2010 Legislature bill descriptions and HANO positions
General excise tax exemption repeal
HB 2877, HD1 -- Proposed temporary suspension of the exemption for certain persons and certain amounts of gross income or proceeds from the general excise tax and required the payment of the tax at a one-half per cent rate. Proposed taking effect on Oct. 1, 2010 and sunsetting on June 30, 2015. Temporarily levied .5% GET on nonprofits, excluding churches, excluding tax on donations and gifts, exempting other types of revenue. House Draft (HD) 1 version removed all charitable organizations from the list of groups being levied the .5% tax increase. Bill eventually got gutted by Senate and then was not heard by Ways and Means (WAM). HANO provided comments and monitored throughout the process.
HB 2878 -- Repealed certain exemptions under the general excise, use, and public service company taxes. The Act was to take effect on July 1, 2010 and sunset on June 30, 2015. Included nonprofits; excluded churches. The bill passed out of the House, but did not crossover to the Senate and was dead for the session. HANO opposed.
HB 2879 -- Imposed a general excise tax surcharge upon gross income or gross proceeds comprised of state non-general funds. Imposed a public service company tax surcharge upon gross income comprised of state non-general funds. Bill was deferred in committee and did not make crossover to Senate. HANO opposed.
HB 1742 -- Repealed GET exemption for nonprofits other than religious institutions. Carried over from 2009. No hearing was scheduled in 2010 session. HANO opposed.
HB 611, HD 1, SD 2 -- Required the Department of Taxation to evaluate certain tax credits and tax exemptions and report to legislature. Provided automatic repeal of the tax credits and tax exemptions. Provided a penalty for excessive amounts filed for tax refunds and credits. Carried over from 2009. No hearing was scheduled in 2010. HANO supported the bill's intent in 2009 and monitored throughout 2010 session.
Requiring nonprofit contractors to pay 'prevailing wages'
HB 2100, HD 1 and SB 2384 -- Extended Little Davis-Bacon rights (federal law) regarding prevailing wages to employees on service contracts with governmental contracting agencies. Increased reporting requirements on nonprofit contractors and required payment once a week. Bill did not make it out of the House. HANO opposed.
Procurement
HB 2506 and SB 2659 -- Amended various sections of the Hawaii Public Procurement Code, Chapter 103D, Hawaii Revised Statutes, to simplify and streamline procurement processes to enable agencies to expeditiously acquire the resources or services they need to perform their missions. Bill got gutted early in session and became no longer relevant to nonprofits. HANO monitored.
Unemployment insurance taxes
HB 2169, HD 2, Act 002 -- Unemployment Insurance Tax bill, set "formula" of calculation to pace out the increase in UI Tax over 2 years. Authorized special assessments upon employers to pay the interest costs on loans received from the U.S. Secretary of Labor. Required the department of labor and industrial relations to conduct rate assessments every six months beginning in 2012. Established recalculation of the adequate reserve fund beginning in 2011. Bill passed and became law on March 11, 2010 to provide immediate relief to businesses. HANO supported, in cooperation with the Chamber of Commerce of Hawaii.
Sales and use tax agreement
SB2405, SD 2, HD1, CD 1 – Adopted amendments to Hawaii tax laws to implement the streamlined sales and use tax agreement. Allowed for capturing uncollected sales tax already owed to State of Hawaii on catalog and internet sales. Bill died in conference committee. HANO supported.
Itemized tax deductions
HB 1907, HD 1, SD 1, CD 1 – Temporarily placed a cap on itemized deductions claimed on state income tax returns until January 1, 2016. This bill would decrease incentives for charitable giving. Bill surfaced at end of session and passed out of session. Bill was vetoed by Governor. While awaiting Governor’s signature, HANO sent letter asking for veto and got word out to other organizations.
Nonprofit registration
SB 2669, SD 1 -- AG’s housekeeping bill to clarify language on nonprofit registration requirements. Amends chapter 467B, HRS, to allow service of process by substitute service, allows the Attorney General to accept assurances of discontinuance, and amends and clarifies the charity registration exemptions, and clarifies the time period for the filing of a charity's annual financial report. HANO supports but proposes other nonprofit inclusion in exemptions if exemption is based solely on independent accreditation.
Board member liability for nonprofit GET payments
HB 2595, HD 1 and SB 2748 -- Precludes a taxpayer from utilizing a general excise tax benefit, including exemptions, deductions, lower rates, or income splitting, unless the taxpayer follows all administrative requirements. Creates trust fund liability for revenues collected by a business as a tax recovery. Puts personal liability on board volunteers if nonprofit does not pay its general excise tax. Adds further reporting requirements on anyone who is supposed to pay GET. HANO opposes.
City property taxes on nonprofits
Honolulu City and County Bill 33 -- Capped exemption amounts on real property tax for Oahu nonprofits who own real property. Bill was deferred indefinitely, but may resurface in 2011. HANO opposed.
Honolulu City and County Bill 32 -- Increased annual nonprofit real property fee from $100 to $300. Passed out of City Council and law went into effect July 1, 2010. HANO expressed concerns but did not oppose.
