THE SENATE

S.B. NO.

2999

TWENTY-NINTH LEGISLATURE, 2018

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO TAXATION.

 

 

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

 


PART I

SECTION 1. Definitions. As used in this part:

"Accounts receivable" means an amount of state tax, penalty, or interest that has been recorded as due and entered in the account records or any ledger maintained in the department or that a taxpayer should reasonably expect to become due as a direct or indirect result of any pending or completed audit or investigation that a taxpayer knows is being conducted by the State.

"Department" means the department of taxation.

"Director" means the director of taxation.

"Final, due, and owing" means an assessment that has become final and is owed to the State, due to either the expiration of a taxpayer's appeal rights or the rendition of the final order by the director or by any court of this State. Assessments that have been appealed shall be final, due, and owing fifteen days after the last unappealed or unappealable order sustaining the assessment or any part thereof has become final. Assessments that have not been appealed shall be final, due, and owing thirty days after service of notice of assessment.

"Taxpayer" means any individual, partnership, joint venture, association, corporation, receiver, trustee, guardian, executor, administrator, fiduciary, or any other entity of any kind subject to any tax in title 14, Hawaii Revised Statutes, or any person required to collect any tax under title 14, Hawaii Revised Statutes.

SECTION 2. Tax amnesty program; applicable time period. (a) The director shall develop and administer a one-time tax amnesty program as provided in this part. The director, upon the voluntary return and remission of taxes and interest owed by any taxpayer, shall waive all penalties that are assessed or subject to being assessed for outstanding liabilities for taxable periods ending or transactions occurring on or before December 31, 2017. The director shall adopt rules, pursuant to chapter 91, Hawaii Revised Statutes, necessary for the administration of this amnesty program and shall further provide for necessary forms for the filing of amnesty applications and returns.

(b) Notwithstanding any other law to the contrary, the tax amnesty program shall begin no later than October 31, 2018, and shall be completed before January 1, 2019, and shall apply to all taxpayers owing taxes, penalties, or interest administered by the director under title 14, Hawaii Revised Statutes, except that the tax amnesty shall not apply to any real property tax or any tax levied pursuant to chapter 249, Hawaii Revised Statutes.

SECTION 3. Application; eligibility requirements. (a) This part shall apply to any taxpayer who files an application for amnesty within the time prescribed by the director and who:

(1) Files all returns as may be required by the director for all years or tax reporting periods as stated on the application:

(A) For which returns have not previously been filed; and

(B) For which returns were filed but the tax liability was underreported; and

(2) Pays in full the taxes due for the years and tax reporting periods stated on the application, at the time the application is made or amnesty tax returns are filed within the designated amnesty program period.

In addition to the requirements set forth in paragraphs (1) and (2), the director may impose, by rule, the further condition that any eligible taxpayer pay in full, within the amnesty period, all taxes previously assessed by the director that are final, due, and owing at the time the application or amnesty tax returns are filed.

(b) An eligible taxpayer may participate in the amnesty program regardless of whether the taxpayer is under audit, notwithstanding the fact that the amount due is included in a proposed assessment or an assessment, bill, notice, or demand for payment issued by the director and without regard to whether the amount due is subject to a pending administrative or judicial proceeding. An eligible taxpayer may participate in the amnesty program to the extent of the uncontested portion of any assessed liability. However, participation in the program shall be conditioned upon the taxpayer's agreement that the right to protest or initiate an administrative or judicial proceeding or to claim any refund of moneys paid under the program is barred with respect to the amounts paid with the application or amnesty return.

(c) The director shall allow installment payment agreements in cases of severe hardship in lieu of the complete payment required under subsection (a). In those cases, twenty- five per cent of the amount due shall be paid with the application or amnesty return, with the balance to be paid in monthly installments determined by the taxpayer and the director. Failure of the taxpayer to make timely payments shall void the terms of the amnesty. All agreements and payments shall not include interest due and accruing during the installment agreement.

SECTION 4. Amnesty provisions. (a) Amnesty shall be granted for any taxpayer who meets the requirements of section 4 of this Act in accordance with the following:

(1) For taxes that are owed as a result of the nonreporting or underreporting of tax liabilities or the nonpayment of any accounts receivable owed by an eligible taxpayer, the State shall waive criminal prosecution and all civil penalties that may be assessed under title 14, Hawaii Revised Statutes, for the taxable years or periods for which the tax amnesty is requested; and

(2) With the exception of instances in which the taxpayer and director enter into an installment payment agreement authorized under section 4(c) of this Act, the failure to pay all taxes as shown on the taxpayer's amnesty tax return shall invalidate any amnesty granted pursuant to this part.

(b) This part shall not apply to any taxpayer who is on notice, written or otherwise, that the taxpayer is the subject of any criminal investigation or criminal prosecution for nonpayment, delinquency, evasion, or fraud in relation to any federal taxes or to any of the taxes to which this amnesty program is applicable.

(c) No refund or credit shall be granted for any interest or penalty paid prior to the time the taxpayer requests amnesty pursuant to section 4 of this Act.

(d) Unless the director, in the director's discretion, redetermines the amount of taxes and interest due, no refund or credit shall be granted for any taxes or interest paid under the amnesty program.

SECTION 5. Public awareness. The director shall adopt rules under chapter 91, Hawaii Revised Statutes, issue forms and instructions, and take all actions necessary to implement this part. The director shall publicize the tax amnesty program in order to maximize the public awareness of, and participation in, the program. For the purpose of publicizing the tax amnesty program, the director may contract with any advertising agency within or outside this State.

