(a) Unless the director of taxation determines that waiver of the Internal Revenue Service tax clearance requirement is necessary to expedite or facilitate the procurement process and is in the best interest of the State, and waives the Internal Revenue Service tax clearance requirement, no contract shall be binding or effective until the contractor secures and the purchasing agency receives a tax clearance from the director of taxation and the Internal Revenue Service to the effect that all tax returns due have been filed, and all taxes, interest, and penalties levied or accrued, under title 14 that are administered by the department of taxation and under the Internal Revenue Code, against the contractor have been paid.
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Terms Used In Hawaii Revised Statutes 103D-328

  • Appeal: A request made after a trial, asking another court (usually the court of appeals) to decide whether the trial was conducted properly. To make such a request is "to appeal" or "to take an appeal." One who appeals is called the appellant.
  • Appropriation: The provision of funds, through an annual appropriations act or a permanent law, for federal agencies to make payments out of the Treasury for specified purposes. The formal federal spending process consists of two sequential steps: authorization
  • Contract: A legal written agreement that becomes binding when signed.
  • Contract: means all types of agreements, regardless of what they may be called, for the procurement or disposal of goods or services, or for construction. See Hawaii Revised Statutes 103D-104
  • Contractor: means any person having a contract with a governmental body. See Hawaii Revised Statutes 103D-104
  • county: includes the city and county of Honolulu. See Hawaii Revised Statutes 1-22
  • Lien: A claim against real or personal property in satisfaction of a debt.
  • Procurement: means buying, purchasing, renting, leasing, or otherwise acquiring any good, service, or construction. See Hawaii Revised Statutes 103D-104
  • Procurement officer: means any person authorized to enter into and administer contracts and make written determinations with respect thereto. See Hawaii Revised Statutes 103D-104
  • Purchasing agency: means any governmental body which is authorized by this chapter or its implementing rules and procedures, or by way of delegation, to enter into contracts for the procurement of goods, services, or construction. See Hawaii Revised Statutes 103D-104
(b) During the term of a contract, if a lien is imposed against the contractor for a tax debt under section 231-33 or the contractor fails to timely file all tax returns and pay all taxes, interest, and penalties due to the Internal Revenue Service, the comptroller or respective county director of finance, upon request of the director of taxation, shall set off the amount of the tax debt against any payment due to the contractor until the tax debt is paid in full.
(c) All state and county procurement officers or agents shall withhold final payment of a contract until the receipt of tax clearances from the director of taxation and the Internal Revenue Service. Notwithstanding §§ 40-57 and 40-58, if a contractor fails to provide the requisite tax clearances within six months of the completion of the contract, the state or county procurement officer or agent shall first notify the department of taxation which in turn will notify the Internal Revenue Service, of amounts payable to the contractor on completed contracts. The department of taxation and the Internal Revenue Service, within thirty days, shall request the procurement officer or agent to set off the amount of taxes due against any payment due to the contractor until the tax debt is paid in full to the State or the Internal Revenue Service, or both. No final bill or invoice from the contractor shall be required as a condition to the setoff. Any remaining contract balance shall revert to the appropriation under which it was encumbered.
(d) This section shall not apply to any contract of less than $25,000 or any contract entered into pursuant to section 103D-305 or 103D-307.
(e) This section shall not apply to a contractor who the director of taxation certifies is:

(1) Contesting the validity of a tax debt, or that any tax, penalty, or interest is due and owing the Internal Revenue Service in an administrative or judicial appeal; or
(2) In good standing, having entered into a plan or plans in which the tax debt, or any tax, penalty, or interest due and owing the Internal Revenue Service is being paid to the department of taxation or the Internal Revenue Service.
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