STAND. COM. REP. NO. 629

Honolulu, Hawaii

RE:    S.B. No. 756

       S.D. 2

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2011

State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred S.B. No. 756, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose and intent of this measure is to facilitate the electronic filing of taxes.

     More specifically, this measure:

     (1)  Establishes the integrated tax services and management special fund to receive revenues from the integrated tax services and management system's post-implementation revenue-generating initiatives;

     (2)  Provides that moneys in the fund will be used to pay for the integrated tax services and management system;

     (3)  Requires the Department of Taxation to establish a system to allow taxpayers to file all tax returns, applications, reports, and other documents electronically, telephonically, or by optical means, with no additional cost to the taxpayer;

     (4)  Lowers the threshold for any taxpayer required to remit taxes by one of the means of electronic funds transfer from $100,000 to $50,000 in tax liability; and

     (5)  Reestablishes the last day of the month, rather than the twentieth day of the month, as the deadline for filing and payment of miscellaneous taxes and quarterly filing and payment of periodic insurance premium taxes.

     Your Committee received comments on this measure from Kalbert K. Young, Director Department of Budget and Finance; and the Tax Foundation of Hawaii.

     Your Committee finds that this measure will provide the Department of Taxation with the resources necessary to further modernize its integrated tax services and management system and allow for expanded electronic tax filing capability.

     Your Committee has amended this measure by:

     (1)  Deleting the dollar amount of the threshold for a taxpayer to be required to remit taxes by electronic funds transfer and changing it to an unspecified amount;

     (2)  Changing the effective date to July 1, 2050, to facilitate further discussion on the measure; and

     (3)  Making technical, nonsubstantive amendments for the purposes of clarity and style.

     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. 756, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 756, S.D. 2.

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

____________________________

DAVID Y. IGE, Chair