SECTION 6. Separate accounting. For purposes of accounting for the revenues received pursuant to this part, the director shall maintain a separate accounting and reporting of funds collected under the amnesty program. All funds collected shall be remitted to the general fund.

PART II

SECTION 7. The legislature finds that, under certain circumstances, allowing a private person to act as a tax collection agent is likely to ease the burden of collecting taxes. Section 237-9(e), Hawaii Revised Statutes, allows a person engaged in network marketing, multi-level marketing, or other similar business to enter into an agreement with the department of taxation to act as a tax collection agent on behalf of its direct sellers. The legislature finds that similarly allowing a transient accommodations broker to act as a tax collection agent on behalf of providers of transient accommodations that utilize the services of the transient accommodations broker may facilitate the collection of transient accommodations taxes and general excise taxes.

The legislature further finds that, to increase transparency and ensure the veracity of the taxes being collected, transient accommodations brokers acting as tax collection agents must provide pertinent information to the department of taxation regarding the operators and plan managers on whose behalf they collect taxes.

The purpose of this part is to allow a transient accommodations broker to register to act as a tax collection agent with respect to transient accommodations taxes and general excise taxes for its operators and plan managers in a manner that recognizes the dynamic changes that are occurring in the transient accommodations business.

This part is not intended to preempt or otherwise limit the authority of the counties to adopt, monitor, and enforce local land use regulations, nor is this part intended to transfer the authority to monitor and enforce the regulations away from the counties.

SECTION 8. Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"237- Transient accommodations broker as tax collection agent. (a) The director may permit a transient accommodations broker to register as a tax collection agent on behalf of all of its operators and plan managers by entering into a tax collection agreement with the director or by submitting a tax collection agent registration statement to the director. Any tax collection agreement entered into pursuant to this section shall be subject to and in accordance with all applicable provisions of state law and county ordinances and shall not permit a tax collection agent, nor any operator or plan manager conducting business through the tax collection agent, to opt out of any requirements or obligations under state law or county ordinance.

The director may deny an application for registration as a tax collection agent under this section for any cause authorized by law, including but not limited to any violation of this chapter or rules adopted pursuant thereto, violation of any prior tax collection agreement, or failure to meet minimum criteria that may be set forth by the department in rules adopted pursuant to chapter 91.

The director shall issue a certificate of registration or letter of denial within thirty days after a transient accommodations broker submits to the director a completed and signed tax collection agent registration statement, in a form prescribed by the department.

The registration shall be valid only for the tax collection agent in whose name it is issued, and for the website or platform designated therein, and shall not be transferable.

(b) In addition to its own responsibilities under this chapter, a registered tax collection agent shall report, collect, and pay over the taxes due under this chapter on behalf of all of its operators and plan managers from the date of registration until the registration is canceled as provided in subsection (h); provided that the registered tax collection agent's obligation to report, collect, and pay taxes on behalf of all of its operators and plan managers shall apply solely to transient accommodations in the State arranged or booked directly through the registered tax collection agent.

(c) The registered tax collection agent's operators and plan managers shall obtain licensure under this chapter and remain subject to the requirements of title 14; provided that the registered tax collection agent shall report, collect, and pay the taxes under this chapter on behalf of the operators and plan managers for business activity conducted directly through the agent, as set forth in this section, from the date of registration until the registration is canceled as provided in subsection (h). For purposes of any other business activity, the operators and plan managers are subject to all requirements of title 14 and all county ordinances and rules regulating short-term rentals, vacation rentals, or bed and breakfast lodging within their jurisdictions as if this section did not exist.

A registered tax collection agent shall be issued separate licenses under this chapter with respect to taxes payable on behalf of its operators and plan managers in its capacity as a registered tax collection agent and, if applicable, with respect to any taxes payable under this chapter for its own business activities.

(d) If the registered tax collection agent fails to report or pay the taxes under this chapter on behalf of the operators and plan managers, as set forth in this section, the registered tax collection agent and the operator or plan manager shall be jointly and severally liable for the taxes due under this chapter, including penalties and interest as provided by law, with respect to their business activities conducted directly through the registered tax collection agent from the date of registration until the registration is canceled as provided in subsection (h).

(e) A tax collection agent shall be personally liable for the taxes imposed by this chapter that are due and collected on behalf of operators and plan managers, if taxes are collected, but not reported or paid, together with penalties and interest as provided by law. If the tax collection agent is an entity, the personal liability under this subsection shall apply to any officer, member, manager, or other person who has control or supervision over amounts collected to pay the taxes or who is charged with the responsibility for the filing of returns or the payment of taxes.

(f) Except as provided in subsection (g), all returns and other information provided by a registered tax collection agent, including the application for registration as a tax collection agent or any tax collection agreement, shall be confidential, and disclosure thereof shall be prohibited as provided in section 237-34.

(g) A registered tax collection agent shall file periodic returns in accordance with section 237-30 and annual returns in accordance with section 237-33. Each periodic return required under section 237-30 shall be accompanied by an electronic cover sheet, in a form prescribed by the department that includes the following information:

(1) For each operator and plan manager on whose behalf the tax collection agent is required to report, collect, and pay over taxes due under this chapter, the operator's or plan manager's name, address, and license identification number; and

(2) For each transient accommodation, rented through the registered tax collection agent or the website or platform designated in the certificate of registration issued pursuant to chapter 237D, for which taxes are being remitted pursuant to this chapter:

(A) The address of the transient accommodation;

(B) The number of nights that each transient accommodation was rented and the rate or price at which each transient accommodation was rented; and

(C) The amount of tax being remitted pursuant to this chapter and the amount of any federal form 1099 income that was derived from each transient accommodation.

