REPORT TITLE:
GE tax; applications


DESCRIPTION:
Provides that sales to a licensed retail merchant, jobber, or
other licensed seller of bulk condiments or prepackaged single-
serving packets of condiments that are provided to customers are
subject to the general excise tax at the wholesale rate of 1/2
percent.  Clarifies that sales to a licensed retail merchant,
jobber, or other licensed seller of tangible personal property
that will be incorporated or processed by the licensed seller
into a finished or saleable product during the course of
preparation for market and sold by the licensed retail merchant,
jobber, or licensed seller at retail is subject to the general
excise tax at the wholesale rate.  Clarifies that the 1/2 percent
intermediary services rate is applicable to persons providing
professional services, not otherwise specifically taxed, under
the general excise tax.  (SB1177 HD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        1177
THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 1999                                H.D. 1
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO THE GENERAL EXCISE TAX. 


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

 1      SECTION 1.  Section 237-4, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "�237-4  "Wholesaler", "jobber", defined.  (a)  "Wholesaler"
 
 4 or "jobber" applies only to a person making sales at wholesale.
 
 5 Only the following are sales at wholesale:
 
 6      (1)  Sales to a licensed retail merchant, jobber, or other
 
 7           licensed seller for purposes of resale;
 
 8      (2)  Sales to a licensed manufacturer of [material]
 
 9           materials or commodities [which] that are to be
 
10           incorporated by the manufacturer into a finished or
 
11           saleable product (including the container or package in
 
12           which the product is contained) during the course of
 
13           its preservation, manufacture, or processing, including
 
14           preparation for market, and [which] that will remain in
 
15           such finished or saleable product in such form as to be
 
16           perceptible to the senses, which finished or saleable
 
17           product is to be sold and not otherwise used by the
 
18           manufacturer;
 
19      (3)  Sales to a licensed producer or cooperative association
 
20           of materials or commodities [which] that are to be
 

 
Page 2                                                     1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1           incorporated by the producer or by the cooperative
 
 2           association into a finished or saleable product [which]
 
 3           that is to be sold and not otherwise used by the
 
 4           producer or cooperative association, including
 
 5           specifically materials or commodities expended as
 
 6           essential to the planting, growth, nurturing, and
 
 7           production of commodities [which] that are sold by the
 
 8           producer or by the cooperative association;
 
 9      (4)  Sales to a licensed contractor, of [material] materials
 
10           or commodities [which] that are to be incorporated by
 
11           the contractor into the finished work or project
 
12           required by the contract and [which] that will remain
 
13           in such finished work or project in such form as to be
 
14           perceptible to the senses;
 
15      (5)  Sales to a licensed producer, or to a cooperative
 
16           association described in section 237-23(a)(7) for sale
 
17           to [such] a licensed producer, or to a licensed person
 
18           operating a feed lot, of poultry or animal feed,
 
19           hatching eggs, semen, replacement stock, breeding
 
20           services for the purpose of raising or producing animal
 
21           or poultry products for disposition as described in
 
22           section 237-5 or [to be incorporated in] for
 
23           incorporation into a manufactured product as described
 

 
Page 3                                                     1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1           in paragraph (2) or for the purpose of breeding,
 
 2           hatching, milking, or egg laying other than for the
 
 3           customer's own consumption of the meat, poultry, eggs,
 
 4           or milk so produced; provided that in the case of a
 
 5           feed lot operator, only the segregated cost of the feed
 
 6           furnished by the feed lot operator as part of the feed
 
 7           lot operator's service to a licensed producer of
 
 8           poultry or animals to be butchered or to a cooperative
 
 9           association described in section 237- 23(a)(7) of such
 
10           licensed producers shall be deemed to be a sale at
 
11           wholesale; and provided further that any amount derived
 
12           from the furnishing of feed lot services, other than
 
13           the segregated cost of feed, shall be deemed taxable at
 
14           the service business rate.  This paragraph shall not
 
15           apply to the sale of feed for poultry or animals to be
 
16           used for hauling, transportation, or sports purposes;
 
