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CHAPTER231,Page1(UnofficialCompilation)
ADMINISTRATION OF TAXES
CHAPTER 231ADMINISTRATION OF TAXES
GeneralProvisions
Section231-1 Definitions231-1.5 Confidentialityprivilegesrelatingtotaxpayercommunications231-1.6 Personnelsecurityprogram;criminalhistoryrecordchecks231-2 Taxationdistricts231-3 Department,generaldutiesandpowers231-3.1 Considerationpaidnotindicativeoffairmarketvalue231-3.2 Repealed231-3.3 Auditoraccesstotaxrecordsorotherinformationforreviewsofexemptions,exclusions,credits,and
deductions231-3.4 Publicationofreports231-3.5 Suspensionofrunningoftheperiodoflimitationduringbankruptcyproceedings231-3.6 Streamlinedsalesandusetaxagreementcompliance231-4 Assessingofficerseligibletoappointmentascollectingofficersandviceversa231-4.3 Investigators;appointmentandpowers231-4.5 Administrativerulesofficer;specialists;appointmentandduties231-5 Deceasedofficers,dutiesofpersonalrepresentatives,etc.231-6 Oath,powertoadminister231-7 Audits,investigations,hearings,andsubpoenas231-7.5 Expeditedappealsanddisputeresolutionprogram231-8 Timelymailingtreatedastimelyfilingandpaying231-8.5 Electronicfilingoftaxreturns231-8.6 Repealed231-9 Taxcollection;generalduties,powersofdirector;dollarrounding231-9.2 Offersincompromise231-9.3 Taxcollection;mainlandcontractorsworkingonfederalconstructionprojects231-9.4 Creditordebitcardremittances231-9.5 Assessmentofadditionaltaxesofcorporationsorpartnerships231-9.6 Fiduciaries,liability231-9.7 Informalitiesnottoinvalidateassessments,mistakesinnamesornotices,etc.231-9.8 Taxbills231-9.9 Filingandpaymentoftaxesbyelectronicfundstransfer231-10 Department;keepofficeswhere231-10.5 Closingauditletters231-10.6 Rulesoradministrativeguidance231-10.7 Temporaryrulemakingauthorityforregulationoftaxmatters231-10.8 Taxclearancefees
Police;DistrictJudges
231-11 Policetoaidassessingorcollectingofficers231-12 Repealed
DelinquentTaxes
231-13 Director;examination,investigation,andcollection231-14 Attorney
ADMINISTRATION OF TAXES
CHAPTER231,Page2(UnofficialCompilation)
ReturnsandRecords,Generally;Validity
231-15 Returnstobesigned231-15.3 Signaturepresumedauthentic231-15.5 Disclosurebyreturnpreparers231-15.6 Returnsofcorporationsorpartnerships231-15.7 Returnsbyfiduciaries231-15.8 Timeforperformingcertainactspostponedbyreasonofserviceincombatzone231-16 Copiesofreturns231-17 Notices,howgiven231-18 Federalorothertaxofficialspermittedtoinspectreturns;reciprocalprovisions231-19 Repealed231-19.3 Disclosureofletterrulings,etal.231-19.5 Publicinspectionandcopyingofwrittenopinions231-20 Evidence,taxrecordsas231-21 DuedateonSaturday,Sunday,orholiday231-21.5 Effectofcivilunion
AdjustmentsandRefunds
231-22 Repealed231-23 Adjustmentsandrefunds
JeopardyAssessments
231-24 Jeopardyassessments,etc.
