STAND. COM. REP. NO. 773

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 1176
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred S.B.
No. 1176 entitled: 

     "A BILL FOR AN ACT RELATING TO THE GENERAL EXCISE TAX
     LICENSING OF SINGLE-MEMBER LIMITED LIABILITY COMPANIES,"

begs leave to report as follows:
     
     The purpose of this measure is to exempt single-member
limited liability companies (LLCs) from the general excise tax
licensing, reporting, and tax liability when the member is
licensed and pays the general excise tax on the business income
of the LLC.

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

     Your Committee finds that this measure would ease the
regulatory burden on sole proprietors who convert to LLC status,
and ensure that the single-member LLC is taxed only once under
the general excise tax law, if specific conditions are met.

     Your Committee has amended this measure to clarify that only
when the single member LLC has a member that is an individual may
the exemption be claimed.  Technical, nonsubstantive amendments
were also made.

     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 S.B.

 
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                                   STAND. COM. REP. NO. 773
                                   Page 2


No. 1176, as amended herein, and recommends that it pass Third
Reading in the form attached hereto as S.B. No. 1176, S.D. 1.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,



                                 ________________________________
                                 CAROL FUKUNAGA, Co-Chair



                                 ________________________________
                                 ANDREW LEVIN, Co-Chair

 
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