HOUSE OF REPRESENTATIVES
THIRTIETH LEGISLATURE, 2019
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO LIVE ADULT ENTERTAINMENT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to title 14 be appropriately designated and to read as follows:
LIVE ADULT ENTERTAINMENT TAX
§ -1 Definitions. As used in this chapter, unless the context otherwise requires:
"Director" means the director of taxation.
"Liquor" shall have the same meaning as in section 281-1.
"Live adult entertainment business" means any person that:
(1) Is required to maintain age verification records of sexually exploited individuals pursuant to section 712-1218.5; and
(2) Authorizes the consumption of liquor on the person's premises, regardless of whether the consumption of liquor is under a license or permit issued under chapter 281.
"Premises" means the real property:
(1) That is owned, rented, or otherwise under the control of a live adult entertainment business as a place of business; and
(2) At which the live adult entertainment business employs sexually exploited individuals to provide entertainment to patrons or customers.
"Sexually exploited individuals" shall have the same meaning as in section 712-1210.
§ -2 Live adult entertainment tax. (a) There is levied and shall be assessed and collected a live adult entertainment tax of $ for each patron or customer admitted each day to the premises of a live adult entertainment business.
(b) This section does not require any live adult entertainment business to collect the live adult entertainment tax from any patron or customer of the business. A business may determine the manner in which the business derives the money required under this section; provided that the business shall not violate any other law.
§ -3 Certificate of registration. (a) Each person as a condition precedent to engaging or continuing in business as a live adult entertainment business shall register with the director. A person required to so register shall make a one-time payment of $ , upon receipt of which the director shall issue a certificate of registration in such form as the director determines, attesting that the registration has been made. The registration shall not be transferable and shall be valid only for the person in whose name it is issued and for the transaction of business at the place designated therein. The registration, or in lieu thereof, a notice stating where the registration may be inspected and examined, shall at all times be conspicuously displayed at the place for which it is issued.
(b) The registration shall be effective until canceled in writing. Any application for the reissuance of a previously canceled registration identification number shall be regarded as a new registration application and shall be subject to the payment of the one-time registration fee in subsection (a). The director may revoke or cancel any certificate of registration issued under this chapter for cause as provided by rule under chapter 91.
(c) If the registration fee is paid, the department shall not refuse to issue a registration or revoke or cancel a registration for the exercise of a privilege protected by the First Amendment of the Constitution of the United States, or for the carrying on of interstate or foreign commerce, or for any privilege the exercise of which, under the Constitution and laws of the United States, cannot be restrained on account of nonpayment of taxes, nor shall section -13 be invoked to restrain the exercise of such a privilege, or the carrying on of commerce that is subject to this chapter.
(d) Any person who is required to register as a live adult entertainment business who engages or continues in the business without registering in conformity with this chapter, shall be guilty of a misdemeanor. Any officer or director of a corporation who permits, aids, or abets the corporation to engage or continue in business without registering in conformity with this chapter, shall be guilty of a misdemeanor. The penalty for violating this subsection shall be the same as prescribed in section 231-34 for violation of that section.
§ -4 Return and payments; penalties. (a) On or before the twentieth day of each calendar month, every person taxable under this chapter during the preceding calendar month shall file a sworn return with the director in a form as the director shall prescribe together with a remittance for the amount of the live adult entertainment tax in the form required by section ‑5. Sections 237-30 and 237-32 shall apply to returns and penalties made under this chapter to the same extent as if the sections were set forth specifically in this section.
(b) Notwithstanding subsection (a), the director, for good cause, may permit a person to file the person's return required under this section and make payments thereon:
(1) On a quarterly basis during the calendar or fiscal year, the return and payment to be made on or before the twentieth day of the calendar month after the close of each quarter, to wit: for calendar year taxpayers, on or before April 20, July 20, October 20, and January 20 or, for fiscal year taxpayers, on or before the twentieth day of the fourth month, seventh month, and tenth month following the beginning of the fiscal year and on or before the twentieth day of the month following the close of the fiscal year; provided that the director is satisfied that the grant of the permit will not unduly jeopardize the collection of the live adult entertainment taxes due thereon and that the person's total live adult entertainment tax liability for the calendar or fiscal year under this chapter will not exceed $4,000; or
(2) On a semiannual basis during the calendar or fiscal year, the return and payment to be made by or before the twentieth day of the calendar month after the close of each six-month period, to wit: for calendar year taxpayers, on July 20 and January 20 or, for fiscal year taxpayers, on or before the twentieth day of the seventh month following the beginning of the fiscal year and on or before the twentieth day of the month following the close of the fiscal year; provided that the director is satisfied that the grant of the permit will not unduly jeopardize the collection of the live adult entertainment taxes due thereon and that the person's total live adult entertainment tax liability for the calendar or fiscal year under this chapter will not exceed $2,000.
The director, for good cause, may permit a person to make monthly payments based on the person's estimated quarterly or semiannual liability; provided that the person files a reconciliation return at the end of each quarter or at the end of each six-month period during the calendar or fiscal year, as provided in this section.
