STAND. COM. REP. NO. 849

Honolulu, Hawaii

RE:    S.B. No. 194

       S.D. 2

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fifth State Legislature

Regular Session of 2009

State of Hawaii

Madam:

     Your Committee on Ways and Means, to which was referred S.B. No. 194, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this measure is to protect taxpayers from unscrupulous income tax return preparers.

     Specifically, this measure:

     (1)  Requires tax refunds to be directly deposited into a taxpayer's own account, instead of a paid income tax return preparer's account;

     (2)  Requires a paid income tax return preparer to sign any tax return or claim for refund prepared on behalf of a client taxpayer; and

     (3)  Establishes penalties if a paid income tax return preparer violates the provisions of this measure.

     Your Committee finds that concerns have been raised that this measure applies only to paid income tax return preparers, and would not provide protection against violations committed by unpaid income tax return preparers.  In light of these concerns, your Committee has amended this measure by:

     (1)  Adding a definition of the term "income tax return preparer" that is similar to the definition in the federal Internal Revenue Code; and

     (2)  Making the provisions of the measure applicable to unpaid income tax return preparers as well as paid income tax return preparers.

     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. 194, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 194, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

DONNA MERCADO KIM, Chair