Real Estate Agents; GET

Requires the withholding of any general excise tax due from real
estate agents on the disposition of real property acquired with
the use of an escrow depository.  Reduces rate of tax to 3.9% for
real estate transactions processed through an escrow depository.

HOUSE OF REPRESENTATIVES                H.B. NO.1327       
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  The legislature finds that it is beneficial to
 2 substantially increase revenues to the State by insuring full and
 3 timely compliance of tax payments due on real estate
 4 transactions.  This Act sunsets in two years.  This Act also
 5 reduces the general excise tax owed on real estate commissions
 6 paid through escrow depositories from four per cent to three and
 7 nine-tenths per cent.
 8      SECTION 2.  Chapter 237, Hawaii Revised Statutes, is amended
 9 by adding a new section to be appropriately designated and to
10 read as follows:
11      "237-    Withholding of tax on the disposition of real
12 property.  (a)  As used in this section:
13      "Property" or "real property" has the same meaning as
14 defined in section 231-1.
15      "Transferee" means any person, the State and the counties
16 and their respective subdivisions, agencies, authorities, and
17 boards, that use the services of an escrow depository regulated
18 under chapter 449 in acquiring real property which is located in
19 Hawaii.

Page 2                                                     
                                     H.B. NO.1327       

 1      "Transferor" means any person disposing real property which
 2 is located in Hawaii.
 3      (b)  Every transferee shall deduct and withhold a tax equal
 4 to three and nine-tenths per cent of the amount realized by a
 5 real estate broker or salesperson on the disposition of real
 6 property in this State.  Every person required to withhold a tax
 7 under this section is made liable for the tax and is relieved of
 8 liability for or upon the claim or demand of any other person for
 9 the amount of any payments to the department made in accordance
10 with this section.
11      (c)  Every transferee required by this section to withhold
12 tax under subsection (b) shall make a return of the amount
13 withheld to the department of taxation at the end of the month
14 following the transfer date or not later than sixty days after
15 the transaction.
16      (d)  An escrow depository may hold any amounts due to the
17 department under this section in trust for the department to be
18 paid along with regular escrow depository returns required under
19 section 237-30, but not later than sixty days after the
20 transaction; provided the escrow depository includes the
21 taxpayer's general excise number, the amount withheld, and the
22 date of the transaction that the general excise taxes were
23 withheld under this section.

Page 3                                                     
                                     H.B. NO.1327       

 1      (e)  Notwithstanding any law to the contrary, the rate of
 2 tax levied and assessed on gross income and proceeds received by
 3 real estate brokers and salespersons:
 4      (1)  Who are subject to the withholding under this section;
 5           and
 6      (2)  Except for this section, would otherwise be subject to
 7           the rate of four per cent under section 237-13,
 8 shall be three and nine-tenths per cent."
 9      SECTION 3.  New statutory material is underscored.
10      SECTION 4.  This Act shall take effect on July 1, 1999;
11 provided this Act shall be repealed on June 30, 2001.
13                              INTRODUCED BY:______________________