Hawaii Teaming Up with IRS, Department of Labor to Crack Down on Employers Hiring Independent Contractors

The state of Hawaii has agreed to team up with 8 other states, the IRS and the U.S. Department of Labor to crack down on business owners who they believe are improperly labeling workers as “independent contractors.”

Companies that hire independent contractors do not have to pay workers compensation, unemployment insurance and federal taxes.

Employers who are found to be out of compliance will likely face multiple fines from state and federal agencies, including the IRS and state and federal labor departments.

Other states that have agreed to work with the federal government include Connecticut, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah and Washington.

The U.S. Department of Labor has hired 300 investigators to help in the effort.

Homebuilders are the first group of business owners to be targeted.

An estimated $4 million was collected by the U.S. Labor Department in 2010 for 6,500 employees who the agency said were misclassified as independent contractors.

That is a 400 percent increase over the amount collected by the agency in 2008, according to an AP report.

Tax Foundation President Critical of Tax Commission’s Progress

Lowell Kalapa, president of the Tax Foundation of Hawaii, is critical of Hawaii’s state tax commission’s progress, saying after three meetings, the commission has yet to tackle Hawaii’s important taxation questions.

Issues such as whether companies should be allowed to use Act 221 tax credits for high technology investments, whether Hawaii should institute a sales tax instead of a General Excise Tax, and whether internet sales should be taxed, need to be addressed.

And what about the dozens of changes made by this past session by the legislature to Hawaii’s tax structure?

Kalapa says that the public still does not know how suspensions of corporate exemptions from the general excise tax will impact the cost of living and doing business in Hawaii.

That includes a corporate general excise tax exemption for Hawaiian airlines, which the company said kept ticket prices down and allowed Hawaiian to compete globally.

The legislature removed that exemption and several others for local businesses to help balance the state budget.

See his full report today here

ACLU Victory in Topless Protestor Case

Tess Meier was topless when she and her husband Jamie stood on the sidewalk of Kalakaua Avenue on August 21 when local police arrested them.

They were holding signs and circulating a petition as part of a gender discrimination protest called“ National Go Topless Day.”

Today, the couple will be arraigned in state district court.

They are backed by the ACLU, which supports their right to protest on public property without a permit.

In response, City Prosecutor Keith Kaneshiro will request a one-month delay in the case.

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