STAND. COM. REP. NO.  1459

Honolulu, Hawaii

                , 2013

RE:   S.B. No. 1185

      S.D. 1

Honorable Joseph M. Souki

Speaker, House of Representatives

Twenty-Seventh State Legislature

Regular Session of 2013

State of Hawaii

Sir:

     Your Committee on Finance, to which was referred S.B. No. 1185, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO DENIAL OF GENERAL EXCISE TAX BENEFITS,"

begs leave to report as follows:

The purpose of this measure is to clarify the definition of "nonprofit organization" in chapter 237, Hawaii Revised Statutes, by replacing references to the Internal Revenue Code with references to section 237-23, Hawaii Revised Statutes, relating to exemptions from the general excise tax.

Your Committee received testimony in support of this measure from the Department of Taxation and the Aloha Society of Association Executives.  The Tax Foundation of Hawaii submitted comments on this measure.

     Your Committee finds that sections 237-9.3 and 237-41.5, Hawaii Revised Statutes, define "nonprofit organization" with references to the Internal Revenue Code section 501(c) that are inconsistent with the provisions of section 237-23, Hawaii Revised Statutes.  Your Committee believes that replacing references to the Internal Revenue Code with references to appropriate provisions of the Hawaii Revised Statutes will make the application and administration of chapter 237, Hawaii Revised Statutes, as it relates to nonprofit organizations, more consistent.

     As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1185, S.D. 1, and recommends that it pass Second Reading and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Finance,

____________________________

SYLVIA LUKE, Chair