Upon request by the planning director or mayor of the applicable county, a registered tax collection agent shall disclose any of the information contained in the returns or cover sheets required by this subsection to the planning director or any county official designated by the mayor to receive the information. Notwithstanding any law to the contrary, including section 237-34, the planning director and county official designated to receive the information pursuant to this subsection may examine and copy the returns and cover sheets to ensure compliance with this section, state tax laws and county tax ordinances, and any applicable land use laws and ordinances.

(h) The registration provided for under this section shall be effective until canceled in writing.

A registered tax collection agent may cancel its registration under this section by delivering written notice of cancellation to the director and each of its operators and plan managers furnishing transient accommodations in the State not later than ninety days prior to the effective date of cancellation.

The director may cancel a tax collection agent's registration under this section for any cause, including but not limited to any violation of this chapter or rules adopted pursuant thereto, or for violation of any applicable tax collection agreement, by delivering written notice of cancellation to the tax collection agent not later than ninety days prior to the effective date of cancellation.

(i) All registered tax collection agents, prior to publishing an advertisement, including an online advertisement, on the availability of a property for lease or rent on behalf of an operator or plan manager:

(1) Shall notify the operator or plan manager that the subject property is required to be in compliance with applicable state and county land use laws and ordinances prior to retaining the services of the transient accommodations broker;

(2) Shall require the operator or plan manager to provide the transient accommodations broker with the operator or plan manager's transient accommodations number and local contact information required under section 237D-4, and include this information in the advertisement, in compliance with section 237D-4;

(3) Shall require the operator or plan manager to provide the transient accommodations broker with verification of compliance with state and county land use laws in the form of a written certification, verification, or permit, as applicable, issued by the appropriate county agency; and

(4) Shall require the operator or plan manager to provide a statement to the transient accommodations broker confirming compliance with all applicable land use laws and ordinances.

A transient accommodations broker shall remove any advertisement published through the transient accommodations broker, including an online advertisement, for a transient accommodation located in the State for which the operator or plan manager fails to comply with paragraph (2), (3), or (4) or for which the transient accommodations broker has received written notice from a state or county governmental authority that the property is not in compliance with state law or county ordinance, as applicable.

(j) Nothing in this section shall be construed to preempt or prohibit the authority of a unit of local government in the State, including counties and any other political subdivisions of the State, to adopt, monitor, and enforce local land use regulations, nor to transfer the authority to monitor and enforce these regulations away from the counties.

(k) For the purposes of this section:

"Director" means the director of taxation.

"Operator" has the same meaning as in section 237D-1.

"Plan manager" has the same meaning as in section 237D-1.

"Transient accommodations" has the same meaning as in section 237D-1.

"Transient accommodations broker" has the same meaning as in section 237D-1."

SECTION 9. Chapter 237D, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"237D- Transient accommodations broker as tax collection agent. (a) The director may permit a transient accommodations broker to register as a tax collection agent on behalf of all of its operators and plan managers by entering into a tax collection agreement with the director or by submitting a tax collection agent registration statement to the director. Any tax collection agreement entered into pursuant to this section shall be subject to and in accordance with all applicable provisions of state law and county ordinances and shall not permit a tax collection agent, nor any operator or plan manager conducting business through the tax collection agent, to opt out of any requirements or obligations under state law or county ordinance.

The director may deny an application for registration as a tax collection agent under this section for any cause authorized by law, including but not limited to any violation of this chapter or rules adopted pursuant thereto, violation of any prior tax collection agreement, or failure to meet minimum criteria that may be set forth by the department in rules adopted pursuant to chapter 91.

The director shall issue a certificate of registration or letter of denial within thirty days after a transient accommodations broker submits to the director a completed and signed tax collection agent registration statement, in a form prescribed by the department. The registration shall be valid only for the tax collection agent in whose name it is issued, and for the website or platform designated therein, and shall not be transferable.

A registered tax collection agent shall be issued separate certificates of registration under this chapter with respect to taxes payable on behalf of its operators and plan managers in its capacity as a registered tax collection agent and, if applicable, with respect to any taxes payable under this chapter for its own business activities.

(b) In addition to its own responsibilities under this chapter, a registered tax collection agent shall report, collect, and pay over the taxes due under this chapter on behalf of all of its operators and plan managers from the date of registration until the registration is canceled as provided in subsection (h); provided that the registered tax collection agent's obligation to report, collect, and pay taxes on behalf of all of its operators and plan managers shall apply solely to transient accommodations in the State arranged or booked directly through the registered tax collection agent.

(c) The registered tax collection agent's operators and plan managers shall obtain registration under this chapter and remain subject to the requirements of title 14; provided that the registered tax collection agent shall report, collect, and pay the taxes under this chapter on behalf of the operators and plan managers for business activity conducted directly through the registered tax collection agent, as set forth in this section, from the date of registration until the registration is canceled as provided in subsection (h). For purposes of any other business activity, the operators and plan managers are subject to all requirements of title 14 and all applicable ordinances and rules regulating short-term rentals, vacation rentals, or bed and breakfast lodging within their jurisdictions as if this section did not exist.

