THE SENATE	S.B. NO.	1114
THIRTIETH LEGISLATURE, 2019
STATE OF HAWAII

A BILL FOR AN ACT

relating to taxation.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that a professional or vocational license grants certain benefits and protections to a license holder. However, a professional or vocational license holder should not be entitled to these benefits and protections unless the license holder is complying with the laws of the State, including the payment of taxes.

The legislature also finds that requiring tax clearances for certain transactions is not new or unique. In Hawaii, a tax clearance is required for certain state contracts, including those over $25,000, for procuring a liquor license, and in certain other instances. Requiring a tax clearance to be submitted with the application for or renewal of a professional or vocational license ensures that the holder of a license granted by the State is in compliance with state tax laws.

The legislature further finds that improvements resulting from the department of taxation's tax modernization program have automated the bulk of tax clearances issued by the department of taxation. Further, the new state data portal can incorporate a tax clearance requirement for the renewal of professional and vocational licenses.

The purpose of this Act is to improve tax compliance by requiring a tax clearance before a professional or vocational license may be issued or renewed.

SECTION 2. Chapter 231, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§231-   Tax clearance before issuance and renewal of professional and vocational licenses. No professional or vocational license issued by the department of commerce and consumer affairs shall be issued or renewed unless the applicant presents to the licensing authority a certificate signed by the director of taxation, showing that the applicant:

(1) Does not owe the State any delinquent taxes, penalties, or interest;

(2) Has entered into and is complying with an installment plan agreement with the department of taxation for the payment of delinquent taxes in installments; or

(3) Is not subject to income tax in Hawaii."

SECTION 3. Chapter 436B, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§436B-   Tax clearance before issuance and renewal of professional and vocational licenses. No professional or vocational license issued by the department shall be issued or renewed unless the applicant presents to the licensing authority a certificate signed by the director of taxation, showing that the applicant:

(1) Does not owe the State any delinquent taxes, penalties, or interest;

(2) Has entered into and is complying with an installment plan agreement with the department of taxation for the payment of delinquent taxes in installments; or

(3) Is not subject to income tax in Hawaii."

SECTION 4. The department of taxation shall prepare any forms necessary for the tax clearance required pursuant to this Act.

SECTION 5. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 6. New statutory material is underscored.

SECTION 7. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2019.

INTRODUCED BY:

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Report Title:

Taxation; Department of Taxation; Professional License; Vocational License; Renewal; Issuance; Tax Clearance

Description:

Requires a tax clearance before renewal or issuance of a professional or vocational license.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.