17      (6)  Sales to a licensed producer, or to a cooperative
 
18           association described in section 237-23(a)(7) for sale
 
19           to the producer, of seed for producing agricultural
 
20           products, or bait for catching fish (including the
 
21           catching of bait for catching fish), which agricultural
 
22           products or fish are to be disposed of as described in
 
23           section 237-5 or to be incorporated in a manufactured
 

 
Page 4                                                     1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1           product as described in paragraph (2);
 
 2      (7)  Sales to a licensed producer, or to a cooperative
 
 3           association described in section 237-23(a)(7) for sale
 
 4           to such producer; of polypropylene shade cloth; of
 
 5           polyfilm; of polyethylene film; of cartons and such
 
 6           other containers, wrappers, and sacks, and binders to
 
 7           be used for packaging eggs, vegetables, fruits, and
 
 8           other agricultural products; of seedlings and cuttings
 
 9           for producing nursery plants; or of chick containers;
 
10           which cartons and such other containers, wrappers, and
 
11           sacks, binders, seedlings, cuttings, and containers are
 
12           to be used as described in section 237-5, or to be
 
13           incorporated in a manufactured product as described in
 
14           paragraph (2);
 
15      (8)  Sales of tangible personal property to a licensed
 
16           person engaged in [the] a service business[;] or
 
17           calling; provided that:
 
18           (A)  [the] The property is not consumed or incidental
 
19                to the performance of the services;
 
20           (B)  [there] There is a resale of the article at the
 
21                retail rate of four per cent; and
 
22           (C)  [the] The resale of the article is separately
 

 
 
 
Page 5                                                     1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1                charged or billed by the person rendering the
 
 2                services;
 
 3      (9)  Sales to a licensed leasing company of capital goods
 
 4           [which] that are thereafter leased as a service to
 
 5           others.  Capital goods means goods which have a
 
 6           depreciable life and which are purchased by the leasing
 
 7           company for lease to its customers[.];
 
 8     (10)  Sales to a licensed retail merchant, jobber, or other
 
 9           licensed seller of bulk condiments or prepackaged
 
10           single-serving packets of condiments that are provided
 
11           to customers by the licensed retail merchant, jobber,
 
12           or other licensed seller;
 
13     (11)  Sales to a licensed retail merchant, jobber, or other
 
14           licensed seller of tangible personal property that will
 
15           be incorporated or processed by the licensed retail
 
16           merchant, jobber, or other licensed seller into a
 
17           finished or saleable product during the course of its
 
18           preparation for market (including disposable,
 
19           nonreturnable containers, packages, or wrappers, in
 
20           which the product is contained and that are generally
 
21           known and most commonly used to contain food or
 
22           beverage for transfer or delivery), and which finished
 
23           or saleable product is to be sold and not otherwise
 

 
Page 6                                                     1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1           used by the licensed retail merchant, jobber, or other
 
 2           licensed seller.
 
 3      (b)  If the use tax law is finally held by a court of
 
 4 competent jurisdiction to be unconstitutional or invalid insofar
 
 5 as it purports to tax the use or consumption of tangible personal
 
 6 property imported into the State in interstate or foreign
 
 7 commerce or both, wholesalers and jobbers shall be taxed
 
 8 thereafter under this chapter in accordance with the following
 
 9 definition (which shall supersede the preceding paragraph
 
10 otherwise defining "wholesaler" or "jobber"): "Wholesaler" or
 
11 "jobber" means a person, or a definitely organized division
 
12 thereof, definitely organized to render and rendering a general
 
13 distribution service [which] that buys and maintains at the
 
14 person's place of business a stock or lines of merchandise
 
15 [which] that the person distributes; and [which,] that the
 
16 person, through salespersons, advertising, or sales promotion
 
17 devices, sells to licensed retailers, to institutional or
 
18 licensed commercial or industrial users, in wholesale quantities
 
19 and at wholesale rates.  A corporation deemed not to be carrying
 
20 on a trade or business in this State under section 235-6 shall
 
21 nevertheless be deemed to be a wholesaler and shall be subject to
 
22 the tax imposed by this chapter."
 