(d) If the registered tax collection agent fails to report or pay the taxes under this chapter on behalf of the operators and plan managers, as set forth in this section, the registered tax collection agent and the operator or plan manager shall be jointly and severally liable for the taxes due under this chapter, including penalties and interest as provided by law, with respect to their business activities conducted directly through the registered tax collection agent from the date of registration until the registration is canceled as provided in subsection (h).

(e) A tax collection agent shall be personally liable for the taxes imposed by this chapter that are due and collected on behalf of operators and plan managers, if taxes are collected, but not reported or paid, together with penalties and interest as provided by law. If the tax collection agent is an entity, the personal liability under this subsection shall apply to any officer, member, manager, or other person who has control or supervision over amounts collected to pay the taxes or who is charged with the responsibility for the filing of returns or the payment of taxes.

(f) Except as provided in subsection (g), all returns and other information provided by a registered tax collection agent, including the application for registration as a tax collection agent or any tax collection agreement, shall be confidential, and disclosure thereof shall be prohibited as provided in section 237D-13.

(g) A registered tax collection agent shall file periodic returns in accordance with section 237D-6 and annual returns in accordance with section 237D-7. Each periodic return required under section 237D-6 shall be accompanied by an electronic cover sheet, in a form prescribed by the department that includes the following information:

(1) For each operator and plan manager on whose behalf the tax collection agent is required to report, collect, and pay over taxes due under this chapter, the operator's or plan manager's name, address, and transient accommodations registration identification number; and

(2) For each transient accommodation, rented through the registered tax collection agent or the website or platform designated in the certificate of registration issued pursuant to subsection (a), for which taxes are being remitted pursuant to this chapter:

(A) The address of the transient accommodation;

(B) The number of nights that each transient accommodation was rented and the rate or price at which each transient accommodation was rented; and

(C) The amount of tax being remitted pursuant to this chapter and the amount of any federal form 1099 income that was derived from each transient accommodation.

Upon request by the planning director or mayor of the applicable county, a registered tax collection agent shall disclose any of the information contained in the returns or cover sheets required by this subsection to the planning director or any county official designated by the mayor to receive the information. Notwithstanding any law to the contrary, including section 237D-13, the planning director and county official designated to receive the information pursuant to this subsection may examine and copy the returns and cover sheets to ensure compliance with this section, state and county tax laws and ordinances, and any applicable land use laws and ordinances.

(h) The registration provided for under this section shall be effective until canceled in writing.

A registered tax collection agent may cancel its registration under this section by delivering written notice of cancellation to the director and each of its operators and plan managers furnishing transient accommodations in the State not later than ninety days prior to the effective date of cancellation.

The director may cancel a tax collection agent's registration under this section for any cause, including but not limited to any violation of this chapter or rules adopted pursuant thereto, or for violation of any applicable tax collection agreement, by delivering written notice of cancellation to the tax collection agent not later than ninety days prior to the effective date of cancellation.

(i) All registered tax collection agents, prior to placing an advertisement, including an online advertisement, on the availability of a property for lease or rent on behalf of an operator or plan manager:

(1) Shall notify the operator or plan manager that the subject property is required to be in compliance with applicable state land use laws and county land use ordinances prior to retaining the services of the transient accommodations broker;

(2) Shall require the operator or plan manager to provide the transient accommodations broker with the operator or plan manager's transient accommodations number and local contact information required under section 237D-4, and include this information in the advertisement, in compliance with section 237D-4;

(3) Shall require the operator or plan manager to provide the transient accommodations broker with verification of compliance with state land use laws and county land use ordinances in the form of a written certification, verification, or permit, as applicable, issued by the appropriate county agency; and

(4) Shall require the operator or plan manager to provide a statement to the transient accommodations broker confirming compliance with all land use laws and ordinances.

A transient accommodations broker shall remove any advertisement published through the transient accommodations broker, including an online advertisement, for a transient accommodation located in the State for which the operator or plan manager fails to comply with paragraph (2), (3), or (4) or for which the transient accommodations broker has received written notice from a state or local governmental authority that the property is not in compliance with state law or county ordinance, as applicable.

(j) Nothing in this section shall be construed to preempt or prohibit the authority of a unit of local government in the State, including counties and any other political subdivisions of the State, to adopt, monitor, and enforce local land use regulations, nor to transfer the authority to monitor and enforce these regulations away from the counties."

SECTION 10. Section 46-1.5, Hawaii Revised Statutes, is amended to read as follows:

"46-1.5 General powers and limitation of the counties. Subject to general law, each county shall have the following powers and shall be subject to the following liabilities and limitations:

(1) Each county shall have the power to frame and adopt a charter for its own self-government that shall establish the county executive, administrative, and legislative structure and organization, including but not limited to the method of appointment or election of officials, their duties, responsibilities, and compensation, and the terms of their office;

(2) Each county shall have the power to provide for and regulate the marking and lighting of all buildings and other structures that may be obstructions or hazards to aerial navigation, so far as may be necessary or proper for the protection and safeguarding of life, health, and property;

(3) Each county shall have the power to enforce all claims on behalf of the county and approve all lawful claims against the county, but shall be prohibited from entering into, granting, or making in any manner any contract, authorization, allowance payment, or liability contrary to the provisions of any county charter or general law;

(4) Each county shall have the power to make contracts and to do all things necessary and proper to carry into execution all powers vested in the county or any county officer;

(5) Each county shall have the power to:

(A) Maintain channels, whether natural or artificial, including their exits to the ocean, in suitable condition to carry off storm waters;

