STAND. COM. REP. NO.  1482


Honolulu, Hawaii

                , 2007


RE:   S.B. No. 1499

      S.D. 2

      H.D. 1





Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii




     Your Committee on Judiciary, to which was referred S.B. No. 1499, S.D. 2, entitled:




begs leave to report as follows:


     The purpose of this bill is to conform Hawaii tax law to federal tax law as it relates to tax administration and criminal tax enforcement.


     The Department of Taxation (DOTAX) testified in support of this bill.  The Tax Foundation of Hawaii provided comments.


     Your Committee agrees that DOTAX should be afforded additional methods for enforcing the State's tax laws and for deterring abuse of tax shelters and understatements of liability by tax return preparers.  However, your Committee is concerned about the removal of the statute of limitations requirements for the various tax laws specified in sections 6 through 10 of this bill, and respectfully encourages the Committee on Finance to explore this matter further.


     Your Committee has amended this bill by:


     (1)  Deleting the provision requiring the reduction of penalty amounts for strict liability for understatement by a tax return preparer from an amount assessed for wilful or reckless understatement of liability;


     (2)  Changing the effective date to July 1, 2112, to promote further discussion; and


     (3)  Making technical, nonsubstantive amendments for clarity and style.


     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. 1499, S.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1499, S.D. 2, H.D. 1, and be referred to the Committee on Finance.


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