STAND. COM. REP. NO. 2108

Honolulu, Hawaii

RE: S.B. No. 2377

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2022

State of Hawaii

Sir:

Your Committee on Judiciary, to which was referred S.B. No. 2377 entitled:

"A BILL FOR AN ACT RELATING TO STATE TAX EXAMINATIONS,"

begs leave to report as follows:

The purpose and intent of this measure is to establish a penalty for failure to respond to an inquiry or request during a state tax examination.

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

Your Committee finds that, currently, the Department of Taxation's only remedy against a person for failure to respond or reply to the Department of Taxation's correspondence or inquiry within a timely manner during an official inspection or examination of records is a criminal penalty that is, at times, inappropriately harsh. The Department of Taxation needs tools and resources to help promote taxpayer compliance and efficient tax administration. This measure will provide for a civil penalty rather than only a criminal penalty, which would provide the Department of Taxation with options in penalizing taxpayers for noncompliance.

As affirmed by the record of votes of the members of your Committee on Judiciary that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2377 and recommends that it pass Second Reading and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Judiciary,

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KARL RHOADS, Chair