RELATING TO THE GENERAL EXCISE TAX.

SB2590

THE SENATE

S.B. NO.

2590

THIRTY-THIRD LEGISLATURE, 2026

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:

����
SECTION 1.
�
The
legislature finds that the federal government established various relief
programs to provide critical assistance to millions of individuals, families,
and businesses during the Coronavirus disease 2019 (COVID-19) pandemic and the
nation's recovery from the pandemic, pursuant to the Coronavirus Aid, Relief,
and Economic Security Act, effective March 27, 2020; and the American Rescue
Plan Act of 2021, effective March 11, 2021.

����
The legislature further finds that the Coronavirus
Aid, Relief, and Economic Security Act created the paycheck protection program,
which provided a forgivable loan to small businesses, and the economic injury disaster
loan emergency advances grant, which provided loan advances that do not need to
be repaid, to small businesses.
�

Likewise, American Rescue Plan Act created the restaurant revitalization
fund to provide grants to food and beverage businesses that experienced revenue
loss related to the COVID-19 pandemic.

����
The legislature also finds that on October
20, 2020, the department of taxation issued Tax Information Release No. 2020‑06
(Revised) (superseding Tax Information Release No. 2020‑02), providing
guidance on the State's tax treatment of various COVID-19 relief programs and
payments under the Coronavirus Aid, Relief, and Economic Security Act, which
specified that in light of the severity of the economic impact of the COVID-19
pandemic, state general excise tax will not be imposed on the loan amounts
forgiven under paycheck protection program and economic injury disaster loan
emergency advances grant.

����
The legislature additionally finds that in
2024, the department of taxation announced that the general excise tax exemption
applicable to the forgiven paycheck protection program and economic injury
disaster loan emergency advances grant loans and loan advances under the Coronavirus
Aid, Relief, and Economic Security Act does not apply to the restaurant
revitalization fund grants under American Rescue Plan Act, despite the purpose
of restaurant revitalization fund grants aligning with the rationale behind paycheck
protection program and economic injury disaster loan emergency advances grant.

����
Accordingly, the purpose of this Act is to:

����
(1)
�
Exempt
restaurant revitalization fund grants received by eligible businesses pursuant
to the American Rescue Plan Act of 2021 from the state general excise tax;

����
(2)
�
Require
the department of taxation to notify all taxpayers eligible for refunds of any
state general excise tax paid for restaurant revitalization fund grants of
their eligibility and require taxpayers to file refund claims no later than six
months following notification; and

����
(3)
�
Require
any state general excise taxes paid by eligible businesses for restaurant revitalization
fund grants to be refunded to the taxpayer.

����
SECTION 2.
�

(a)
�
Notwithstanding any law to
the contrary, any grants received from the federal restaurant revitalization fund
by an eligible business pursuant to the American Rescue Plan Act of 2021 shall
not be subject to general excise taxation under chapter 237, Hawaii Revised
Statutes.

����
(b)
�
The
department of taxation shall notify all taxpayers eligible for refunds pursuant
to subsection (a).
�
Taxpayers shall file
refund claims no later than six months following the department of taxation's
notice of eligibility.

����
(c)
�
Any
state general excise tax paid by eligible businesses for grants received from
the federal restaurant revitalization fund shall be refunded to the taxpayer no
later than
���������
.

����
(d)
�

The director of taxation:

����
(1)
�
Shall
prepare any forms necessary to claim a tax refund under this Act;

����
(2)
�
May
require proof of the claim for the tax refund;

����
(3)
�
Shall
notify eligible taxpayers using appropriate and available means; and

����
(4)
�
May
adopt rules pursuant to chapter 91, Hawaii Revised Statutes, to effectuate this
Act.

����
SECTION 3.
�

This Act shall take effect on July 1, 2026, and shall apply
retroactively to March 11, 2021.

INTRODUCED BY:

_____________________________

Report Title:

General
Excise Tax; Exemption; American Rescue Plan Act Restaurant Revitalization Fund;
Department of Taxation; Notification; Refund

Description:

Exempts
from the state general excise tax any grants received from the federal
Restaurant Revitalization Fund by an eligible business pursuant to the American
Rescue Plan Act of 2021.
�
Requires the
Department of Taxation to notify all taxpayers eligible for refunds of any
state general excise tax paid for grants received from the federal Restaurant
Revitalization Fund of their eligibility and requires taxpayers to file refund
claims no later than six months following notification.
�
Requires any state general excise taxes paid
by eligible businesses for Restaurant Revitalization Fund grants to be refunded
to the taxpayer.
�
Applies retroactively
to 3/11/2021.

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