CollectionProceedings
231-25 Payment,enforcementofbyassumpsitactionorbylevyanddistraintuponallpropertyandrightstoproperty
231-25.5 Costrecoveryfeesfortheadministrationoftaxes231-26 Extraterritorialenforcementoftaxlaws231-27 Partialpaymentoftaxes231-28 Taxclearancebeforeprocuringliquorlicenses231-29 JoinderofpartydefendantwhenStateclaimstaxliens231-30 Unknownornonresidentdelinquents;proceduretocollecttaxesfrom231-31 Nonresidentsengagedinbusiness,etc.,serviceofprocesson,designationofagentforserviceof
process231-32 Recordsofdelinquenttaxes,uncollectibledelinquenttaxes231-33 TaxdebtduetheState;lien
PenaltiesandInterest
231-34 Attempttoevadeordefeattax231-35 Wilfulfailuretofilereturn,supplyinformation,orsecurealicense231-36 Falseandfraudulentstatements;aidingandabetting231-36.4 Wilfulfailuretocollectandpayovertax231-36.5 Understatementoftaxpayer’sliabilitybytaxreturnpreparer231-36.6 Substantialunderstatementsormisstatementsofamounts;penalty231-36.7 Promotingabusivetaxshelters231-36.8 Erroneousclaimforrefundorcredit231-37 Neglectofduty,etc.,misdemeanor231-38 Repealed231-39 Additionstotaxesfornoncomplianceorevasion;interestonunderpaymentsandoverpayments231-40 Interpretation231-40.5 Statuteoflimitations;extensionforsubstantialomissions231-41 Statuteoflimitationforcriminalpenalties
CHAPTER231,Page3(UnofficialCompilation)
ADMINISTRATION OF TAXES
RecoveryofMoneyOwedtotheState
231-51 Purpose231-52 Definitions231-53 Setoffagainstrefund231-54 Hearings;appeals231-55 Finalizationofsetoff;creditondebt231-56 Chargesforsetoff;credittoagency231-57 Apportionmentofjointrefunds231-57.5 Notificationofaddressandsocialsecuritynumberofdebtorparent231-58 Rules231-59 Procedureadditional
Liens,Foreclosure
231-61 Taxliens;co-owners’rights231-62 Taxliens;foreclosure;property231-63 Taxliens;foreclosurewithoutsuit,notice231-64 Taxliens;registeredland231-65 Taxliens;notice,formof231-66 Taxliens;postponementofsale,etc.231-67 Taxliens;taxdeed;redemption231-68 Taxliens;costs231-69 Taxdeedasevidence231-70 Dispositionofsurplusmoneys
CivilCompliance;SpecialEnforcementSection
231-81 Specialenforcementsection;created231-82 Specialenforcementsection;functions,powers,andduties231-83 Investigatorsandpersonnel,appointmentandpower231-84 Righttoinspectionofbooks,records,andpremises;warrantsandwrits;levyandseizure231-85 Identificationofcash-economycases;retentionoffunds231-86 Violentinterferencewithataxofficial
CashEconomyEnforcement;Citations
231-91 Citationsforviolations;deposits231-92 Cash-basedbusinesses;injunction231-93 Cash-basedbusiness;defined231-94 Failuretoproducelicenseupondemand231-95 Failuretokeepadequatebooksandrecords231-96 Failuretorecordtransaction231-97 Repealed231-98 Taxavoidancepricefixing231-99 Possessionofcurrencyfortaxavoidancepurposes231-100 Interferencewithataxofficial
ThisisanunofficialcompilationoftheHawaiiRevisedStatutes.
Note
Performance-basedcontractstoacquireautomatedtaxsystems.L1996,c273.
Law Journals and Reviews
Hawaii’sGeneralExciseTaxLaw:AComprehensiveReviewoftheDecisions.IIHBJNo.13,atpg.1.TaxesinHawaiiSinceJanuary1973:ATaxSystemEvolves,ArthurB.Reinwald,13HBJNo.2Summer1977,pg.3.
§231-1 ADMINISTRATION OF TAXES
CHAPTER231,Page4(UnofficialCompilation)
GENERAL PROVISIONS
§231-1 Definitions. Wheneverusedinchaptersofthelawundertitle14administeredbythedepartment:“Assessor”or“assistantassessor”meanstheassessororanassistantassessorappointedforthetaxationdistrictconcerned.Wheneverthereismorethanoneassessorforthefirstdistrict,withrespecttothatdistrict“assessor”or“assistantassessor”meanstheassessororassistantassessorforaparticulartax.
“Comptroller”meansthecomptrolleroftheState.“Department”meansthedepartmentoftaxation,unlessthecontextclearlyindicatesotherwise.“Electronicfundstransfer”meansanytransferoffundsthatisinitiatedthroughanelectronicterminal,telephonic
instrument,orcomputerormagnetictapesoastoorder,instruct,orauthorizeafinancialinstitutiontodebitorcreditanaccountbutshallnotincludeanytransferoriginatedbycheck,draft,orsimilarpaperinstrument.
“Person”includesoneormoreindividuals,acompany,corporation,apartnership,anassociation,oranyothertypeoflegalentity,andalsoincludesanofficeroremployeeofacorporation,apartneroremployeeofapartnership,atrusteeofatrust,afiduciaryofanestate,oramember,employee,orprincipalofanyotherentity,whoassuchofficer,employee,partner,trustee,fiduciary,member,orprincipalisunderadutytoperformandisprincipallyresponsibleforperformingtheactinrespectofwhichtheviolationoccurs.