(c) If a person filing the return on a quarterly or semiannual basis, as provided in this section, becomes delinquent in either the filing of the return or the payment of the live adult entertainment taxes due thereon, or if the liability of a person, who possesses a permit to file the return and to make payments on a semiannual basis exceeds $2,000 in live adult entertainment taxes during the calendar year or exceeds $4,000 in live adult entertainment taxes during the calendar year if making payments on a quarterly basis, or if the director determines that any such quarterly or semiannual filing of return would unduly jeopardize the proper administration of this chapter, including the assessment or collection of the live adult entertainment tax, the director, at any time, may revoke a person's permit, in which case the person then shall be required to file the person's return and make payments thereon as provided in subsection (a).
(d) Section 232-2 does not apply to a monthly, quarterly, or semiannual return.
§ -5 Remittances. All remittances of the live adult entertainment tax imposed under this chapter shall be made by cash, bank draft, cashier's check, money order, or certificate of deposit to the office of the taxation district to which the return was transmitted. The department shall deposit the moneys into the state treasury to the credit of the human trafficking victim services fund established under section 706-650.5.
§ -6 Annual return. On or before the twentieth day of the fourth month following the close of the taxable year, every person who has become liable for the payment of the live adult entertainment tax during the preceding tax year shall file a return summarizing the person's liability under this chapter for the year, in a form as the director prescribes. The person shall transmit with the return a remittance covering the residue of the live adult entertainment tax chargeable to the person, if any, to the office of the appropriate state district tax assessor designated in section ‑7. The return shall be signed by the person, if made by an individual, or by the president, vice-president, secretary, or treasurer of a corporation, if made on behalf of a corporation. If made on behalf of a partnership, firm, society, unincorporated association, group, hui, joint adventure, joint stock company, corporation, trust estate, decedent's estate, trust, or other entity, any individual delegated by the entity shall sign the same on behalf of the person. If for any reason it is not practicable for the individual person to sign the return, it may be done by any duly authorized agent. The department, for good cause shown, may extend the time for making the return on the application of any person and grant such reasonable additional time within which to make the return as the department may deem advisable.
Section 232-2 shall apply to the annual return, but not to a monthly, quarterly, or semiannual return.
§ -7 Filing of returns. All monthly, quarterly, semiannual, and annual returns shall be transmitted to the office of the taxation district in which the person's place of business is situated or to the office of the first taxation district in Honolulu.
§ -8 Assessment of live adult entertainment tax upon failure to make return; limitation period; exceptions; extension by agreement. (a) If any person fails to make a return as required by this chapter, the director shall make an estimate of the live adult entertainment tax liability of the person from any information the director obtains, and according to the estimate so made, assess the live adult entertainment taxes, interest, and penalty due the State from the person, give notice of the assessment to the person, and make demand upon the person for payment. The assessment shall be presumed to be correct until and unless, upon an appeal duly taken as provided in section ‑10, the contrary shall be clearly proved by the person assessed, and the burden of proof upon the appeal shall be upon the person assessed to disprove the correctness of assessment.
(b) After a return is filed under this chapter the director shall cause the return to be examined, and may make further audits or investigation as the director considers necessary. If the director determines that there is a deficiency with respect to the payment of the live adult entertainment tax due under this chapter, the director shall assess the live adult entertainment taxes, interest, and penalty due the State, give notice of the assessment to the persons liable, and make demand upon the persons for payment.
(c) Except as otherwise provided by this section, the amount of live adult entertainment taxes imposed by this chapter shall be assessed or levied within three years after the annual return was filed, or within three years of the due date prescribed for the filing of the return, whichever is later, and no proceeding in court without assessment for the collection of any live adult entertainment taxes shall begin after the expiration of the period. Where the assessment of the tax imposed by this chapter has been made within the period of limitation applicable thereto, the tax may be collected by levy or by a proceeding in court under chapter 231; provided that the levy is made or the proceeding was begun within fifteen years after the assessment of the tax.
(4) During which the taxpayer is outside the State if the period of absence is for a continuous period of at least six months; provided that if at the time of the taxpayer's return to the State the period of limitations on collection after assessment would expire before the expiration of six months from the date of the taxpayer's return, the period shall not expire before the expiration of the six months.
(d) In the case of a false or fraudulent return with intent to evade the live adult entertainment tax, or of a failure to file the annual return, the live adult entertainment tax may be assessed or levied at any time; provided that the burden of proof with respect to the issues of falsity or fraud and intent to evade tax shall be upon the State.
(e) Where, before the expiration of the period prescribed in subsection (c), both the department and the person have consented in writing to the assessment or levy of the live adult entertainment tax after the date fixed by subsection (c), the live adult entertainment tax may be assessed or levied at any time prior to the expiration of the period agreed upon. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon.
