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HOUSE OF REPRESENTATIVES |
H.B. NO. |
2628 |
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TWENTY-EIGHTH LEGISLATURE, 2016 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
relating to public property, purchasing, and contracting.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Section 103-53, Hawaii Revised Statutes, is amended as follows:
1. By amending subsection (a) to read:
"(a) All state and county officers and agents making contracts on behalf of the State or any county shall require, as a prerequisite to entering into these contracts, tax clearances from the director of taxation and the Internal Revenue Service to the effect that all tax returns due have been filed, and all taxes, interest, and penalties levied against the contractor or accrued under title 14 that are administered by the department of taxation and under the Internal Revenue Code have been paid. The director of taxation may waive the Internal Revenue Service tax clearance requirement if the director determines that it is in the best interest of the State.
A contractor's tax clearance shall be valid for one year from the date it is received by a state or county contracting officer or agent."
2. By amending subsections (c) and (d) to read:
"(c) All state and county contracting officers or agents shall withhold final payment of a contract until the receipt of tax clearances from the director of taxation and the Internal Revenue Service. A contractor's tax clearance shall be valid for one year from the date it is received by a state or county contracting officer or agent.
Notwithstanding sections 40-57 and 40-58, if a
contractor fails to provide the requisite tax clearances within six months of
the completion date of the contract, the state or county contracting officer or
agent shall first notify the department of taxation which in turn will notify
the Internal Revenue Service, of amounts payable to the contractor on completed
contracts. The department of taxation and the Internal Revenue Service [shall],
within thirty days, shall request the contracting officer or agent to
offset the amount of taxes due against any payment due to the contractor until
the tax debt is paid in full to the State or the Internal Revenue Service or
both. No final bill or invoice from the contractor shall be required as a
condition to the offset. Any remaining contract balance shall revert to the
appropriation under which it was encumbered.
(d) Any assignment of a contract shall require
the assignee, as a condition precedent to the assignment, to first obtain a
bulk sales certificate if required under section 237-43, and present the
certificate, or tax clearance as provided under subsection (a) if a bulk sales
certificate is not required, to the state or county contracting officer or
agent[.]; provided that a tax clearance for the contractor making the
assignment shall not satisfy the requirements of this subsection."
SECTION 2. Section 103D-328, Hawaii Revised Statutes, is amended as follows:
1. By amending subsection (a) to read:
"(a) Unless the director of taxation determines that waiver of the Internal Revenue Service tax clearance requirement is necessary to expedite or facilitate the procurement process and is in the best interest of the State, and waives the Internal Revenue Service tax clearance requirement, no contract shall be binding or effective until the contractor secures and the purchasing agency receives a tax clearance from the director of taxation and the Internal Revenue Service to the effect that all tax returns due have been filed, and all taxes, interest, and penalties levied or accrued, under title 14 that are administered by the department of taxation and under the Internal Revenue Code, against the contractor have been paid.
A contractor's tax clearance shall be valid for one year from the date it is received by a purchasing agency."
2. By amending subsection (c) to read:
"(c) All state and county procurement officers or agents shall withhold final payment of a contract until the receipt of tax clearances from the director of taxation and the Internal Revenue Service. A contractor's tax clearance shall be valid for one year from the date it is received by a procurement officer or agent.
Notwithstanding sections 40-57 and 40-58, if a contractor fails to provide the requisite tax clearances within six months of the completion of the contract, the state or county procurement officer or agent shall first notify the department of taxation which in turn will notify the Internal Revenue Service, of amounts payable to the contractor on completed contracts. The department of taxation and the Internal Revenue Service, within thirty days, shall request the procurement officer or agent to set off the amount of taxes due against any payment due to the contractor until the tax debt is paid in full to the State or the Internal Revenue Service, or both. No final bill or invoice from the contractor shall be required as a condition to the setoff. Any remaining contract balance shall revert to the appropriation under which it was encumbered."
SECTION 3. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.
SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 5. This Act shall take effect upon its approval.
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INTRODUCED BY: |
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Report Title:
Public Contracts; Tax Clearances
Description:
Provides that, for public contracting purposes, a contractor's tax clearance will be valid for one year from the date the procuring agent receives the clearance from the contractor.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.