THE SENATE

S.B. NO.

223

THIRTY-FIRST LEGISLATURE, 2021

S.D. 1

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO CONTRACTING.

 

 

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

 


SECTION 1. Chapter 46, Hawaii Revised Statutes, is amended by adding a new section to part V to be appropriately designated and to read as follows:

"46-   Private building developments; tax clearances. (a) No building license shall be granted for a private development valued at $195,000 or greater, unless the applicant has presented to the issuing officer tax clearances from the director of taxation and the Internal Revenue Service on behalf of the building contractor and any subcontractors. The issuing officer shall verify that all contractors and subcontractors have filed all tax returns due, and that all taxes, interest, and penalties levied against the contractor and subcontractors or accrued under title 14 that are administered by the department of taxation and under the Internal Revenue Code have been paid. The director of taxation may waive the Internal Revenue Service tax clearance requirement if the director determines that it is in the best interest of the State. A building license issued pursuant to this subsection shall be valid for two years, provided that all appropriate tax clearances were obtained and submitted with the application.

(b) Any assignment of a contract for a private development valued at $195,000 or greater shall require the assignee, as a condition precedent to the assignment, to first obtain a bulk sales certificate if required under section 237-43, and present the certificate, or tax clearance as provided under subsection (a) if a bulk sales certificate is not required, to the state or county contracting officer or agent.

(c) If the building license issued pursuant to subsection (a) expires, all state and county contracting officers or agents shall withhold final inspection of a private development valued at $195,000 or greater until the receipt of tax clearances from the director of taxation and the Internal Revenue Service on behalf of the building contractor and any subcontractors; provided that the tax clearances shall be dated no earlier than forty-five days prior to the date of the request for final inspection of the private development.

(d) This section shall not apply to a contractor or subcontractor if the department of taxation certifies that the contractor or subcontractor is in good standing under a plan in which delinquent taxes, interest, and penalties are being paid to the department of taxation or the Internal Revenue Service, if applicable, in installments.

(e) The department of taxation may require that an application for a tax clearance required by this section be submitted electronically.

(f) Any officer or employee of any governmental agency who intentionally or knowingly violates any provision under this section shall be fined not more than $1,000 or imprisoned not more than one year, or both.

(g) This section shall not apply to the extent and during the period that the validity of the taxes, penalties, or interest is being contested in an administrative or judicial appeal with the department of taxation or Internal Revenue Service."

SECTION 2. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on January 1, 2022, and shall be repealed on December 31, 2026.


 


 

Report Title:

DOTAX; Counties; Contracting; Private Developments; Tax Clearance

 

Description:

Requires contractors and subcontractors to submit tax clearances as a condition of: (1) obtaining building permits for private developments exceeding a certain value, which shall be valid for two years; (2) assigning a contract for private developments exceeding a certain value; and (3) obtaining final inspection of private developments exceeding a certain value in certain circumstances. Authorizes the department of taxation to require that tax clearance applications be submitted electronically. Establishes penalties. Effective 1/1/2022. Repeals 12/31/2026. (SD1)

 

 

 

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