“Property”or“realproperty”hasthemeaningdefinedherein,and,totheextentapplicabletootherchaptersofthelawundertitle14administeredbythedepartmentincludesothersubjectsormeasuresoftax.“Realproperty”includesalllandandappurtenancesthereofandthebuildings,structures,fences,andimprovementserectedonoraffixedtotheland,andanyfixturewhichiserectedonoraffixedtotheland,buildings,structures,fences,andimprovements,includingallmachineryandothermechanicalorotheralliedequipmentandthefoundationsthereof,whoseuseisnecessarytotheutilityoftheland,buildings,structures,fences,andimprovements,orwhoseremovaltherefromcannotbeaccomplishedwithoutsubstantialdamagetotheland,buildings,structures,fences,andimprovements,excluding,however,anygrowingcrops.[L19322d,c40,ptof§§1and17;amLSp1933,c9,§14;RL1935,ptof§§1900and1906;amL1935,c153,ptof§1;RL1945,ptof§§5101and5103;amL1945,c79,§1;RL1955,§115-1;amL1957,c152,§1;amLSp19592d,c1,§16;amL1967,c37,§1;HRS§231-1;amL1983,c217,§2;amLSp19841st,c1,§4;amL1989,c14,§4(1);amL1991,c263,§2;amL1995,c66,§1andc121,§2;amL1996,c54,§1;amL2009,c134,§4;amL2013,c58,§1]
Cross Reference
TaxInformationReleaseNo.90-14,“WithholdingofTaxontheDispositionofRealPropertybyNonresidentPersons” SupersededinpartbyTIR 97-1
Case notes
Commissionermayexercisetherighttoappealgiventheassessorby§232-19,44H.584,358P.2d539.
[§231-1.5] Confidentiality privileges relating to taxpayer communications. Section 7525 (with respect toconfidentialityprivilegesrelatingtotaxpayercommunications)oftheInternalRevenueCodeshallbeoperativeforthepurposesofthistitle.AllreferencestoInternalRevenueCodesectionswithinsection7525shallbeoperativeforpurposesofthissection.Theterm“InternalRevenueService”asusedinsection7525(a)(2)(A)meansthedepartment;theterm“federalcourt”asusedinsection7525(a)(2)(B)meansstatecourt;andtheterm“UnitedStates”asusedinsection7525(a)(2)(B)meansState.[L2001,c45,§1]
[§231-1.6] Personnel security program; criminal history record checks. (a)The department shall establish apersonnelsecurityprogramthatensuresabackgroundinvestigationiscompletedattheappropriateleveldesignatedbythefederalgovernmentforanyperson,includinganyauthorizedcontractor,tohaveaccesstofederaltaxinformation.Thisprogramshallincludecriminalhistoryrecordchecksinaccordancewithsection846-2.7.Informationobtainedpursuanttothissubsectionshallbeusedexclusivelybythedepartmentforthepurposeofdeterminingwhetherthepersonissuitableforaccessingfederaltaxinformationinaccordancewithapplicablefederallaws.
(b) Thedepartmentmayterminateordenyemploymenttoanyemployeeorapplicant,orterminateorrefusetosecuretheservicesofanycontractor,ifthedepartmentfindsbyreasonofthebackgroundinvestigationconductedundersubsection(a)thattheemployeeorapplicant,oremployeeoragentofthecontractor,posesarisktothesecurityof federal tax information.Terminationor denial of employment, or terminationor refusal to secure the servicesofanycontractor,under this subsection shallonlyoccurafterappropriatenotification to theemployee, applicant,or employee or agent of the contractor, of the findings of the background investigation, and after the employee,applicant,oremployeeoragentofthecontractorisgivenanopportunitytomeetandrebutthefindings.Nothinginthissubsectionshallabrogateanyapplicableappealrightsunderchapters76and89,oradministrativerulesofthedepartment.
(c) Thedepartmentshallbeexemptfromsection831-3.1andneednotconductinvestigations,notifications,orhearingsunderthissectioninaccordancewithchapter91.[L2017,c132,§2]
CHAPTER231,Page5(UnofficialCompilation)
ADMINISTRATION OF TAXES §231-3
§231-2 Taxation districts. Forthepurposeoftaxation,theStateisdividedintothefollowingfourdistricts:(1) ThecityandcountyofHonolulu,tobecalledthefirstdistrict;(2) ThecountiesofMauiandKalawao,tobecalledtheseconddistrict;(3) ThecountyofHawaii,tobecalledthethirddistrict;(4) ThecountyofKauai,tobecalledthefourthdistrict.[L19322d,c40,§2;RL1935,§1901;RL1945,§5102;
RL1955,§115-2;amL1967,c37,§1;HRS§231-2;amL2017,c12,§31]Cross References
Districts,generally,seechapter4.
Case Notes
Cited:33H.515,530.
