STAND. COM. REP. NO. 1563

Honolulu, Hawaii

RE: H.B. No. 1041

H.D. 1

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2021

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.B. No. 1041, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO CONFORMITY TO THE INTERNAL REVENUE CODE,"

begs leave to report as follows:

The purpose and intent of this measure is to conform state income tax law and estate and generation—skipping transfer tax law to the Internal Revenue Code of 1986, as amended as of December 31, 2020.

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

Your Committee received comments on this measure from the Department of Budget and Finance and Tax Foundation of Hawaii.

Your Committee recognizes that this administrative measure serves as legislation to comply with sections 235-2.5(c) and 236E‑4(c), Hawaii Revised Statutes, which require the Department of Taxation to submit to the Legislature for each Regular Session legislation to adopt the Internal Revenue Code as it exists on the December 31 preceding the Regular Session. The purpose is to conform relevant state tax laws to those changes made to the federal Internal Revenue Code during the past year, to the extent that those changes are appropriate for the State.

Your Committee has amended this measure by:

(1) Specifying that certain provisions in the federal Internal Revenue Code of 1986, as amended, relating to exclusions from income, disaster tax relief, and retirements plans shall be operative for the purposes of state income tax law;

(2) Changing the effective date to make the measure effective upon its approval; and

(3) Making technical nonsubstantive changes for 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. 1041, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1041, H.D. 1, 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,

________________________________

DONOVAN M. DELA CRUZ, Chair