SB 1278 would exempt grants received from the federal Restaurant Revitalization Fund (RRF) from Hawaii’s general excise tax (GET) when the grants are received by eligible businesses under the American Rescue Plan Act of 2021. The bill is aimed at aligning the tax treatment of RRF grants with the state’s prior treatment of certain COVID-era relief, such as forgiven PPP and EIDL amounts, which were not subject to GET.
The measure also directs the Department of Taxation to notify taxpayers who may be entitled to refunds for GET previously paid on RRF grants and gives those taxpayers six months after notice to file refund claims. It further requires any eligible GET paid on RRF grants to be refunded. The bill is written to apply retroactively to March 11, 2021, although the effective date in the text is set to July 1, 3000, which appears to function as a placeholder rather than a practical enactment date.
Impact
If enacted, SB 1278 would amend the application of chapter 237, Hawaii Revised Statutes, by excluding RRF grants from the general excise tax base and creating a refund mechanism for taxes already paid on those grants. The Department of Taxation would have new administrative duties to identify eligible taxpayers, provide notice, and process refunds, and affected businesses—primarily food and beverage establishments that received RRF assistance—could recover previously paid state tax on those federal grants.
Sentiment
The available voting history suggests strong support, with the Senate Ways and Means Committee passing the bill 13-0 with amendments on February 12, 2025. No committee transcript excerpts were provided, so there is no recorded floor or committee debate to indicate broader opposition or support arguments beyond the bill’s stated purpose. Overall, the bill appears to have been received favorably as a corrective tax measure for pandemic relief recipients.
Contention
The main substantive issue is whether RRF grants should receive the same general excise tax treatment as PPP and EIDL relief, which the bill’s findings say were exempted because of the pandemic’s economic impact. The bill also raises administrative and fiscal questions about retroactive refunds, including how the Department of Taxation will identify eligible taxpayers, how much revenue may be returned, and whether the retroactive application to March 11, 2021 is appropriate. Because no transcript is available, no specific opposing lawmakers, agencies, or stakeholder groups are identified in the record provided.
A resolution to direct the Clerk of the House of Representatives to only present to the Governor enrolled House bills finally passed by both houses of the One Hundred Third Legislature.
Relating to nonsubstantive additions to, revisions of, and corrections in enacted codes, to the nonsubstantive codification or disposition of various laws omitted from enacted codes, and to conforming codifications enacted by the 88th Legislature to other Acts of that legislature.