STAND. COM. REP. NO. 2190

Honolulu, Hawaii

RE:    S.B. No. 2887

       S.D. 1

Honorable Donna Mercado Kim

President of the Senate

Twenty-Seventh State Legislature

Regular Session of 2014

State of Hawaii

Madam:

     Your Committee on Ways and Means, to which was referred S.B. No. 2887 entitled:

"A BILL FOR AN ACT RELATING TO THE ESTATE AND GENERATION-SKIPPING TRANSFER TAXES,"

begs leave to report as follows:

     The purpose and intent of this measure is to conform the State's estate and generation-skipping transfer tax law to the Internal Revenue Code of 1986, as amended as of December 31, 2013, and to close a loophole that allows a decedent to avoid estate and generation-skipping transfer taxes.

     The Department of Taxation provided testimony in support of this measure.  The Tax Foundation of Hawaii provided comments on this measure.

     Your Committee finds that conforming chapter 236E, Hawaii Revised Statutes, to the Internal Revenue Code of 1986, as amended as of December 31, 2013, regarding estate taxes, will facilitate taxpayer compliance with the state and federal tax codes.  Your Committee further finds that amending the definition of "applicable exclusion amount" will close a loophole that currently allows a decedent to avoid estate and generation-skipping transfer taxes by gifting away property as late as on the eve of death.

     Your Committee has amended this measure by making technical nonsubstantive amendments for purposes of style, clarity, and consistency.

     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. 2887, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2887, S.D. 1, and be placed on the calendar for Third Reading.

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

____________________________

DAVID Y. IGE, Chair