§231-3 Department, general duties and powers. Thedepartmentoftaxationshallhavethefollowingdutiesandpowers,inadditiontoanyothersprescribedorgrantedbythischapter:
(1) Assessment:Tomakeanyassessmentbylawrequiredtobemadebythedepartment;(2) Collections:Toberesponsibleforthecollectionofalltaxesimposedundertitle14,exceptthosewhichby
lawaretobecollectedbycountytreasurers,andforsuchotherdutiesasareprovidedbylaw;(3) Constructionofrevenuelaws:Toconstruethetaxandrevenuelaws,theadministrationofwhichiswithinthe
scope of the department’s duties,whenever requested by any officer acting under those laws, or by aninterestedperson;
(4) Enforcementofpenalties:ToseethatpenaltiesareenforcedwhenprescribedbyanytaxorrevenuelawoftheState(theadministrationofwhichiswithinthescopeofthedepartment’sduties)fordisobedienceorevadingofitsprovisions,andtoseethatcomplaintismadeagainstpersonsviolatinganysuchlaw;intheexecutionofthesepowersanddutiesthedepartmentmaycallupontheattorneygeneraloranyoftheattorneygeneral’sdeputies,includingthecountyattorneysorpublicprosecutors,whosedutiesitshallbetoassistintheinstitutionandconductofallproceedingsorprosecutionsforpenaltiesandforfeitures,liabilities,andpunishmentsforviolationofthelawsadministeredbythedepartment;
(5) Forms:Toprescribeformstobeusedinorinconnectionwithanyassessment,includingformstobeusedinthemakingofreturnsbytaxpayersorinanyotherproceedingsconnectedwiththeassessment,andtochangethesamefromtimetotimeasdeemednecessary;
(6) Inspection,examinationofrecords:Toinspectandexaminetherecordsofallpublicofficerswithoutcharge,andtoexaminethebooksandpapersofaccountofanypersonforthepurposeofenablingthedepartmenttoobtainallinformationthatcouldinanymanneraidthedepartmentindischargingitsdutiesunderanytaxlaw;
(7) Recommendationsforlegislation:Torecommendtothegovernoranyamendments,changes,ormodificationsofthelawsasmayseemproperornecessarytoremedyinjusticeorirregularityintaxationortofacilitatetheassessmentoftaxes;
(8) Reporttogovernor:Toreporttothegovernorannually,andatsuchothertimesandinsuchmannerasthegovernormayrequire,concerningtheactsanddoingsandtheadministrationofthedepartment,andanyothermattersofinformationconcerningtaxationasmaybedeemedofgeneralinterest;
(9) Rules:Toadoptsuchrulesasthedepartmentmaydeempropereffectuallytocarryoutthepurposesforwhichthedepartmentisconstitutedandtoregulatemattersofprocedurebyorbeforethedepartment;
(10)Compromises:Withtheapprovalofthegovernor,tocompromiseanyclaimwherethetaxexceeds$50,000(exclusiveofpenaltiesandinterest)arisingunderanytaxlawtheadministrationofwhichiswithinthescopeofthedepartment’sduties,andtocompromiseanytaxclaimwherethetaxis$50,000orless(exclusiveofpenaltiesandinterest)withoutseekingtheapprovalofthegovernor;providedthatthedirectorshallhavethediscretiontoseektheapprovalofthegovernortocompromiseanytaxclaimwherethedirectordeemsitappropriate; and in each case the department shall post each proposed compromise, as set forth insubparagraphs(A)to(D),onthedepartment’sInternetwebsiteforfivecalendardaysbeforethedirectorsignsthecompromise,andthereshallbeplacedonfileinthedepartment’sofficeastatementof:(A) Thenameofthetaxpayerandtheamountandtypeoftaxassessed,orproposedtobeassessed;(B) Theamountofpenaltiesandinterestimposedorwhichcouldhavebeenimposedbylawwithrespect
totheamountoftaxassessed,ascomputedbythedepartment;(C) Thetotalamountofliabilityasdeterminedbythetermsofthecompromise,andtheactualpayments
madethereonwiththedatesthereof;and(D) Thereasonsforthecompromise.