(B) Remove from the channels, and from the shores and beaches, any debris that is likely to create an unsanitary condition or become a public nuisance; provided that, to the extent any of the foregoing work is a private responsibility, the responsibility may be enforced by the county in lieu of the work being done at public expense;

(C) Construct, acquire by gift, purchase, or by the exercise of eminent domain, reconstruct, improve, better, extend, and maintain projects or undertakings for the control of and protection against floods and flood waters, including the power to drain and rehabilitate lands already flooded;

(D) Enact zoning ordinances providing that lands deemed subject to seasonable, periodic, or occasional flooding shall not be used for residence or other purposes in a manner as to endanger the health or safety of the occupants thereof, as required by the Federal Flood Insurance Act of 1956 (chapter 1025, Public Law 1016); and

(E) Establish and charge user fees to create and maintain any stormwater management system or infrastructure;

(6) Each county shall have the power to exercise the power of condemnation by eminent domain when it is in the public interest to do so;

(7) Each county shall have the power to exercise regulatory powers over business activity as are assigned to them by chapter 445 or other general law;

(8) Each county shall have the power to fix the fees and charges for all official services not otherwise provided for;

(9) Each county shall have the power to provide by ordinance assessments for the improvement or maintenance of districts within the county;

(10) Except as otherwise provided, no county shall have the power to give or loan credit to, or in aid of, any person or corporation, directly or indirectly, except for a public purpose;

(11) Where not within the jurisdiction of the public utilities commission, each county shall have the power to regulate by ordinance the operation of motor vehicle common carriers transporting passengers within the county and adopt and amend rules the county deems necessary for the public convenience and necessity;

(12) Each county shall have the power to enact and enforce ordinances necessary to prevent or summarily remove public nuisances and to compel the clearing or removal of any public nuisance, refuse, and uncultivated undergrowth from streets, sidewalks, public places, and unoccupied lots. In connection with these powers, each county may impose and enforce liens upon the property for the cost to the county of removing and completing the necessary work where the property owners fail, after reasonable notice, to comply with the ordinances. The authority provided by this paragraph shall not be self-executing, but shall become fully effective within a county only upon the enactment or adoption by the county of appropriate and particular laws, ordinances, or rules defining "public nuisances" with respect to each county's respective circumstances. The counties shall provide the property owner with the opportunity to contest the summary action and to recover the owner's property;

(13) Each county shall have the power to enact ordinances deemed necessary to protect health, life, and property, and to preserve the order and security of the county and its inhabitants on any subject or matter not inconsistent with, or tending to defeat, the intent of any state statute where the statute does not disclose an express or implied intent that the statute shall be exclusive or uniform throughout the State;

(14) Each county shall have the power to:

(A) Make and enforce within the limits of the county all necessary ordinances covering all:

(i) Local police matters;

(ii) Matters of sanitation;

(iii) Matters of inspection of buildings;

(iv) Matters of condemnation of unsafe structures, plumbing, sewers, dairies, milk, fish, and morgues; and

(v) Matters of the collection and disposition of rubbish and garbage;

(B) Provide exemptions for homeless facilities and any other program for the homeless authorized by part XVII of chapter 346, for all matters under this paragraph;

(C) Appoint county physicians and sanitary and other inspectors as necessary to carry into effect ordinances made under this paragraph, who shall have the same power as given by law to agents of the department of health, subject only to limitations placed on them by the terms and conditions of their appointments; and

(D) Fix a penalty for the violation of any ordinance, which penalty may be a misdemeanor, petty misdemeanor, or violation as defined by general law;

(15) Each county shall have the power to provide public pounds; to regulate the impounding of stray animals and fowl, and their disposition; and to provide for the appointment, powers, duties, and fees of animal control officers;

(16) Each county shall have the power to purchase and otherwise acquire, lease, and hold real and personal property within the defined boundaries of the county and to dispose of the real and personal property as the interests of the inhabitants of the county may require, except that:

(A) Any property held for school purposes may not be disposed of without the consent of the superintendent of education;

(B) No property bordering the ocean shall be sold or otherwise disposed of; and

(C) All proceeds from the sale of park lands shall be expended only for the acquisition of property for park or recreational purposes;

(17) Each county shall have the power to provide by charter for the prosecution of all offenses and to prosecute for offenses against the laws of the State under the authority of the attorney general of the State;

(18) Each county shall have the power to make appropriations in amounts deemed appropriate from any moneys in the treasury, for the purpose of:

(A) Community promotion and public celebrations;

(B) The entertainment of distinguished persons as may from time to time visit the county;

(C) The entertainment of other distinguished persons, as well as, public officials when deemed to be in the best interest of the community; and

(D) The rendering of civic tribute to individuals who, by virtue of their accomplishments and community service, merit civic commendations, recognition, or remembrance;

(19) Each county shall have the power to:

(A) Construct, purchase, take on lease, lease, sublease, or in any other manner acquire, manage, maintain, or dispose of buildings for county purposes, sewers, sewer systems, pumping stations, waterworks, including reservoirs, wells, pipelines, and other conduits for distributing water to the public, lighting plants, and apparatus and appliances for lighting streets and public buildings, and manage, regulate, and control the same;

(B) Regulate and control the location and quality of all appliances necessary to the furnishing of water, heat, light, power, telephone, and telecommunications service to the county;

(C) Acquire, regulate, and control any and all appliances for the sprinkling and cleaning of the streets and the public ways, and for flushing the sewers; and

(D) Open, close, construct, or maintain county highways or charge toll on county highways; provided that all revenues received from a toll charge shall be used for the construction or maintenance of county highways;