 
 
 
Page 7                                                     1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1      SECTION 2.  Section 237-13, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "�237-13 Imposition of tax.  There is hereby levied and
 
 4 shall be assessed and collected annually privilege taxes against
 
 5 persons on account of their business and other activities in the
 
 6 State measured by the application of rates against values of
 
 7 products, gross proceeds of sales, or gross income, whichever is
 
 8 specified, as follows:
 
 9      (1)  Tax on manufacturers.
 
10           (A)  Upon every person engaging or continuing within
 
11                the State in the business of manufacturing,
 
12                including compounding, canning, preserving,
 
13                packing, printing, publishing, milling,
 
14                processing, refining, or preparing for sale,
 
15                profit, or commercial use, either directly or
 
16                through the activity of others, in whole or in
 
17                part, any article or articles, substance or
 
18                substances, commodity or commodities, the amount
 
19                of the tax to be equal to the value of the
 
20                articles, substances, or commodities,
 
21                manufactured, compounded, canned, preserved,
 
22                packed, printed, milled, processed, refined, or
 
23                prepared[,] for sale, as shown by the gross
 

 
Page 8                                                     1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1                proceeds derived from the sale thereof by the
 
 2                manufacturer or person compounding, preparing, or
 
 3                printing them, multiplied by one-half of one per
 
 4                cent.
 
 5           (B)  The measure of the tax on manufacturers is the
 
 6                value of the entire product for sale, regardless
 
 7                of the place of sale or the fact that deliveries
 
 8                may be made to points outside the State.
 
 9           (C)  If any person liable for the tax on manufacturers
 
10                ships or transports the person's product, or any
 
11                part thereof, out of the State, whether in a
 
12                finished or unfinished condition, or sells the
 
13                same for delivery to points outside [of] the State
 
14                (for example, consigned to a mainland purchaser
 
15                via common carrier f.o.b. Honolulu), the value of
 
16                the products in the condition or form in which
 
17                they exist immediately before entering interstate
 
18                or foreign commerce, determined as hereinafter
 
19                provided, shall be the basis for the assessment of
 
20                the tax imposed by this paragraph.  This tax shall
 
21                be due and payable as of the date of entry of the
 
22                products into interstate or foreign commerce,
 
23                whether the products are then sold or not.  The
 

 
Page 9                                                     1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1                department [of taxation] shall determine the basis
 
 2                for assessment, as provided by this paragraph, as
 
 3                follows:
 
 4                (i)  If the products at the time of their entry
 
 5                     into interstate or foreign commerce already
 
 6                     have been sold, the gross proceeds of sale,
 
 7                     less the transportation expenses, if any,
 
 8                     incurred in realizing the gross proceeds for
 
 9                     transportation from the time of entry of the
 
10                     products into interstate or foreign commerce,
 
11                     including insurance and storage in transit,
 
12                     shall be the measure of the value of the
 
13                     products[.];
 
14               (ii)  If the products have not been sold at the
 
15                     time of their entry into interstate or
 
16                     foreign commerce, and in cases governed by
 
17                     clause (i) in which the products are sold
 
18                     under circumstances such that the gross
 
19                     proceeds of sale are not indicative of the
 
20                     true value of the products, the value of the
 
21                     products constituting the basis for
 
22                     assessment shall correspond as nearly as
 
23                     possible to the gross proceeds of sales for
 

 
Page 10                                                    1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1                     delivery outside the State, adjusted as
 
 2                     provided in clause (i), or if sufficient data
 
 3                     are not available, sales in the State, of
 
 4                     similar products of like quality and
 
 5                     character and in similar quantities, made by
 
 6                     the taxpayer (unless not indicative of the
 
 7                     true value) or by others.  Sales outside the
 
 8                     State, adjusted as provided in clause (i),
 
 9                     may be considered when they constitute the
 
10                     best available data.  The department shall
 
11                     prescribe uniform and equitable rules for
 
12                     ascertaining the values[.];
 