Notwithstandingtheprovisionsofanylawmakingunlawfulthedisclosureoftaxreturnsorreturninformation,statementsonfileandincludedinthedepartment’sInternetwebsiteinrespectofcompromisesshallbeopentopublicinspection;
18-231-3-1.1
18-231-3-10
[§231-3.1] ADMINISTRATION OF TAXES
CHAPTER231,Page6(UnofficialCompilation)
(11)Retroactivityofrulings:Toprescribetheextent,ifany,towhichanyruling,rule,orconstructionofthetaxlaws,ofgeneralapplication,shallbeappliedwithoutretroactiveeffect;
(12)Remissionofdelinquencypenaltiesandinterest:Exceptincasesoffraudorwilfulviolationofthelawsorwilfulrefusaltomakeareturnsettingforththeinformationrequiredbylaw(butinclusioninareturnofaclaimofnonliabilityforthetaxshallnotbedeemedarefusaltomakeareturn),thedepartmentmayremitanyamountofpenaltiesorinterestadded,underanylawadministeredbythedepartment,toanytaxthatisdelinquent,inacaseofexcusablefailuretofileareturnorpayataxwithinthetimerequiredbylaw,orinacase of uncollectibility of the whole amount due; and in that case there shall be placed on file in thedepartment’sofficeastatementshowingthenameofthepersonreceivingtheremission,theprincipalamountofthetax,andtheyearorperiodinvolved;
(13)Closingagreements:Toenterintoanagreementinwritingwithanytaxpayerorotherpersonrelatingtotheliabilityofthetaxpayerorotherperson,underanylawtheadministrationofwhichiswithinthescopeofthedepartment’sduties,inrespectofanytaxableperiod,orinrespectofoneormoreseparateitemsaffectingtheliability for any taxable period; the agreement, signed by or on behalf of the taxpayer or other personconcerned,andbyoronbehalfofthedepartment,shallbefinalandconclusive,andexceptuponashowingoffraudormalfeasance,ormisrepresentationofamaterialfact:(A) Themattersagreeduponshallnotbereopened,andtheagreementshallnotbemodified,byanyofficer
oremployeeoftheState;and(B) In any suit, action, or proceeding, the agreement, or any determination, assessment, collection,
payment,refund,orcreditmadeinaccordancetherewith,shallnotbeannulled,modified,setaside,ordisregarded;
(14)Otherpowersandduties:Inadditiontothepowersanddutiescontainedinthischapter,thepowersanddutiescontainedinotherchaptersofthelawundertitle14administeredbythedepartmentforlevying,assessing,collecting,receiving,andenforcingpaymentsofthetaximposedthereunder,andotherwiserelatingthereto,shall be severally and respectively conferred, granted, practiced, and exercised for levying, assessing,collecting,receiving,andenforcingpaymentofthetaxesimposedundertheauthorityofthosechaptersasfarastheprovisionsareconsistentwiththeexpressprovisionsofthosechapters,asfullyandeffectuallytoallintentsandpurposesasifthesamepowersandauthoritieswererepeatedinthosechapters,withreferencetothosetaxes,andalloftheprovisionsshallbeapplied,construed,deemed,andtakentorefertothetaxesimposedundertheauthorityofthosechapters,inlikemanner.[L19322d,c40,§§18,20,57,58;RL1935,§1907;RL1945,§5104;amL1945,c79,§2andc196,§1;amL1951,c133,§1;amL1953,c125,§1andc223,§2;RL1955,§115-4;amLSp19592d,c1,§16;HRS§231-3;amL1983,c217,§3;amimpL1984,c90,§1;gench1985;amL1985,c16,§2;amL1986,c340,§2;amL1989,c14,§4(2);amL1990,c320,§2;amL1991,c263,§3;amL1995,c66,§2;amL2003,c136,§3]
Cross References
Generally,see§26-10.Annualreports,duedates,see§93-12.
Law Journals and Reviews
RuleofStrictconstructioninTaxCases,aQuestionofClassificationorExemption,ArthurB.Reinwald,11HBJ98.
Case Notes
Requireinformationreturn,33H.766.Commissionermayexercisetherighttoappealgiventheassessorby§232-19.44H.584,358P.2d539.Economyinadministrationisaproperfactorforconsiderationinassessmentoftaxes.56H.321,536P.2d91.
[§231-3.1] Consideration paid not indicative of fair market value. Wheresalesaremadebyataxpayer,taxableunder title14, toother affiliated companiesorpersons, orunderother circumstanceswhere the relationbetween thetaxpayerandthebuyerissuchthattheconsiderationpaid,ifany,isnotindicativeofthefairmarketvalue,thetaxpayershallpay the taxes imposedunder title14,measuredby thefairmarketvalue,correspondingasnearlyaspossible tothegrossproceedsofsalesoflikequalityandcharacterbyotherpersons,wherenocommoninterestexistsbetweenthebuyerandsellerbutthecircumstancesandconditionsareotherwisesimilar.Ifnosuchcomparablesalesexistbetweennonaffiliatedbuyersandsellers,thedepartmentmayprescribeequitableanduniformrulesforascertainingthefairmarketvalueofthesale.
