Thomas Grande drafted and helped to pass SB 2443, signed into law as Act 48. Act 48 prevents double taxation on non-physical injury settlements or awards. Some federal circuit courts of appeals have interpreted the alternative minimum tax to require that a person who receives a non-personal injury settlement (for example, whistleblower lawsuits) must pay federal taxes on the full amount of an award or settlement, without receiving a deduction for the attorney's fees part of the award. Attorneys also pay taxes on their portion of a court awarded or contingency fee award, so this results in double taxation on the award.
Act 48 clarified and confirmed that under existing Hawaii law residents who receive non-physical injury settlements or awards are not subject to double federal taxation.
To see a copy of this law, please click here: http://www.capitol.hawaii.gov/session2004/bills/SB2443_hd1_.htm