13              (iii)  At the election of the taxpayer and with the
 
14                     approval of the department, the taxpayer may
 
15                     make the taxpayer's returns under clause (i)
 
16                     even though the products have not been sold
 
17                     at the time of their entry into interstate or
 
18                     foreign commerce[.]; and
 
19               (iv)  In all cases in which products leave the
 
20                     State in an unfinished condition, the basis
 
21                     for assessment shall be adjusted so as to
 
22                     deduct the portion of the value as is
 

 
 
 
Page 11                                                    1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1                     attributable to the finishing of the goods
 
 2                     outside the State.
 
 3      (2)  Tax on business of selling tangible personal property;
 
 4           producing.
 
 5           (A)  Upon every person engaging or continuing in the
 
 6                business of selling any tangible personal property
 
 7                whatsoever (not including, however, bonds or other
 
 8                evidence of indebtedness, or stocks), there is
 
 9                likewise hereby levied, and shall be assessed and
 
10                collected, a tax equivalent to four per cent of
 
11                the gross proceeds of sales of the business;
 
12                provided that insofar as certain retailing is
 
13                taxed by section 237-16, the tax shall be that
 
14                levied by section 237-16, and in the case of a
 
15                wholesaler, the tax shall be equal to one-half of
 
16                one per cent of the gross proceeds of sales of the
 
17                business.  Upon every person engaging or
 
18                continuing within this State in the business of a
 
19                producer, the tax shall be equal to one-half of
 
20                one per cent of the gross proceeds of sales of the
 
21                business, or the value of the products, for sale,
 
22                if sold for delivery outside the State or shipped
 
23                or transported out of the State, and the value of
 

 
Page 12                                                    1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1                the products shall be determined in the same
 
 2                manner as the value of manufactured products
 
 3                covered in the cases under paragraph (1)(C).
 
 4           (B)  Gross proceeds of sales of tangible property in
 
 5                interstate and foreign commerce shall constitute a
 
 6                part of the measure of the tax imposed on persons
 
 7                in the business of selling tangible personal
 
 8                property, to the extent, under the conditions, and
 
 9                in accordance with the provisions of the
 
10                Constitution of the United States and the Acts of
 
11                the Congress of the United States which may be now
 
12                in force or may be hereafter adopted, and whenever
 
13                there occurs in the State an activity to which,
 
14                under the Constitution and Acts of Congress, there
 
15                may be attributed gross proceeds of sales, the
 
16                gross proceeds shall be so attributed.
 
17           (C)  No manufacturer or producer, engaged in such
 
18                business in the State and selling the
 
19                manufacturer's or producer's products for delivery
 
20                outside of the State (for example, consigned to a
 
21                mainland purchaser via common carrier f.o.b.
 
22                Honolulu), shall be required to pay the tax
 
23                imposed in this chapter for the privilege of so
 

 
Page 13                                                    1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1                selling the products, and the value or gross
 
 2                proceeds of sales of the products shall be
 
 3                included only in determining the measure of the
 
 4                tax imposed upon the manufacturer or producer.
 
 5           (D)  When a manufacturer or producer, engaged in such
 
 6                business in the State, also is engaged in selling
 
 7                the manufacturer's or producer's products in the
 
 8                State at wholesale, retail, or in any other
 
 9                manner, the tax for the privilege of engaging in
 
10                the business of selling the products in the State
 
11                shall apply to the manufacturer or producer as
 
12                well as the tax for the privilege of manufacturing
 
13                or producing in the State, and the manufacturer or
 
14                producer shall make the returns of the gross
 
15                proceeds of the wholesale, retail, or other sales
 
16                required for the privilege of selling in the
 
17                State, as well as making the returns of the value
 
18                or gross proceeds of sales of the products
 
19                required for the privilege of manufacturing or
 
20                producing in the State.  The manufacturer or
 
21                producer shall pay the tax imposed in this chapter
 
22                for the privilege of selling its products in the
 
23                State, and the value or gross proceeds of sales of
 

 
Page 14                                                    1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1                the products, thus subjected to tax, may be
 
 2                deducted insofar as duplicated as to the same
 
 3                products by the measure of the tax upon the
 
 4                manufacturer or producer for the privilege of
 
 5                manufacturing or producing in the State; except
 
 6                that no producer of agricultural products who
 
 7                sells the products to a purchaser who will process
 
 8                the products outside the State shall be required
 
 9                to pay the tax imposed in this chapter for the
 
10                privilege of producing or selling those products.
 