Asusedinthissection,“affiliatedcompaniesorpersons”meanstwoormoreorganizations,trades,orbusinesses(whetherornotincorporated,organizedintheUnitedStates,oraffiliated)ownedorcontrolleddirectlyorindirectlybythesameinterests,includingcompaniesorpersonsdescribedinsection237-23.5.[L2002,c153,§2]
§231-3.2 REPEALED. L2007,c9,§21.
18-231-3-14
CHAPTER231,Page7(UnofficialCompilation)
ADMINISTRATION OF TAXES [§231-3.6]
[§231-3.3] Auditor access to tax records or other information for reviews of exemptions, exclusions, credits, and deductions. (a)Notwithstandinganyotherlawtothecontrary,thedepartmentshallprovidetotheauditoranytaxrecordsandotherinformationmaintainedbythedepartmentthatarerequestedbytheauditorforthereviewsof:
(1) Exemptions,exclusions,andcreditsunderthegeneralexciseandusetaxes,publicservicecompanytax,andinsurancepremiumtax,asprovidedbychapter23,partVI;and
(2) Credits,exclusions,anddeductionsundertheincometaxandfinancialinstitutionstax,asprovidedbychapter23,partVII.
Any information provided to the auditor under this sectionmarked confidential by the department shall be keptconfidentialbytheauditor,exceptasprovidedinsubsection(b).
(b) Notwithstandinganyotherlawtothecontrary,theauditormayincludeinareportofareviewthatissubmittedtothelegislaturedatathat:
(1) The auditor deems necessary and relevant for the purpose of legislative review, including informationreceivedfromthedepartmentoftaxationpursuanttosubsection(a);and
(2) Doesnotexplicitlyidentifyanyspecifictaxpayerorbeneficiaryofataxexemption,exclusion,credit,ordeduction;
providedthatanyinformationmarkedconfidentialbythedepartmentshallbekeptconfidentialbythelegislature.[L2017,c177,§2]
§231-3.4 Publication of reports. (a)Thedepartmentoftaxationshallpublishreportsonthefollowing:(1) Hawaiiincomepatterns—individuals;(2) Hawaiiincomepatterns—businesses;(3) Taxcredits;and(4) Generalexcisetaxexemptionsthat:
(A) Aretaxexpendituresatthewholesalerate;(B) Aretaxexpendituresattheretailrate;and(C) Maybeforegoneopportunitiestoexporttaxes;providedthatthedepartmentoftaxationshallhavethe
discretiontodeterminetheexemptionsthatfitwithineachofthecategorieswithinsubparagraphs(A),(B),and(C)andthosethatdonotfitintoanyofthecategories.Thedepartmentshallnotberequiredtopublishreportsonexemptionsthatdonotfitintoanyofthecategories.
(b) Thedepartment shallmakeeachof these reports available inbothpaper formandcommonlyaccessibleelectronicforms.
(c) Thedepartmentoftaxationshallprovidethereportsrequiredbysubsection(a)(1)and(3)tothelegislaturenolaterthantwentydayspriortotheconveningofeachregularsession;providedthatonorbeforeDecember31,2015,thedepartmentoftaxationshallreporttothelegislatureonthestatusofupgradingitsformsandreportingcapabilitiespertheimplementationofthedepartmentoftaxation’staxsystemmodernization.Thedepartmentoftaxationshallprovide the reports requiredby subsection (a)(2) and (4) to the legislature no later than twentydays prior to theconveningofthe2017regularsessionandeachsessionthereafter.
(d) Thedepartmentmayexploreandimplementallreasonablemethodsofcoveringthecostsofdistributionofthereports,includingbutnotlimitedto:
(1) Setting reasonable fees thatwill cover the costs of producing and distributing the reports in paper andelectronicform;and
(2) Negotiatinglicensingfeeswithcommercialinformationprovidersforrightstocarrythereportson-lineorinotherelectronicstoragemethods.[L1996,c250,§2;amL2012,c189,§1;amL2015,c94,§2]
Note
EstablishingpositionstofulfilltheL2012,c189amendment.L2012,c189,§2.