(20) Each county shall have the power to regulate the renting, subletting, and rental conditions of property for places of abode by ordinance;

(21) Unless otherwise provided by law, each county shall have the power to establish by ordinance the order of succession of county officials in the event of a military or civil disaster;

(22) Each county shall have the power to sue and be sued in its corporate name;

(23) Each county shall have the power to establish and maintain waterworks and sewer works; to collect rates for water supplied to consumers and for the use of sewers; to install water meters whenever deemed expedient; provided that owners of premises having vested water rights under existing laws appurtenant to the premises shall not be charged for the installation or use of the water meters on the premises; to take over from the State existing waterworks systems, including water rights, pipelines, and other appurtenances belonging thereto, and sewer systems, and to enlarge, develop, and improve the same;

(24) (A) Each county may impose civil fines, in addition to criminal penalties, and remedies for disgorgement of all profits and restitution of any money, real property, or personal property that was obtained through unfair or unlawful business acts and practices, for any violation of county ordinances or rules after a reasonable notice and [requests] request to correct or cease the violation [have] has been made upon the violator. Any administratively imposed civil fine shall not be collected until [after] either an opportunity for:

(i) [a] A hearing under chapter 91[.]; or

(ii) Judicial review by the circuit court, as prescribed by ordinance for specific violations,

has been afforded. Any appeal shall be filed within thirty days from the date of the final written decision. These proceedings shall not be stayed pending disposition of any criminal proceeding for a related offense. These proceedings shall not be a prerequisite for any civil fine or injunctive relief ordered by the circuit court[;]. Where a county seeks injunctive relief for violations related to single-family transient vacation rental units as provided by ordinance, the county need not show irreparable injury;

(B) Each county by ordinance may provide for the addition of any unpaid civil fines, ordered by any court of competent jurisdiction, to any taxes, fees, or charges, with the exception of fees or charges for water for residential use and sewer charges, collected by the county. Each county by ordinance may also provide for the addition of any unpaid administratively imposed civil fines, which remain due after all judicial review rights under section 91-14 are exhausted, to any taxes, fees, or charges, with the exception of water for residential use and sewer charges, collected by the county. The ordinance shall specify the administrative procedures for the addition of the unpaid civil fines to the eligible taxes, fees, or charges and may require hearings or other proceedings. After addition of the unpaid civil fines to the taxes, fees, or charges, the unpaid civil fines shall not become a part of any taxes, fees, or charges. The county by ordinance may condition the issuance or renewal of a license, approval, or permit for which a fee or charge is assessed, except for water for residential use and sewer charges, on payment of the unpaid civil fines. Upon recordation of a notice of unpaid civil fines in the bureau of conveyances, the amount of the civil fines, including any increase in the amount of the fine which the county may assess, shall constitute a lien upon all real property or rights to real property belonging to any person liable for the unpaid civil fines. The lien in favor of the county shall be subordinate to any lien in favor of any person recorded or registered prior to the recordation of the notice of unpaid civil fines and senior to any lien recorded or registered after the recordation of the notice. The lien shall continue until the unpaid civil fines are paid in full or until a certificate of release or partial release of the lien, prepared by the county at the owner's expense, is recorded. The notice of unpaid civil fines shall state the amount of the fine as of the date of the notice and maximum permissible daily increase of the fine. The county shall not be required to include a social security number, state general excise taxpayer identification number, or federal employer identification number on the notice. Recordation of the notice in the bureau of conveyances shall be deemed, at such time, for all purposes and without any further action, to procure a lien on land registered in land court under chapter 501. After the unpaid civil fines are added to the taxes, fees, or charges as specified by county ordinance, the unpaid civil fines shall be deemed immediately due, owing, and delinquent and may be collected in any lawful manner. The procedure for collection of unpaid civil fines authorized in this paragraph shall be in addition to any other procedures for collection available to the State and county by law or rules of the courts;

(C) Each county may impose civil fines upon any person who places graffiti on any real or personal property owned, managed, or maintained by the county. The fine may be up to $1,000 or may be equal to the actual cost of having the damaged property repaired or replaced. The parent or guardian having custody of a minor who places graffiti on any real or personal property owned, managed, or maintained by the county shall be jointly and severally liable with the minor for any civil fines imposed hereunder. Any such fine may be administratively imposed after an opportunity for a hearing under chapter 91, but such a proceeding shall not be a prerequisite for any civil fine ordered by any court. As used in this subparagraph, "graffiti" means any unauthorized drawing, inscription, figure, or mark of any type intentionally created by paint, ink, chalk, dye, or similar substances;

(D) At the completion of an appeal in which the county's enforcement action is affirmed and upon correction of the violation if requested by the violator, the case shall be reviewed by the county agency that imposed the civil fines to determine the appropriateness of the amount of the civil fines that accrued while the appeal proceedings were pending. In its review of the amount of the accrued fines, the county agency may consider:

(i) The nature and egregiousness of the violation;

(ii) The duration of the violation;

(iii) The number of recurring and other similar violations;

(iv) Any effort taken by the violator to correct the violation;

(v) The degree of involvement in causing or continuing the violation;

(vi) Reasons for any delay in the completion of the appeal; and

(vii) Other extenuating circumstances.

