THE SENATE

S.B. NO.

675

THIRTIETH LEGISLATURE, 2019

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to taxation.

 

 

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

 

     SECTION 1.  Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to part VI to be appropriately designated and to read as follows:

     "§235-     Real estate investment trust returns; withholding on dividends paid.  (a)  Each real estate investment trust shareholder's pro rata share of income attributable to the State and the shareholder's pro rata share of income not attributable to the State, to the extent modified under this chapter, shall be taken into account by the shareholder for the purposes of this chapter under rules similar to those adopted pursuant to section 235-122(c).

     (b)  Every real estate investment trust shall make a return for each taxable year, stating specifically:

     (1)  The items of its gross income and the deductions allowable by this chapter;

     (2)  The name, address, and social security or federal identification number of each person owning stock in the real estate investment trust at any time during the taxable year;

     (3)  The number of shares of stock owned by each shareholder at all times during the taxable year;

     (4)  The income attributable to the State and income not attributable to the State with respect to each shareholder as determined under this chapter;

     (5)  Any modifications required under this chapter;

     (6)  The amount of money and other property distributed by the real estate investment trust during the taxable year to each shareholder;

     (7)  The date of each distribution; and

     (8)  Any other information the department may prescribe by form or rule.

     (c)  The real estate investment trust, on or before the day on which the return is filed, shall furnish to each person who was a shareholder during the year a copy of the information shown on the return as the department may prescribe by form or rule.  Any return filed pursuant to this section, for purposes of sections 235-111 and 235-112, shall be treated as a return filed by the real estate investment trust under section 235-92.

     (d)  The department may permit composite returns and payments to be made on behalf of resident shareholders.

     (e)  A real estate investment trust shall withhold and pay to this State, on behalf of any shareholder, an amount equal to five per cent multiplied by the amount of the shareholder's pro rata share of the income attributable to the State, as reflected on the real estate investment trust's return for the taxable period.  A real estate investment trust shall be entitled to recover a payment made pursuant to this subsection from the shareholder on whose behalf the payment was made.

     (f)  The amount withheld by a real estate investment trust under subsection (e) shall be the minimum tax due to Hawaii by each real estate investment trust shareholder on their Hawaii source income.  A real estate investment trust shareholder that is not otherwise required to file Hawaii tax returns need not file a Hawaii return to report the income received and tax paid.  Any real estate investment trust shareholder that is tax exempt under federal income tax law shall not be liable for the minimum tax on their real estate investment trust income and may file a claim for refund for the amount withheld and paid to the State by the real estate investment trust.

     (g)  Any amount paid by the real estate investment trust to this State pursuant to subsection (d) or (e) shall be considered to be a payment by the shareholder on account of the income tax imposed on the shareholder for the taxable period.

     (h)  Any officer of any real estate investment trust who wilfully fails to provide any information, file any return or agreement, or make any payment as required by this section or section 231-15.6 shall be guilty of a misdemeanor.

     (i)  As used in this section:

     "Real estate investment trust" means a corporation, trust, or association for which a valid election in accordance with section 856 of the Internal Revenue Code, as amended, is in effect.

     "Real estate investment trust shareholder" or "shareholder" means any person who is ultimately responsible for the payment of tax on a portion of the real estate investment trust's income from dividend distributions."

     SECTION 2.  New statutory material is underscored.

     SECTION 3.  This Act, upon its approval, shall apply to taxable years beginning after December 31, 2019.

 

INTRODUCED BY:

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Report Title:

Taxation; Income Tax; Tax Returns; Real Estate Investment Trusts

 

Description:

Requires that real estate investment trusts file returns reporting their shareholders' pro rata shares of net income and net income attributable to this State.  Requires withholding on all payments to shareholders.  Applies to taxable years beginning after 12/31/2019.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.