§231-3.5 Suspension of running of the period of limitation during bankruptcy proceedings. Therunningoftheperiodsoflimitationprovidedunderchaptersofthelawundertitle14administeredbythedepartmenttothecontrarynotwithstanding,shallbesuspendedfortheperiodduringwhichthedirectoroftaxationisprohibitedfrommakinganassessmentoftaxesbyreasonoftitle11(withrespecttobankruptcy)oftheUnitedStatesCodeandforsixtydaysaftertheprohibitionislifted.[L1991,c19,§1;amL1994,c20,§1;amL1995,c66,§3]
[§231-3.6] Streamlined sales and use tax agreement compliance.(a)Asellerthatregisterstopayorcollectandremitsalesorusetaxinaccordancewiththetermsofthestreamlinedsalesandusetaxagreementmayselectoneofthefollowingmethodsofremittanceorothermethodallowedbylawtoremitthetaxescollected,asfollows:
(1) Amodel1seller,whoshallbeasellerwhoselectsacertifiedserviceproviderasanagenttoperformalltheseller’ssalesorusetaxfunctions,otherthantheseller’sobligationtoremittaxonitsownpurchases;
18-231-3.4
§231-4 ADMINISTRATION OF TAXES
CHAPTER231,Page8(UnofficialCompilation)
(2) Amodel2seller,whoshallbeasellerwhoselectsacertifiedautomatedsystemtousewhichcalculatestheamountoftaxdueonatransaction;or
(3) Amodel3seller,whoshallbeasellerwhousesitsownproprietaryautomatedsalestaxsystemthathasbeencertifiedasacertifiedautomatedsystem.
(b) Acertifiedserviceproviderinmodel1shallbeallowedamonetaryallowanceinaccordancewiththetermsofthecontractthatthestatesparticipatinginthestreamlinedsalesandusetaxagreementexecutewiththeprovider.Thedirectorshallprescribetheallowanceinaccordancewiththetermsofthecontract,whichshallbefundedentirelyfrommoneycollectedinmodel1.
Amonetaryallowancetoacertifiedserviceprovidermaybebasedononeormoreofthefollowingincentives:(1) Abaseratethatappliestotaxabletransactionsprocessedbytheprovider;and(2) For a period not to exceed twenty-four months following a voluntary seller’s registration through the
streamlinedsalesandusetaxagreement’scentralregistrationprocess,apercentageoftaxrevenuegeneratedfor amember state by the voluntary seller for eachmember state forwhich the seller does not have arequirementtoregistertocollectthetax.
(c) Amodel2sellershallbeallowedamonetaryallowancethatthedirectorshallprescribeinaccordancewiththetermsagreedtobythememberstatesofthestreamlinedsalesandusetaxagreement.Thememberstatesinitiallyanticipatethattheywillprovideamonetaryallowancetosellersundermodel2basedonthefollowing:
(1) Eachsellershallreceiveabaserateforaperiodnottoexceedtwenty-fourmonthsfollowingthecommencementofparticipationbytheseller;and
(2) For a period not to exceed twenty-four months following a voluntary seller’s registration through thestreamlinedsalesandusetaxagreement’scentralregistrationprocess,apercentageoftaxrevenuegeneratedfor amember state by the voluntary seller for eachmember state forwhich the seller does not have arequirementtoregistertocollectthetax.
(d) Amodel3sellerandallothersellersthatarenotundermodel1ormodel2shallbeallowedamonetaryallowance that the director shall prescribe in accordance with the terms agreed to by the member states of thestreamlinedsalesanduse taxagreement.Thememberstates initiallyanticipate that theywillprovideamonetaryallowancetosellersundermodel3andtoallothersellersthatarenotundermodels1or2basedonthefollowing:
(1) For a period not to exceed twenty-four months following a voluntary seller’s registration through thestreamlinedsalesandusetaxagreement’scentralregistrationprocess;and
(2) Apercentageoftaxrevenuegeneratedforamemberstatebythevoluntarysellerforeachmemberstateforwhichthesellerdoesnothavearequirementtoregistertocollectthetax.
(e) Pursuanttothestreamlinedsalesandusetaxagreement,thedirectorisauthorizedtoacceptcertifiedautomatedsystemsandcertifiedserviceproviderstoaidintheadministrationofthecollectionofthetaximposedunderchapter237andchapter238.
(f) Nopersonrequiredtocollectanytaximposedbychapter237or238,oranytaxauthorizedtobecollectedunderthestreamlinedsalesandusetaxagreementshallbeheldliableforhavingchargedandcollectedtheincorrectamountofsalesorusetaxbyreasonofrelianceonerroneousdataprovidedbythedirectorwithrespecttotaxrates,boundaries,ortaxingjurisdictionassignments.
(g) Inconnectionwithapurchaser’srequestfromasellerofovercollectedsalesorusetaxes,asellershallbepresumedtohaveareasonablebusinesspractice,ifinthecollectionofthesalesorusetaxes,theseller:
(1) Useseitheraproviderorasystem,includingaproprietarysystem,thatiscertifiedbytheState;and(2) HasremittedtotheStatealltaxescollectedlessanydeductions,credits,orcollectionallowances.
