REPORT TITLE:
GET Exempt School Orgs.


DESCRIPTION:
Exempts from the general excise tax law amounts received by
nonprofit associations organized to benefit and assist public
schools within the State.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                            366         
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                     A BILL FOR AN ACT

RELATING TO GENERAL EXCISE TAX.



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

 1      SECTION 1.  Section 237-24.7, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "§237-24.7  Additional amounts not taxable.  In addition to
 
 4 the amounts not taxable under section 237-24, this chapter shall
 
 5 not apply to:
 
 6      (1)  Amounts received by the operator of a hotel from the
 
 7           owner of the hotel in amounts equal to and which are
 
 8           disbursed by the operator for employee wages, salaries,
 
 9           payroll taxes, insurance premiums, and benefits,
 
10           including retirement, vacation, sick pay, and health
 
11           benefits.  As used in this paragraph:
 
12                "Employee" means employees directly engaged in the
 
13           day-to-day operation of the hotel and employed by the
 
14           operator.
 
15                "Hotel" means an operation licensed under section
 
16           445-92.
 
17                "Operator" means any person who, pursuant to a
 
18           written contract with the owner of a hotel, operates or
 
19           manages the hotel for the owner.
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1                "Owner" means the fee owner or lessee under a
 
 2           recorded lease of a hotel;
 
 3      (2)  Amounts received by the operator of a county
 
 4           transportation system operated under an operating
 
 5           contract with a political subdivision, where the
 
 6           political subdivision is the owner of the county
 
 7           transportation system.  As used in this paragraph:
 
 8                "County transportation system" means a mass
 
 9           transit system of motorized buses providing regularly
 
10           scheduled transportation within a county.
 
11                "Operating contract" or "contract" means a
 
12           contract to operate and manage a political
 
13           subdivision's county transportation system, which
 
14           provides that:
 
15           (A)  The political subdivision shall exercise
 
16                substantial control over all aspects of the
 
17                operator's operation;
 
18           (B)  The political subdivision controls the development
 
19                of transit policy, service planning, routes, and
 
20                fares; and
 
21           (C)  The operator develops in advance a draft budget in
 
22                the same format as prescribed for agencies of the
 
23                political subdivision.  The budget must be subject
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1                to the same constraints and controls regarding the
 
 2                lawful expenditure of public funds as any public
 
 3                sector agency, and deviations from the budget must
 
 4                be subject to approval by the appropriate
 
 5                political subdivision officials involved in the
 
 6                budgetary process.
 
 7                "Operator" means any person who, pursuant to an
 
 8           operating contract with a political subdivision,
 
 9           operates or manages a county transportation system.
 
10                "Owner" means a political subdivision that owns or
 
11           is the lessee of all the properties and facilities of
 
12           the county transportation system (including buses, real
 
13           estate, parking garages, fuel pumps, maintenance
 
14           equipment, office supplies, etc.), and that owns all
 
15           revenues derived therefrom;
 
16      (3)  Surcharge taxes on rental motor vehicles imposed by
 
17           chapter 251 and passed on and collected by persons
 
18           holding certificates of registration under that
 
19           chapter;
 
20      (4)  Amounts received by the operator of orchard properties
 
21           from the owner of the orchard property in amounts equal
 
22           to and which are disbursed by the operator for employee
 
23           wages, salaries, payroll taxes, insurance premiums, and
 

 
Page 4                                         366         
                                     H.B. NO.           
                                                        
                                                        

 
 1           benefits, including retirement, vacation, sick pay, and
 
 2           health benefits.  As used in this paragraph:
 
 3                "Employee" means an employee directly engaged in
 
 4           the day-to-day operations of the orchard properties and
 
 5           employed by the operator.
 
 6                "Operator" means a producer who, pursuant to a
 
 7           written contract with the owner of the orchard
 
 8           property, operates or manages the orchard property for
 
 9           the owner where the property contains an area
 
10           sufficient to make the undertaking economically
 
11           feasible.
 
