HB1744 SD1.DOC

SECTION 1. The purpose of this Act is to create a county surcharge on transient accommodations tax and to repeal the distribution of transient accommodations tax revenues to the counties.

SECTION 2. Chapter 46, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§46‑ County surcharge on transient accommodations tax. (a) Each county may establish a surcharge on transient accommodations tax in addition to the rates enumerated in section 237D-2. A county electing to establish this surcharge shall do so by ordinance after January 1, 2010; provided that:

(1) No ordinance shall be adopted until the county has conducted a public hearing on the proposed ordinance;

(2) No county surcharge on transient accommodations tax that may be authorized under this section shall be levied prior to January 1, 2010; and

(3) The surcharge shall be no greater than five per cent.

Notice of the public hearing required under paragraph (1) shall be published in a newspaper of general circulation within the county at least twice within a period of thirty days immediately preceding the date of the hearing.

(b) A county electing to exercise the authority granted under this section shall notify the director of taxation within ten days after the county has adopted the ordinance establishing a surcharge on transient accommodations tax and, beginning no earlier than one hundred eighty days after the adoption of an ordinance establishing the surcharge authorized under this section, the director of taxation shall levy, assess, collect, and otherwise administer the county surcharge on transient accommodations tax."

SECTION 3. Chapter 237D, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§237D‑ County surcharge on transient accommodations tax; administration. (a) The county surcharge on transient accommodations tax, upon the adoption of a county ordinance and in accordance with the requirements of section 46- , shall be levied, assessed, and collected as provided in this section on all gross rental proceeds taxable under this chapter. No county shall set the surcharge on transient accommodations tax at a rate greater than five per cent of all gross rental proceeds taxable under this chapter. All provisions of this chapter shall apply to the county surcharge on transient accommodations tax. With respect to the surcharge, the director of taxation shall have all the rights and powers provided under this chapter. In addition, the director of taxation shall have the exclusive rights and power to determine the county or counties in which a person is engaged in business and, in the case of a person engaged in business in more than one county, the director shall determine, through apportionment or other means, that portion of the surcharge on transient accommodations tax attributable to business conducted in each county.

(b) Each county surcharge on transient accommodations tax that may be established pursuant to section 46‑ shall be levied beginning in the taxable year after the adoption of the relevant county ordinance; provided that no surcharge on transient accommodations tax may be levied prior to not less than one hundred eighty days after the adoption of an ordinance establishing the surcharge authorized under section 46‑ .

(c) The county surcharge on transient accommodations tax, if adopted, shall be imposed on the gross rental proceeds of all written contracts that require the passing on of the taxes imposed under this chapter; provided that if the gross rental proceeds are received as payments beginning in the taxable year in which the taxes become effective, on contracts entered into before June 30 of the year prior to the taxable year in which the taxes become effective, and the written contracts do not provide for the passing on of increased rates of taxes, the county surcharge on transient accommodations tax shall not be imposed on the gross rental proceeds covered under the written contracts. The county surcharge on transient accommodations tax shall be imposed on the gross rental proceeds from all contracts entered into on or after June 30 of the year prior to the taxable year in which the taxes become effective, regardless of whether the contract allows for the passing on of any tax or any tax increases.

(d) No county surcharge on transient accommodations tax shall be established on any transactions, amounts, persons, gross income, or gross rental proceeds exempt from tax under this chapter.

(e) The director of taxation shall revise any tax forms necessary to provide for the clear and separate designation of the imposition and payment of the county surcharge on transient accommodations tax.

(f) The taxpayer shall designate the taxation district to which the county surcharge on transient accommodations tax is assigned, in accordance with rules adopted by the director of taxation under chapter 91. The taxpayer shall file a schedule with the taxpayer's periodic and annual returns required under this chapter summarizing the amount of taxes assigned to each taxation district.

(g) The penalties provided by section 231-39 for failure to file a tax return shall be imposed on the amount of surcharge due on the return being filed for the failure to file the schedule required to accompany the return. In addition, there shall be added to the tax an amount equal to ten per cent of the amount of the surcharge and tax due on the return being filed for the failure to file the schedule or the failure to correctly report the assignment of the transient accommodations tax by taxation district on the schedule required under this subsection.

(h) All taxpayers who file on a fiscal year basis whose fiscal year ends after December 31 of the year prior to the taxable year in which the taxes become effective, shall file a short period annual return for the period preceding January 1 of the taxable year in which the taxes become effective. Each fiscal year taxpayer shall also file a short period annual return for the period starting on January 1 of the taxable year in which the taxes become effective, and ending before January 1 of the following year."

SECTION 4. Section 237D-6.5, Hawaii Revised Statutes, is amended to read as follows:

"§237D-6.5 Remittances; distribution [~~to counties~~]. (a) All remittances of taxes imposed under this chapter shall be made by cash, bank drafts, cashier's check, money order, or certificate of deposit to the office of the taxation district to which the return was transmitted.

(b) Revenues collected under this chapter shall be distributed as follows, with the excess revenues to be deposited into the general fund:

(1) 17.3 per cent of the revenues collected under this chapter shall be deposited into the convention center enterprise special fund established under section 201B-8; provided that beginning January 1, 2002, if the amount of the revenue collected under this paragraph exceeds $33,000,000 in any calendar year, revenues collected in excess of $33,000,000 shall be deposited into the general fund; and

(2) 34.2 per cent of the revenues collected under this chapter shall be deposited into the tourism special fund established under section 201B-11 for tourism promotion and visitor industry research; provided that beginning on July 1, 2002, of the first $1,000,000 in revenues deposited:

(A) Ninety per cent shall be deposited into the state parks special fund established in section 184-3.4; and

(B) Ten per cent shall be deposited into the special land and development fund established in section 171-19 for the Hawaii statewide trail and access program;

provided that of the 34.2 per cent, 0.5 per cent shall be transferred to a sub-account in the tourism special fund to provide funding for a safety and security budget, in accordance with the Hawaii tourism strategic plan 2005-2015; provided further that of the revenues remaining in the tourism special fund after revenues have been deposited as provided in this paragraph and except for any sum authorized by the legislature for expenditure from revenues subject to this paragraph, beginning July 1, 2007, funds shall be deposited into the tourism emergency trust fund, established in section 201B-10, in a manner sufficient to maintain a fund balance of $5,000,000 in the tourism emergency trust fund[~~; and~~

~~(3)~~ 44.8 per cent of the revenues collected under this chapter shall be transferred as follows: Kauai county shall receive 14.5 per cent, Hawaii county shall receive 18.6 per cent, city and county of Honolulu shall receive 44.1 per cent, and Maui county shall receive 22.8 per cent].

All transient accommodations taxes shall be paid into the state treasury each month within ten days after collection and shall be kept by the state director of finance in special accounts for distribution as provided in this subsection.

[(c) On or before January or July 1 of each year or after the disposition of any tax appeal with respect to an assessment for periods after June 30, 1990, the state director of finance shall compute and pay the amount due as provided in subsection (b) to the director of finance of each county to become a general realization of the county expendable as such, except as otherwise provided by law.]"

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

SECTION 6. This Act shall take effect on July 1, 2046; provided that section 4 shall take effect on July 1, 2010.

HOUSE OF REPRESENTATIVES	H.B. NO.	1744
TWENTY-FIFTH LEGISLATURE, 2009		H.D. 1
STATE OF HAWAII		S.D. 1