circumstances of the case may require~~].

(b) If any person lawfully required so to do under this chapter shall fail to apply for and secure a license as provided by this chapter for a period of sixty days after the first date when the person was required under this chapter to secure the same, the department shall proceed in the circuit court of the judicial circuit in which the privilege taxed or taxable has been exercised, to obtain an injunction restraining the further exercise of the privilege until such license is secured and until full payment shall have been made of all taxes and penalties and interest that would otherwise have been due under this chapter."

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	555
TWENTY-FIFTH LEGISLATURE, 2009
STATE OF HAWAII