STAND. COM. REP. NO.  1463

Honolulu, Hawaii

                , 2013

RE:   S.B. No. 1203

      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. 1203, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO CONFORMITY OF THE HAWAII ESTATE AND GENERATION-SKIPPING TRANSFER TAX LAW TO THE INTERNAL REVENUE CODE,"

begs leave to report as follows:

The purpose of this measure is to conform the Hawaii estate and generation-skipping transfer tax law to the Internal Revenue Code.

The Department of Taxation testified in support of this measure.  The Tax Foundation of Hawaii submitted comments on the measure.

     According to section 236E-5, Hawaii Revised Statutes, the intent of the Hawaii estate and generation-skipping transfer tax law is to conform as closely as possible to the Internal Revenue Code.  Pursuant to this goal, provisions of sections 236E-3 and 236E-4, Hawaii Revised Statutes, are designed to incorporate amendments to the Internal Revenue Code that are made as of the end of the preceding calendar year.

     However, your Committee finds that due to protracted "fiscal cliff" negotiations, amendments to the Internal Revenue Code were not enacted before the end of the past calendar year and, instead, were enacted on January 2, 2013.  To reflect the late enactment of Internal Revenue Code amendments and the stated intent of section 236E-5, Hawaii Revised Statutes, the amendments to the estate and generation-skipping transfer tax law should conform to the version of the Internal Revenue Code as amended on January 2, 2013.

     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. 1203, 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