12                "Orchard property" means any real property that is
 
13           used to raise trees with a production life cycle of
 
14           fifteen years or more producing fruits or nuts having a
 
15           normal period of development from the initial planting
 
16           to the first commercially saleable harvest of not less
 
17           than three years.
 
18                "Owner" means a fee owner or lessee under a
 
19           recorded lease of orchard property;
 
20      (5)  Taxes on nursing facility income imposed by chapter
 
21           346E and passed on and collected by operators of
 
22           nursing facilities;
 
23      (6)  Amounts received under property and casualty insurance
 

 
Page 5                                         366         
                                     H.B. NO.           
                                                        
                                                        

 
 1           policies for damage or loss of inventory used in the
 
 2           conduct of a trade or business located within the State
 
 3           or a portion thereof that is declared a natural
 
 4           disaster area by the governor pursuant to section
 
 5           209-2;
 
 6      (7)  Amounts received as compensation by community
 
 7           organizations, school booster clubs, and nonprofit
 
 8           organizations under a contract with the chief election
 
 9           officer for the provision and compensation of precinct
 
10           officials and other election-related personnel,
 
11           services, and activities, pursuant to section 11-5;
 
12      (8)  Interest received by a person domiciled outside the
 
13           State from a trust company (as defined in section
 
14           412:8-101) acting as payment agent or trustee on behalf
 
15           of the issuer or payees of an interest bearing
 
16           instrument or obligation, if the interest would not
 
17           have been subject to tax under this chapter if paid
 
18           directly to the person domiciled outside the State
 
19           without the use of a paying agent or trustee; provided
 
20           that if the interest would otherwise be taxable under
 
21           this chapter if paid directly to the person domiciled
 
22           outside the State, it shall not be exempt solely
 
23           because of the use of a Hawaii trust company as a
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1           paying agent or trustee;
 
 2      (9)  Amounts received by a management company from related
 
 3           entities engaged in the business of selling interstate
 
 4           or foreign common carrier telecommunications services
 
 5           in amounts equal to and which are disbursed by the
 
 6           management company for employee wages, salaries,
 
 7           payroll taxes, insurance premiums, and benefits,
 
 8           including retirement, vacation, sick pay, and health
 
 9           benefits.  As used in this paragraph:
 
10                "Employee" means employees directly engaged in the
 
11           day-to-day operation of related entities engaged in the
 
12           business of selling interstate or foreign common
 
13           carrier telecommunications services and employed by the
 
14           management company.
 
15                "Management company" means any person who,
 
16           pursuant to a written contract with a related entity
 
17           engaged in the business of selling interstate or
 
18           foreign common carrier telecommunications services,
 
19           provides managerial or operational services to that
 
20           entity.
 
21                "Related entities" means:
 
22                (A)  An affiliated group of corporations within
 
23                     the meaning of section 1504 (with respect to
 

 
Page 7                                         366         
                                     H.B. NO.           
                                                        
                                                        

 
 1                     affiliated group defined) of the federal
 
 2                     Internal Revenue Code of 1986, as amended;
 
 3                (B)  A controlled group of corporations within the
 
 4                     meaning of section 1563 (with respect to
 
 5                     definitions and special rules) of the federal
 
 6                     Internal Revenue Code of 1986, as amended; or
 
 7                (C)  Those entities connected through ownership of
 
 8                     at least eighty per cent of the total value
 
 9                     of each such entity, including partnerships,
 
10                     associations, trusts, S corporations,
 
11                     nonprofit corporations, or any other group or
 
12                     combination of these or other tax entities
 
13                     acting as a business unit;
 
14                whether or not the entity is located within or
 
15                without the State or licensed under this chapter;
 
16                [and]
 
17     (10)  Amounts received as grants under section 206M-15[.];
 
18           and
 
19     (11)  Amounts received by nonprofit associations organized to
 
20           both benefit and assist public elementary,
 
21           intermediate, and high schools within the State."
 
22      SECTION 2.  Statutory material to be repealed is bracketed.
 
23 New statutory material is underscored.
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1      SECTION 3.  This Act shall take effect on July 1, 1999.
 
 2 
 
 3                           INTRODUCED BY:_________________________