STAND. COM. REP. NO. 3561

Honolulu, Hawaii

RE: H.B. No. 1655

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2018

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.B. No. 1655 entitled:

"A BILL FOR AN ACT RELATING TO TAX ON SALES OF TANGIBLE PERSONAL PROPERTY,"

begs leave to report as follows:

The purpose and intent of this measure is to improve the collection of general excise and use taxes.

More specifically, this measure clarifies that a person who sells or assists in the sale of tangible personal property on behalf of another person and who provides customer service, processes payments, and controls the fulfillment process is the seller of the property for general excise tax and use tax purposes.

Your Committee received testimony in support of this measure from the Department of Taxation and IMUAlliance.

Your Committee received testimony in opposition to this measure from Amazon, Internet Association, Internet Coalition, CompTIA, NetChoice, and TechNet.

Your Committee received comments on this measure from the Tax Foundation of Hawaii.

Your Committee finds that establishing a mechanism for imposing and collecting general excise and use taxes on third-party sales made through a marketplace facilitator, rather than attempting to collect taxes from numerous individual marketplace sellers, would improve efficiency.

Your Committee has amended this measure by:

(1) Adding definitions for the terms "marketplace facilitator" and "referrer";

(2) Establishing reporting requirements and penalties for marketplace facilitators and referrers;

(3) Adding a severability clause; and

(4) Making technical nonsubstantive amendments for the purposes of clarity, consistency, and style.

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 H.B. No. 1655, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1655, 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,

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DONOVAN M. DELA CRUZ, Chair