HB562.DOC

SECTION 1. The legislature finds that the general excise tax is unfairly administered to the detriment of many hard working small businesses. Despite the severe slowdown in the economy and the drastically reduced visitor spending statewide, the general excise tax is still assessed and collected. This policy has crippled numerous small businesses, causing many to fall behind in their general excise tax filings or not pay the tax at all. Many small businesses are on the brink of closing and must often choose between meeting their payroll or paying the general excise tax.

If these businesses are compelled under threats of criminal prosecution to pay their general excise tax, they will be forced to lay-off many employees, which will cause needless exacerbation of an already overloaded state unemployment system, as well as threaten a substantial source of state tax revenue.

By making reasonable modifications to the general excise tax law, this Act assists these businesses to continue operating with the assurance that all general excise tax obligations will be met.

The purpose of this Act is to provide general excise tax relief to overburdened small businesses.

SECTION 2. Section 237-30, Hawaii Revised Statutes, is amended to read as follows:

"§237-30 Monthly, quarterly, or semiannual return, computation of tax, payment. (a) The taxes levied hereunder shall be payable in monthly installments on or before the last day of the calendar month following the month in which they accrue[.]; provided that a grace period of thirty days shall apply to the payments if the applicable return is timely filed pursuant to this section or the payment qualifies under section 237-33. The taxpayer [~~shall~~], on or before the last day of the calendar month following the month in which the taxes accrue, shall make out and sign a return of the installment of tax for which the taxpayer is liable for the preceding month and transmit the same, together with a remittance, in the form required by section 237-31, for the amount of the tax, to the office of the department of taxation in the appropriate district hereinafter designated.

(b) Notwithstanding subsection (a), the director of taxation, for good cause, may permit a taxpayer to file the taxpayer's return required under this section and make payments thereon:

(1) On a quarterly basis during the calendar or fiscal year, the return and payment to be made on or before the last day of the calendar month after the close of each quarter[,]; provided that a grace period of ninety days shall apply to the payments if the applicable return is timely filed pursuant to this section or the payment qualifies under section 237-33, to wit: for calendar year taxpayers, on or before April 30, July 31, October 31, and January 31 or, for fiscal year taxpayers, on or before the last day of the fourth month, seventh month, and tenth month following the beginning of the fiscal year and on or before the last day of the month following the close of the fiscal year; provided further that the director is satisfied that the grant of the permit will not unduly jeopardize the collection of the taxes due thereon and the taxpayer's total tax liability for the calendar or fiscal year under this chapter will not exceed [~~$4,000;~~] $12,000; or

(2) On a semiannual basis during the calendar or fiscal year, the return and payment to be made on or before the last day of the calendar month after the close of each six-month period[,]; provided that a grace period of one hundred eighty days shall apply to the payments if the applicable return is timely filed pursuant to this section or the payment qualifies under section 237-33, to wit: for calendar year taxpayers, on July 31 and January 31 or, for fiscal year taxpayers, on or before the last day of the seventh month following the beginning of the fiscal year and on or before the last day of the month following the close of the fiscal year; provided that the director is satisfied that the grant of the permit will not unduly jeopardize the collection of the taxes due thereon and the taxpayer's total tax liability for the calendar or fiscal year under this chapter will not exceed $2,000.

The director, for good cause, may permit a taxpayer to make monthly payments based on the taxpayer's estimated quarterly or semiannual liability, provided the taxpayer files a reconciliation return at the end of each quarter or at the end of each six-month period during the calendar or fiscal year, as provided in this section.

(c) [If] Except as otherwise provided in this chapter, if a taxpayer filing the taxpayer's return on a quarterly or semiannual basis, as provided in this section, becomes delinquent in either the filing of the taxpayer's return or the payment of the taxes due thereon, or if the liability of a taxpayer, who possesses a permit to file the taxpayer's return and to make payments on a semiannual basis exceeds $2,000 in general excise taxes during the calendar year or exceeds [~~$4,000~~] $12,000 in general excise taxes during the calendar year if making payments on a quarterly basis, or if the director determines that any such quarterly or semiannual filing of return would unduly jeopardize the proper administration of this chapter, including the assessment or collection of the general excise tax, the director may, at any time, revoke a taxpayer's permit, in which case the taxpayer will then be required to file the taxpayer's return and make payments thereon as herein provided in subsection (a).

(d) The director may adopt [~~and promulgate~~] rules [~~and regulations~~] pursuant to chapter 91 to carry out the purposes of this section.

(e) Section 232-2 does not apply to a monthly return."

SECTION 3. Section 237-33, Hawaii Revised Statutes, is amended to read as follows:

"§237-33 Annual return, payment of tax. On or before the twentieth day of the fourth month following the close of the taxable year, each taxpayer shall make a return showing the value of products, gross proceeds of sales or gross income, and compute the amount of tax chargeable against the taxpayer in accordance with this chapter and deduct the amount of monthly payments (as hereinbefore provided), and transmit with the taxpayer's report a remittance in the form required by section 237-31 covering the residue of the tax chargeable against the taxpayer to the district office of the department of taxation hereinafter designated[.]; provided that delinquent payments due during the tax year covered by the annual return may be made with the annual return; provided that all applicable returns under section 237-30 and the annual return are timely filed and the taxpayer has submitted a letter of hardship explaining the late payment that the director of taxation deems reasonable and warrants acceptance under this section. The return shall be signed by the taxpayer, if made by an individual, or by the president, vice-president, secretary, or treasurer of a corporation, if made on behalf of a corporation. If made on behalf of a partnership, firm, society, unincorporated association, group, hui, joint adventure, joint stock company, corporation, trust estate, decedent's estate, trust, or other entity, any individual delegated by the entity shall sign the same on behalf of the taxpayer. If for any reason it is not practicable for the individual taxpayer to sign the return, it may be done by any duly authorized agent. The department, for good cause shown, may extend the time for making the return on the application of any taxpayer and grant such reasonable additional time within which to make the same as may, by it, be deemed advisable.

Section 232-2 applies to the annual return, but not to a monthly return."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval and apply to taxable years beginning after December 31, 2008.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	562
TWENTY-FIFTH LEGISLATURE, 2009
STATE OF HAWAII