HOUSE OF REPRESENTATIVES

H.B. NO.

2702

TWENTY-NINTH LEGISLATURE, 2018

H.D. 1

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO TAXATION.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"235-   Real estate investment trust returns; shareholder agreements; mandatory payments. (a) Each real estate investment trust shareholder receiving a dividend from the real estate investment trust shall take into account for purposes of this chapter a pro rata share of income attributable to the State and the pro rata share of income not attributable to the State, to the extent modified under this chapter, under rules similar to those adopted pursuant to section 235-122(c). The percentage of the dividend attributable to the State shall be the same as the real estate investment trust's overall percentage of income attributable to the State.

Each real estate investment trust shall make a return for each taxable year, stating specifically:

(1) The items of its gross income and the deductions allowable by this chapter;

(2) The name, address, and social security or federal identification number of each person owning stock in the real estate investment trust at any time during the taxable year;

(3) The number of shares of stock owned by each shareholder at all times during the taxable year;

(4) The income attributable to the State and income not attributable to the State with respect to each shareholder as determined under this chapter;

(5) Any modifications required under this chapter;

(6) The amount of money and other property distributed by the real estate investment trust during the taxable year to each shareholder;

(7) The amount of each distribution constituting a dividend or capital gain dividend; and

(8) Any other information that the department, by form or rule, may prescribe.

The real estate investment trust, on or before the day on which its return is filed, shall furnish to each person who was a shareholder during the year a copy of the information shown on the return as the department may prescribe by form or rule. Any return filed pursuant to this section, for purposes of sections 235-111 and 235-112, shall be treated as a return filed by the real estate investment trust under section 235-92.

(b) The department shall permit any real estate investment trust to file composite returns and to make composite payments of tax on behalf of some or all of its nonresident shareholders. The department may permit composite returns and payments to be made on behalf of resident shareholders.

(c) A real estate investment trust shall file with the department, in the form prescribed by the department, the agreement of each nonresident shareholder of the real estate investment trust:

(1) To file a return and make timely payment of all taxes imposed by this State on the shareholder with respect to the income of the real estate investment trust; and

(2) To be subject to personal jurisdiction in this State for purposes of the collection of unpaid income tax, together with related interest and penalties.

If the real estate investment trust fails to timely file the agreements required by paragraphs (1) and (2) on behalf of each of its nonresident shareholders, then the real estate investment trust, at the times set forth in subsection (d), shall pay to this State on behalf of each nonresident shareholder in respect of whom an agreement has not been timely filed an amount equal to the highest marginal tax rate in effect under section 235-71 (if the shareholder is a corporation) or 235-51 (for any other shareholder), multiplied by the amount of the shareholder's pro rata share of the income attributable to the State as reflected on the real estate investment trust's return for the taxable period. A real estate investment trust shall be entitled to recover a payment made pursuant to the preceding sentence from the shareholder on whose behalf the payment was made.

(d) The agreements required to be filed pursuant to subsection (c) shall be filed at the following times:

(1) At the time the annual return is required to be filed for the first taxable period for which the real estate investment trust became subject to this chapter; and

(2) At the time the annual return is required to be filed for any taxable period in which the real estate investment trust had a nonresident shareholder on whose behalf such an agreement has not been previously filed.

(e) Any amount paid by the real estate investment trust to this State pursuant to subsection (b) or (c) shall be considered to be a payment by the shareholder on account of the income tax imposed on the shareholder for the taxable period.

(f) Any officer of any real estate investment trust who wilfully fails to provide any information, file any return or agreement, or make any payment as required by this section or by section 231-15.6 shall be guilty of a misdemeanor.

(g) As used in this section, a "real estate investment trust" means a corporation for which a valid election under section 856 of the Internal Revenue Code, as amended, is in effect."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act shall take effect on July 1, 2030, and shall apply to taxable years beginning after December 31, 2018.



 

Report Title:

Real Estate Investment Trusts; Income Tax on Shareholders; Withholding

 

Description:

Requires that real estate investment trusts file returns reporting their shareholders' pro rata shares of net income and net income attributable to this State. Provides for composite returns and requires withholding for those shareholders who do not agree to file returns or pay tax on their pro rata share of net income attributable to this State. Applies to taxable years beginning after 12/31/2018. (HB2702 HD1)

 

 

 

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