SB1289 HD1.DOC

THE SENATE	S.B. NO.	1289
TWENTY-SEVENTH LEGISLATURE, 2013		S.D. 2
STATE OF HAWAII		H.D. 1

A BILL FOR AN ACT

RELATING TO TAXATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Chapter 231, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§231- Construction service providers; reporting of non-wage payments. (a) Any payor engaged in a trade or business and making a payment, other than wages, in the course of the payor's trade or business to another person, corporation, partnership, association, or limited liability company, that is valued at $600 or more in any taxable year for the receipt of construction services, including payment for materials, equipment, or both, if included in the payment for construction services, shall submit a report of the aggregate payments made to each construction service provider, to the department in a manner prescribed by the department, including but not limited to mandatory electronic filing of the report that shall specify:

(1) The name, address, and general excise taxpayer identification number; and the federal employer identification number or social security number of the payor;

(2) Where the payor is claiming a deduction pursuant to chapter 237 for amounts paid to a construction service provider, the name and general excise taxpayer identification number of each construction service provider;

(3) Where the payor is not claiming a deduction pursuant to chapter 237 for amounts paid to a construction service provider, the name and federal employer identification number or social security number of each construction service provider;

(4) The total amount that the payor paid to the construction service provider during the payor's taxable year; and

(5) Any other information required by the department.

(b) The annual payment report shall be transmitted by the payor to the department on or before the twentieth day of the fourth month following the close of the payor's taxable year in which the payments were made.

(c) The annual payment report required under subsection (a) may be utilized by the payor to meet the administrative requirements of claiming the deduction under section 237-13(3)(B).

(d) The director of taxation, to the extent permitted by law, may enter into agreements with state or federal law enforcement agencies to share the reports required under subsection (a).

(e) A payor required to file an annual report under subsection (a) who fails to file the report by the due date shall be assessed a civil penalty of $250 per month for each month the report is not filed, not to exceed a total of $3,000 for every annual report not filed. For the purposes of this subsection and subsection (f), filing an incomplete, misleading, or false report shall be deemed to be a failure to file.

(f) In addition to any other civil or criminal penalty that may be imposed under this chapter, a payor required to file an annual report under subsection (a) who wilfully fails to file the report by the due date shall be subject to section 231-35.

(g) The requirements of this section shall not apply to any payment for construction services by a person whose activities do not include the contracting of construction services while in the normal or regular course of the person's trade or business.

(h) The director of taxation may prepare forms necessary to meet the reporting requirements under this section. The director of taxation may also require the taxpayer to furnish reasonable documentation or evidence necessary to substantiate the information contained in the report required by subsection (a).

(i) The director of taxation may adopt rules necessary to effectuate the purposes of this section.

(j) For the purposes of this section:

"Construction service provider" means a person performing construction services.

"Construction services" includes the erection, excavation, installation, alteration, addition, modification, repair, improvement, demolition, destruction, dismantling, or removal of all or any part of a building, structure, dock, wharf, surface, or subsurface construction on or attached to any real property.

"Payment" shall not include wages paid to an employee of the payor.

"Person" includes an individual, corporation, partnership, association, limited liability company, or any other business entity."

SECTION 2. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2030, and shall apply to taxable years beginning after December 31, 2013.