S.B. 397 Summary

• Requires tax clearances from the Hawaii Department of Taxation and Internal Revenue Service for building contractors and subcontractors before issuing building permits for private developments valued at $195,000 or greater.

• Mandates that issuing officers verify contractors and subcontractors have filed all required tax returns and paid all taxes, interest, and penalties under Hawaii and federal law, with an option for the Director of Taxation to waive the IRS requirement if deemed in the State's interest.

• Requires contractors seeking to assign contracts for qualifying private developments to obtain a bulk sales certificate or tax clearance as a condition precedent to assignment.

• Requires state and county contracting officers to withhold final inspection approval for qualifying private developments until receiving tax clearances dated no earlier than 45 days before the inspection request.

• Exempts contractors and subcontractors in good standing under installment payment plans with the Department of Taxation or IRS, and exempts situations where tax validity is being contested in administrative or judicial proceedings.

• Appropriates $3,000 annually for fiscal years 2019-2020 and 2020-2021 to counties for enforcement, allocated as $500 (Hawaii), $1,500 (Honolulu), $500 (Kauai), and $500 (Maui).

• Establishes criminal penalties of up to $1,000 fine or one year imprisonment for government officers or employees who intentionally or knowingly violate the requirements.

• Takes effect July 1, 2050.