11           (E)  A taxpayer selling to a federal cost-plus
 
12                contractor may make the election provided for by
 
13                paragraph (3)(C), and in that case the tax shall
 
14                be computed pursuant to the election,
 
15                notwithstanding this paragraph or paragraph (1) to
 
16                the contrary.
 
17           (F)  The department, by rule, may [provide] require
 
18                that a seller [may] take from the purchaser of
 
19                tangible personal property a certificate, in a
 
20                form [as] prescribed by the department [shall
 
21                prescribe], certifying that the sale is a sale at
 
22                wholesale[.  If the certificate is so provided for
 
23                by rule of the department:]; provided that:
 

 
Page 15                                                    1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1                (i)  Any purchaser who furnishes a certificate
 
 2                     shall be obligated to pay to the seller, upon
 
 3                     demand, if the sale in fact is not at
 
 4                     wholesale, the amount of the additional tax
 
 5                     which by reason thereof is imposed upon the
 
 6                     seller; and
 
 7               (ii)  The absence of a certificate, unless the
 
 8                     sales of the business are exclusively at
 
 9                     wholesale, in itself shall give rise to the
 
10                     presumption that the sale is not at
 
11                     wholesale.
 
12      (3)  Tax upon contractors.
 
13           (A)  Upon every person engaging or continuing within
 
14                the State in the business of contracting, the tax
 
15                shall be equal to four per cent of the gross
 
16                income of the business; provided that insofar as
 
17                the business of contracting is taxed by section
 
18                237-16, which relates to certain retailing, the
 
19                tax shall be that levied by section 237-16.
 
20           (B)  In computing the tax levied under this paragraph
 
21                or section 237-16, there shall be deducted from
 
22                the gross income of the taxpayer so much thereof
 
23                as has been included in the measure of the tax
 

 
Page 16                                                    1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1                levied under subparagraph (A) or section 237-16,
 
 2                on:
 
 3                (i)  Another taxpayer who is a contractor, as
 
 4                     defined in section 237-6;
 
 5               (ii)  A specialty contractor, duly licensed by the
 
 6                     department of commerce and consumer affairs
 
 7                     pursuant to section 444-9, in respect of the
 
 8                     specialty contractor's business; or
 
 9              (iii)  A specialty contractor who is not licensed by
 
10                     the department of commerce and consumer
 
11                     affairs pursuant to section 444-9, but who
 
12                     performs contracting activities on federal
 
13                     military installations and nowhere else in
 
14                     this State;
 
15              but any person claiming a deduction under this
 
16              paragraph shall be required to show in the person's
 
17              return the name and general excise number of the
 
18              person paying the tax on the amount deducted by the
 
19              person.
 
20           (C)  In computing the tax levied under this paragraph
 
21                against any federal cost-plus contractor, there
 
22                shall be excluded from the gross income of the
 

 
 
 
Page 17                                                    1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1                contractor so much thereof as fulfills the
 
 2                following requirements:
 
 3                (i)  The gross income exempted shall constitute
 
 4                     reimbursement of costs incurred for
 
 5                     materials, plant, or equipment purchased from
 
 6                     a taxpayer licensed under this chapter, not
 
 7                     exceeding the gross proceeds of sale of the
 
 8                     taxpayer on account of the transaction; and
 
 9               (ii)  The taxpayer making the sale shall have
 
10                     certified to the department that the taxpayer
 
11                     is taxable with respect to the gross proceeds
 
12                     of the sale, and that the taxpayer elects to
 
13                     have the tax on gross income computed the
 
14                     same as upon a sale to the state government.
 
