SB1278 would exempt grants received from the federal Restaurant Revitalization Fund (RRF), created under the American Rescue Plan Act of 2021, from Hawaii’s general excise tax (GET) when received by an eligible business. The bill also directs the Department of Taxation to notify taxpayers who may have paid GET on RRF grants and gives them six months after notice to file refund claims. In addition, it requires any GET already paid on qualifying RRF grants to be refunded to the taxpayer.
The bill is framed as a retroactive tax correction aligned with Hawaii’s earlier treatment of certain COVID-era relief programs, such as forgiven PPP loans and EIDL advances, which were not subject to GET. It applies retroactively to March 11, 2021, the effective date of ARPA, but the bill text includes an effective date of July 1, 3000, which appears to function as a placeholder rather than a practical implementation date. The measure would affect chapter 237, Hawaii Revised Statutes, by carving out a specific exemption for RRF grants and creating a refund process tied to Department of Taxation notice.
Impact
If enacted, SB1278 would amend Hawaii’s general excise tax framework to exclude federal Restaurant Revitalization Fund grants from taxable gross income for eligible businesses, reducing GET liability for food and beverage businesses that received those grants. It would also impose an administrative duty on the Department of Taxation to identify and notify potentially eligible taxpayers and would authorize refunds for GET previously paid on RRF grants, subject to a six-month claim deadline after notice. The bill would therefore affect both current tax administration and past tax payments dating back to March 11, 2021.
Sentiment
The available voting history suggests broad support for the bill. It passed the Senate Ways and Means Committee unanimously, 13-0, with amendments, and later passed second reading in the House as amended in HD 1 without any recorded opposition. No committee transcripts were provided, but the lack of recorded no votes or reservations indicates generally favorable sentiment toward extending tax relief to businesses that received RRF assistance.
Contention
The main policy issue appears to be whether Hawaii should treat Restaurant Revitalization Fund grants the same way it treated PPP and EIDL relief for GET purposes. The bill’s findings indicate the Department of Taxation had concluded that the existing exemption did not apply to RRF grants, so the legislation resolves that interpretive dispute by expressly exempting them. Any potential contention would likely center on the fiscal impact of retroactive refunds, the administrative burden on the Department of Taxation to identify and notify taxpayers, and the practical mechanics of implementing refunds for payments made since 2021. However, the recorded votes do not show significant opposition.
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.