The civil fine that is imposed by administrative order after this review is completed and the violation is corrected shall be subject to judicial review, notwithstanding any provisions for administrative review in county charters;

(E) After completion of a review of the amount of accrued civil fine by the county agency that imposed the fine, the amount of the civil fine determined appropriate, including both the initial civil fine and any accrued daily civil fine, shall immediately become due and collectible following reasonable notice to the violator. If no review of the accrued civil fine is requested, the amount of the civil fine, not to exceed the total accrual of civil fine prior to correcting the violation, shall immediately become due and collectible following reasonable notice to the violator, at the completion of all appeal proceedings;

(F) If no county agency exists to conduct appeal proceedings for a particular civil fine action taken by the county, then one shall be established by ordinance before the county shall impose the civil fine;

(25) Any law to the contrary notwithstanding, any county mayor, by executive order, may exempt donors, provider agencies, homeless facilities, and any other program for the homeless under part XVII of chapter 346 from real property taxes, water and sewer development fees, rates collected for water supplied to consumers and for use of sewers, and any other county taxes, charges, or fees; provided that any county may enact ordinances to regulate and grant the exemptions granted by this paragraph;

(26) Any county may establish a captive insurance company pursuant to article 19, chapter 431; and

(27) Each county shall have the power to enact and enforce ordinances regulating towing operations."

SECTION 11. Section 46-4, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) This section and any ordinance, rule, or regulation adopted in accordance with this section shall apply to lands not contained within the forest reserve boundaries as established on January 31, 1957, or as subsequently amended.

Zoning in all counties shall be accomplished within the framework of a long-range, comprehensive general plan prepared or being prepared to guide the overall future development of the county. Zoning shall be one of the tools available to the county to put the general plan into effect in an orderly manner. Zoning in the counties of Hawaii, Maui, and Kauai means the establishment of districts of such number, shape, and area, and the adoption of regulations for each district to carry out the purposes of this section. In establishing or regulating the districts, full consideration shall be given to all available data as to soil classification and physical use capabilities of the land to allow and encourage the most beneficial use of the land consonant with good zoning practices. The zoning power granted herein shall be exercised by ordinance which may relate to:

(1) The areas within which agriculture, forestry, industry, trade, and business may be conducted;

(2) The areas in which residential uses may be regulated or prohibited;

(3) The areas bordering natural watercourses, channels, and streams, in which trades or industries, filling or dumping, erection of structures, and the location of buildings may be prohibited or restricted;

(4) The areas in which particular uses may be subjected to special restrictions;

(5) The location of buildings and structures designed for specific uses and designation of uses for which buildings and structures may not be used or altered;

(6) The location, height, bulk, number of stories, and size of buildings and other structures;

(7) The location of roads, schools, and recreation areas;

(8) Building setback lines and future street lines;

(9) The density and distribution of population;

(10) The percentage of a lot that may be occupied, size of yards, courts, and other open spaces;

(11) Minimum and maximum lot sizes; and

(12) Other regulations the boards or city council find necessary and proper to permit and encourage the orderly development of land resources within their jurisdictions.

The council of any county shall prescribe rules, regulations, and administrative procedures and provide personnel it finds necessary to enforce this section and any ordinance enacted in accordance with this section. The ordinances may be enforced by appropriate fines [and], penalties, and remedies for disgorgement of all profits and restitution of any money, real property, or personal property that was obtained through unfair or unlawful business acts and practices, civil or criminal, or by court order at the suit of the county or the owner or owners of real estate directly affected by the ordinances. In any action brought under this part, the court or zoning agency, in addition to any fine imposed upon the ordinance violator, shall allow costs of action, including costs and fees of any nature and reasonable attorney's fees, to be paid by the ordinance violator.

A transient accommodations broker who fails to remove an advertisement within seven days of receiving a notice of noncompliance under section 237- (i) or 237D- (i) shall be considered to be in violation of this section and applicable county land use ordinances and shall be subject to civil fines, ranging from $25,000 to $100,000, to be levied by the county planning director of the county where the subject property is located.

Any civil fine or penalty provided by ordinance under this section may be imposed by the district court, or by the zoning agency after an opportunity for a hearing pursuant to chapter 91. The proceeding shall not be a prerequisite for any injunctive relief ordered by the circuit court.

Nothing in this section shall invalidate any zoning ordinance or regulation adopted by any county or other agency of government pursuant to the statutes in effect prior to July 1, 1957.

The powers granted herein shall be liberally construed in favor of the county exercising them, and in such a manner as to promote the orderly development of each county or city and county in accordance with a long-range, comprehensive general plan to ensure the greatest benefit for the State as a whole. This section shall not be construed to limit or repeal any powers of any county to achieve these ends through zoning and building regulations, except insofar as forest and water reserve zones are concerned and as provided in subsections (c) and (d).

Neither this section nor any ordinance enacted pursuant to this section shall prohibit the continued lawful use of any building or premises for any trade, industrial, residential, agricultural, or other purpose for which the building or premises is used at the time this section or the ordinance takes effect; provided that a zoning ordinance may provide for elimination of nonconforming uses as the uses are discontinued, or for the amortization or phasing out of nonconforming uses or signs over a reasonable period of time in commercial, industrial, resort, and apartment zoned areas only. A zoning ordinance may provide for the amortization or phasing out of conforming or nonconforming single-family transient vacation rental units over a reasonable period of time in an area of any zoning classification. In no event shall such amortization or phasing out of nonconforming uses apply to any existing building or premises used for residential (single-family or duplex) or agricultural uses[.] other than transient vacation rental units, as provided in this section. Nothing in this section shall affect or impair the powers and duties of the director of transportation as set forth in chapter 262."

