STAND. COM. REP. NO. 660

Honolulu, Hawaii

RE: S.B. No. 795

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Second State Legislature

Regular Session of 2023

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 795, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXES,"

begs leave to report as follows:

The purpose and intent of this measure is to provide flexibility for the motion picture, digital media, and film production income tax credit.

Specifically, this measure:

(1) Requires that taxpayers claiming the motion picture, digital media, and film production income tax credit provide evidence of reasonable efforts to comply with the requirements under title 14, Hawaii Revised Statutes; and

(2) Requires that taxpayers be given notice and an opportunity to cure any requirements for qualifying for the tax credit.

Your Committee received written comments in support of this measure from the Department of Business, Economic Development, and Tourism; IATSE Local 665; Island Film Group; Motion Picture Association; and fourteen individuals.

Your Committee received written comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

Your Committee finds that the language in subsections 235‑17(d)(7) and (8), Hawaii Revised Statutes, added last year by section 3 of Act 217, Session Laws of Hawaii 2022, could have the effect of disqualifying a production from all of the available motion picture, digital media, and film production income tax credits because of one or a few relatively minor issues. This measure will help to ensure compliance with requirements to claim the tax credit.

Your Committee has amended this measure by clarifying that section 235‑17(d), Hawaii Revised Statutes, does not waive any act required by the motion picture, digital media, and film production income tax credit law.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 795, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 795, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

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DONOVAN M. DELA CRUZ, Chair