§ -9 Overpayment; refunds. Upon application by a person, if the director determines that any live adult entertainment tax, interest, or penalty has been paid more than once, or has been erroneously or illegally collected or computed, the live adult entertainment tax, interest, or penalty shall be credited by the director on any live adult entertainment tax then due from the person under this chapter. The director shall refund the balance to the person or the person's successors, administrators, executors, or assigns in accordance with section 231-23(d). No credit or refund shall be allowed for any live adult entertainment tax imposed by this chapter, unless a claim for the credit or refund is filed as follows:
(1) If an annual return is timely filed, or is filed within three years after the date prescribed for filing the annual return, then the credit or refund shall be claimed within three years after the date the annual return was filed or the date prescribed for filing the annual return, whichever is later.
(2) If an annual return is not filed, or is filed more than three years after the date prescribed for filing the annual return, a claim for credit or refund shall be filed within:
(A) Three years after the payment of the tax; or
(B) Three years after the date prescribed for the filing of the annual return,
whichever is later.
Paragraphs (1) and (2) are mutually exclusive. The preceding limitation shall not apply to a credit or refund pursuant to an appeal provided for in section -10.
As to all tax payments for which a refund or credit is not authorized by this section (including, without prejudice to the generality of the foregoing, cases of unconstitutionality), the remedies provided by appeal or by section 40-35 are exclusive.
§ -10 Appeals. Any person aggrieved by any assessment of the live adult entertainment tax for any month or any year may appeal from the assessment in the manner and within the time and in all other respects as provided in the case of income tax appeals by section 235-114.
§ -11 Records to be kept; examination. Every person shall keep in the English language within the State, and preserve for a period of three years, suitable records relating to the live adult entertainment tax levied and assessed under this chapter, and any other books, records of account, and invoices as may be required by the department, and all books, records, and invoices shall be open for examination at any time by the department or the Multistate Tax Commission pursuant to chapter 255, or the authorized representative thereof.
§ -12 Disclosure of returns unlawful; destruction of returns. (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 tax return, return information, or report so made, or any copy thereof, to be seen or examined by any person; provided that for live adult entertainment tax purposes only, 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:
(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 in connection with their official duties;
(10) Any duly accredited tax official of the United States or of any state or territory;
(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.
(b) The department may destroy the monthly, quarterly, or semiannual returns filed pursuant to section ‑4, or any of them, upon the expiration of three years after the end of the calendar or fiscal year in which the live adult entertainment taxes so returned accrued.
§ -13 Collection by suit; injunction. The department may collect live adult entertainment taxes due and unpaid under this chapter, together with all accrued penalties, by action in assumpsit or other appropriate proceedings in the circuit court of the judicial circuit in which the live adult entertainment taxes arose. After delinquency has continued for sixty days, or if any person lawfully required so to do under this chapter fails to apply for and secure a certificate as provided by this chapter for a period of sixty days after the first date when the person was required under this chapter to secure the certificate, the department may proceed in the circuit court of the judicial circuit in which the live adult entertainment business' premises is located, to obtain an injunction restraining further business operations until full payment has been made of all live adult entertainment taxes, penalties, and interest due under this chapter, or until the certificate is secured, or both, as the circumstances of the case requires.
§ -14 Application of live adult entertainment tax. The live adult entertainment tax imposed by this chapter shall be in addition to any other taxes imposed by any other laws of the State, except as otherwise specifically provided in this chapter; provided that if it be held by any court of competent jurisdiction that the live adult entertainment tax imposed by this chapter may not legally be imposed in addition to any other tax or taxes imposed by any other law or laws with respect to the same premises or the use thereof, then this chapter shall be deemed not to apply to the premises and the use thereof under the specific circumstances, but the other laws shall be given full effect with respect to the premises and use.
§ -15 Administration and enforcement; rules. (a) The director shall administer and enforce this chapter in respect to:
(1) The examination of books and records of live adult entertainment businesses;
(2) Procedure and powers upon failure or refusal by a person to make a return or proper return; and
(3) The general administration of this chapter.
All of the provisions of chapter 237 not inconsistent with this chapter and that may appropriately be applied to the taxes, persons, circumstances, and situations involved in this chapter, including (without prejudice to the generality of the foregoing) provisions as to penalties and interest, and provisions granting administrative powers to the department, and provisions for the assessment, levy, and collection of taxes, shall be applicable to the live adult entertainment tax imposed by this chapter, and to the assessment, levy, and collection thereof.
(b) The director may adopt, amend, or repeal rules under chapter 91 to carry out this chapter."
SECTION 2. Section 706-650.5, Hawaii Revised Statutes, is amended by amending subsection (4) to read as follows:
"(4) All [
(a) Fees paid [
and interest accrued on
funds collected] pursuant to this section; and
(b) Moneys collected pursuant to chapter from the live adult entertainment tax,
shall be deposited into the human trafficking victim services fund. All interest earned or accrued on moneys deposited into the human trafficking victim services fund shall become part of the fund."
SECTION 3. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.
SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 5. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2019; provided that section 2 shall take effect on January 1, 2020.
Taxation; Live Adult Entertainment
Imposes a per person, per day admission tax on certain live adult entertainment businesses. Imposes filing, reporting, and recordkeeping requirements. Deposits moneys collected from the tax into the human trafficking victim services fund.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.