15           (D)  A person who, as a business or as a part of a
 
16                business in which the person is engaged, erects,
 
17                constructs, or improves any building or structure,
 
18                of any kind or description, or makes, constructs,
 
19                or improves any road, street, sidewalk, sewer, or
 
20                water system, or other improvements on land held
 
21                by the person (whether held as a leasehold, fee
 
22                simple, or otherwise), upon the sale or other
 
23                disposition of the land or improvements, even if
 

 
Page 18                                                    1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1                the work was not done pursuant to a contract,
 
 2                shall be liable to the same tax as if engaged in
 
 3                the business of contracting, unless the person
 
 4                shows that at the time the person was engaged in
 
 5                making the improvements [it was,] the person
 
 6                intended, and for the period of at least one year
 
 7                after completion of the building, structure, or
 
 8                other improvements[, it continued to be the
 
 9                person's purpose] the person continued to intend
 
10                to hold and not sell or otherwise dispose of the
 
11                land or improvements.  The tax in respect of the
 
12                improvements shall be measured by the amount of
 
13                the proceeds of the sale or other disposition that
 
14                is attributable to the erection, construction, or
 
15                improvement of such building or structure, or the
 
16                making, constructing, or improving of the road,
 
17                street, sidewalk, sewer, or water system, or other
 
18                improvements.  The measure of tax in respect of
 
19                the improvements shall not exceed the amount which
 
20                would have been taxable had the work been
 
21                performed by another, subject as in other cases to
 
22                the deductions allowed by subparagraph (B).  Upon
 
23                the election of the taxpayer, this paragraph may
 

 
Page 19                                                    1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1                be applied notwithstanding that the improvements
 
 2                were not made by the taxpayer, or were not made as
 
 3                a business or as a part of a business, or were
 
 4                made with the intention of holding the same.
 
 5                However, this paragraph shall not apply in respect
 
 6                of any proceeds that constitute or are in the
 
 7                nature of rent; all such gross income shall be
 
 8                taxable under paragraph [(10);] (9); provided that
 
 9                insofar as the business of renting or leasing real
 
10                property under a lease is taxed under section 237-
 
11                16.5, the tax shall be levied by section 237-16.5.
 
12      (4)  Tax upon theaters, amusements, radio broadcasting
 
13           stations, etc.  Upon every person engaging or
 
14           continuing within the State in the business of
 
15           operating a theater, opera house, moving picture show,
 
16           vaudeville, amusement park, dance hall, skating rink,
 
17           radio broadcasting station, or any other place at which
 
18           amusements are offered to the public, the tax shall be
 
19           equal to four per cent of the gross income of the
 
20           business.
 
21      (5)  Tax upon sales representatives, etc.  Upon every person
 
22           classified as a representative or purchasing agent
 
23           under section 237-1, engaging or continuing within the
 

 
Page 20                                                    1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1           State in the business of performing services for
 
 2           another, other than as an employee, there is likewise
 
 3           hereby levied and shall be assessed and collected a tax
 
 4           equal to four per cent of the commissions and other
 
 5           compensation attributable to the services so rendered
 
 6           by the person.
 
 7      (6)  Tax on service business.  Upon every person engaging or
 
 8           continuing within the State in any service business,
 
 9           [or] calling, or professional services not otherwise
 
10           specifically taxed under this chapter, there is
 
11           [likewise hereby] levied, [and] shall be assessed, and
 
12           shall be collected a tax equal to four per cent of the
 
13           gross income of the business; provided that [where]:
 
14           (A)  Where any person engaging or continuing within the
 
15                State in any service business, [or] calling, or
 
16                professional services renders those services upon
 
17                the order of or at the request of another taxpayer
 
18                who is engaged in the service business, calling,
 
19                or professional services and who, in fact, acts as
 
20                or [acts] in the nature of an intermediary between
 
21                the person rendering those services and the
 
22                ultimate recipient of the benefits of those
 
23                services, so much of the gross income as is
 

 
Page 21                                                    1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1                received by the person rendering the services
 