SECTION 12. Section 237-34, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) All tax returns and return information required to be filed under this chapter, and the report of any investigation of the return or of the subject matter of the return, shall be confidential. It shall be unlawful for any person or any officer or employee of the State, including the auditor or the auditor's agent with regard to tax return information obtained pursuant to section 23-5(a), to intentionally make known information imparted by any tax return or return information filed pursuant to this chapter, or any report of any investigation of the return or of the subject matter of the return, or to wilfully permit any return, return information, or report so made, or any copy thereof, to be seen or examined by any person; provided that for tax purposes only, the taxpayer, the taxpayer's authorized agent, or persons with a material interest in the return, return information, or report may examine them. Unless otherwise provided by law, persons with a material interest in the return, return information, or report shall include:

(1) Trustees;

(2) Partners;

(3) Persons named in a board resolution or a one per cent shareholder in the case of a corporate return;

(4) The person authorized to act for a corporation in dissolution;

(5) The shareholder of an S corporation;

(6) The personal representative, trustee, heir, or beneficiary of an estate or trust in the case of the estate's or decedent's return;

(7) The committee, trustee, or guardian of any person in paragraphs (1) through (6) who is incompetent;

(8) The trustee in bankruptcy or receiver, and the attorney-in-fact of any person in paragraphs (1) through (7);

(9) Persons duly authorized by the State or any county of the State in connection with their official duties;

(10) Any duly accredited tax official of the United States or of any state or territory[;], or of any county of this State;

(11) The Multistate Tax Commission or its authorized representative;

(12) Members of a limited liability company; and

(13) A person contractually obligated to pay the taxes assessed against another when the latter person is under audit by the department.

Any violation of this subsection shall be a class C felony."

SECTION 13. Section 237D-13, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) All tax returns and return information required to be filed under this chapter, and the report of any investigation of the return or of the subject matter of the return, shall be confidential. It shall be unlawful for any person or any officer or employee of the State, including the auditor or the auditor's agent with regard to tax return information obtained pursuant to section 23-5(a), to intentionally make known information imparted by any tax return or return information filed pursuant to this chapter, or any report of any investigation of the return or of the subject matter of the return, or to wilfully permit any return, return information, or report so made, or any copy thereof, to be seen or examined by any person; provided that for tax purposes only the taxpayer, the taxpayer's authorized agent, or persons with a material interest in the return, return information, or report may examine them. Unless otherwise provided by law, persons with a material interest in the return, return information, or report shall include:

(1) Trustees;

(2) Partners;

(3) Persons named in a board resolution or a one per cent shareholder in the case of a corporate return;

(4) The person authorized to act for a corporation in dissolution;

(5) The shareholder of an S corporation;

(6) The personal representative, trustee, heir, or beneficiary of an estate or trust in the case of the estate's or decedent's return;

(7) The committee, trustee, or guardian of any person in paragraphs (1) through (6) who is incompetent;

(8) The trustee in bankruptcy or receiver, and the attorney-in-fact of any person in paragraphs (1) through (7);

(9) Persons duly authorized by the State or any county of the State in connection with their official duties;

(10) Any duly accredited tax official of the United States, or of any state or territory, or of any county of this State;

(11) The Multistate Tax Commission or its authorized representative; and

(12) Members of a limited liability company.

Any violation of this subsection shall be a class C felony. Nothing in this subsection shall prohibit the publication of statistics that are classified to prevent the identification of particular reports or returns and the items of the reports or returns."

SECTION 14. By January 1, 2019, the director of taxation shall make available to transient accommodations brokers a form of application for registration as a tax collection agent under the new section of chapter 237, Hawaii Revised Statutes, added by section 9 of this Act, and under the new section of chapter 237D, Hawaii Revised Statutes, added by section 10 of this Act.

SECTION 15. Upon the establishment by a county of a process for providing verification of compliance by an operator or plan manager with that county's land use ordinances, the director of taxation shall transfer to that county per cent of the transient accommodations tax and general excise tax revenues collected pursuant to this part in that county for that fiscal year.

PART III

SECTION 16. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 17. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 18. This Act shall take effect on July 1, 2018.

 

INTRODUCED BY:

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Report Title:

Taxation; Amnesty; Transient Accommodations; Vacation Rentals; Taxation; Transient Accommodations Brokers; Tax Collection Agents; General Excise Tax

 

Description:

Establishes a 1-time amnesty program for certain delinquent tax obligations. Allows transient accommodations brokers to register as a tax collection agent on behalf of all of its operators and plan managers. Requires registered tax collection agent's operators and plan managers to obtain a GET license and TAT registration. Requires registered tax collection agents to file periodic and annual GET and TAT returns. Requires that each periodic return be accompanied by an electronic cover sheet containing required information. Requires all registered tax collection agents to inquire with their operators and plan managers whether the transient accommodation is in compliance with all pertinent state and county land use and tax laws. Requires the operator or plan manager to provide verification of and a statement confirming compliance with state and county land use laws in the form of a written certification, verification, or permit, as applicable, issued by the appropriate county agency. Requires a transient accommodations broker to remove an advertisement for a transient accommodation upon notice that the property is not in compliance with state law or county ordinance. Authorizes counties to disgorge profits obtained through unfair or unlawful business practices. Authorizes counties to adopt ordinances to amortize or phase out transient vacation rental units. Authorizes disclosure of GET and TAT returns to authorized county officials. Allocates an unspecified percentage of GET and TAT tax revenues to the counties, contingent upon establishment of a process to provide verification of compliance by an operator or plan manager with county land use laws.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.