 2                shall be subjected to the tax at the rate of one-
 
 3                half of one per cent and all of the gross income
 
 4                received by the intermediary from the principal
 
 5                shall be subjected to a tax at the rate of four
 
 6                per cent; and [provided that where]
 
 7           (B)  Where any person is engaged in the business of
 
 8                selling interstate or foreign common carrier
 
 9                telecommunication services within and without the
 
10                State, the tax shall be imposed on that portion of
 
11                gross income received by a person from service
 
12                which is originated or terminated in this State
 
13                and is charged to a telephone number, customer, or
 
14                account in this State notwithstanding any other
 
15                state law (except for the exemption under section
 
16                237-23(a)(1)) to the contrary.  If, under the
 
17                Constitution and laws of the United States, the
 
18                entire gross income as determined under this
 
19                paragraph of a business selling interstate or
 
20                foreign common carrier telecommunication services
 
21                cannot be included in the measure of the tax, the
 
22                gross income shall be apportioned as provided in
 
23                section 237- 21; provided that the apportionment
 

 
Page 22                                                    1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1                factor and formula shall be the same for all
 
 2                persons providing those services in the State.
 
 3      (7)  Tax on insurance solicitors and agents.  Upon every
 
 4           person engaged as a licensed solicitor, general agent,
 
 5           or subagent pursuant to chapter 431, there is hereby
 
 6           levied and shall be assessed and collected a tax equal
 
 7           to .15 per cent of the commissions due to that
 
 8           activity.
 
 9     [(8)  Professions.  Upon every person engaging or continuing
 
10           within the State in the practice of a profession,
 
11           including those expounding the religious doctrines of
 
12           any church, there is likewise hereby levied and shall
 
13           be assessed and collected a tax equal to four per cent
 
14           of the gross income on the practice or exposition.
 
15      (9)] (8)  Tax on receipts of sugar benefit payments.  Upon
 
16           the amounts received from the United States government
 
17           by any producer of sugar (or the producer's legal
 
18           representative or heirs), as defined under and by
 
19           virtue of the Sugar Act of 1948, as amended, or other
 
20           Acts of the Congress of the United States relating
 
21           thereto, there is hereby levied a tax of one-half of
 
22           one per cent of the gross amount received[,]; provided
 
23           that the tax levied hereunder on any amount so received
 

 
Page 23                                                    1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1           and actually disbursed to another by a producer in the
 
 2           form of a benefit payment shall be paid by the person
 
 3           or persons to whom the amount is actually disbursed,
 
 4           and the producer actually making a benefit payment to
 
 5           another shall be entitled to claim on the producer's
 
 6           return a deduction from the gross amount taxable
 
 7           hereunder in the sum of the amount so disbursed.  The
 
 8           amounts taxed under this paragraph shall not be taxable
 
 9           under any other paragraph, subsection, or section of
 
10           this chapter.
 
11    [(10)] (9)  Tax on other business.  Upon every person engaging
 
12           or continuing within the State in any business, trade,
 
13           activity, occupation, or calling not included in the
 
14           preceding paragraphs or any other provisions of this
 
15           chapter, there is likewise hereby levied and shall be
 
16           assessed and collected, a tax equal to four per cent of
 
17           the gross income thereof.  In addition, the rate
 
18           prescribed by this paragraph shall apply to a business
 
19           taxable under one or more of the preceding paragraphs
 
20           or other provisions of this chapter, as to any gross
 
21           income thereof not taxed thereunder as gross income or
 
22           gross proceeds of sales or by taxing an equivalent
 
23           value of products, unless specifically exempted."
 

 
Page 24                                                    1177
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        


 1      SECTION 3.  Statutory material to be repealed is bracketed.
 
 2 New statutory material is underscored.
 
 3      SECTION 4.  This Act shall take effect upon its approval;
 
 4 provided that section 1 shall apply to gross receipts received
 
 5 after June 30, 1999.