(h) Forthepurposesofthissection,“streamlinedsalesandusetaxagreement”meanstheagreementauthorizedunderchapter255D.[LSp2005,c3,§2]
§231-4 Assessing officers eligible to appointment as collecting officers and vice versa. Appointeestoofficesorpositionsinthedepartmentoftaxationfortheassessingoftaxesshallbeeligibleforappointmenttoofficesorpositionsinthedepartmentforthecollectionoftaxes,andviceversa.[L19322d,c40,§6;RL1935,§1904;RL1945,§5106;amL1951,c264,§2;RL1955,§115-6;amLSp19592d,c1,§16;HRS§231-4;amL1989,c14,§4(3)]
[§231-4.3] Investigators; appointment and powers. The director may appoint and commission one or moreinvestigatorsastheexigenciesofthepublicservicemayrequire.Personsappointedandcommissionedunderthissectionshallhaveandmayexerciseallofthepowersandauthorityandthebenefitsandprivilegesofapoliceofficerorofadeputysheriff, includingthepower toarrest;providedthatsuchpowersshall remaininforceandeffectonlywhile inactualperformanceoftheirduties.Theseinvestigatorsshallconsistofpersonnelwhoseprimarydutyistoconductinvestigationsasdirectedbythedirector.Personsappointedandcommissionedunderthissectionshallbeexemptfromchapter76. [L2003,c136,§2]
[§231-4.5] Administrative rules officer; specialists; appointment and duties. Thedirectoroftaxationmayappointanadministrativerulesofficer,andadministrativerulesspecialistsasnecessarytoassisttheadministrativerulesofficer.
CHAPTER231,Page9(UnofficialCompilation)
ADMINISTRATION OF TAXES §231-7
Theadministrativerulesofficershalldirecttheadoptionofrulesrelatedtotaxesadministeredbythedepartment,assistwiththeissuanceoftaxmemorandaandtaxinformationreleases,andperformotherdutiesasdirectedbythedirector.Theadministrativerulesofficerandtheadministrativerulesspecialistsshallbeexemptfromchapters76and77andmaybelegaloraccountingprofessionals;providedthatnoindividualappointedunderthissectionshallrenderlegalservicesreservedtotheattorneygeneralunderchapter28.[L1990,c102,§1]
§231-5 Deceased officers, duties of personal representatives, etc. Thepersonalrepresentativesofanydeceasedofficerofthedepartmentoftaxation,andallotherpersonsintowhosehandsanytaxlists,orrecords,papers,documents,orbooks,ortaxes,maycome,shalldeliverthesametothedepartment,andanyrefusalorwilfulfailuresotodoshallconstituteamisdemeanor.[L19322d,c40,§9;RL1935,§1909;RL1945,§5109;RL1955,§115-9;amLSp19592d,c1,§16;HRS§231-5;amL1976,c200,ptof§1]
§231-6 Oath, power to administer. Thedepartmentoftaxationmayadministeralloathsoraffirmationsrequiredtobetakenorbeadministeredunderchaptersofthelawundertitle14administeredbythedepartment,withrespecttoanymatterscomingwithinthescopeofthedutiesofthedepartment.[L19322d,c40,§10;RL1935,§1916;RL1945,§5110;RL1955,§115-10;amLSp19592d,c1,§16;HRS§231-6;amL1983,c217,§4;amL1985,c16,§3;amL1986,c340,§3;amL1991,c263,§4;amL1995,c66,§4]
§231-7 Hearings and subpoenas. [This section is effective until June 30, 2011. For section effective on July 1, 2011, see below.] (a)Thedirectoroftaxation,andanyrepresentativeofthedirectordulyauthorizedbythedirector,mayconductanyinquiry,investigation,orhearing,relatingtoanyassessment,ortheamountofanytax,orthecollectionofanydelinquenttax,includinganyinquiryorinvestigationintothefinancialresourcesofanydelinquenttaxpayerorthecollectabilityofanydelinquenttax.
(b) The director or other person conducting hearings may administer oaths and take testimony under oathrelatingtothematterofinquiryorinvestigation,andsubpoenawitnessesandrequiretheproductionofbooks,papers,documents,andrecordspertinenttosuchinquiry.
(c) Ifanypersondisobeysanyprocessor,havingappeared inobedience thereto, refuses toanswerpertinentquestionsputtothepersonbythedirectororotherpersonconductingthehearing,ortoproduceanybooks,papers,documents,orrecordspursuantthereto,thedirectororotherpersonconductingthehearingmayapplytothecircuitcourtofthecircuitwhereintheinquiryorinvestigationisbeingconducted,ortoanyjudgeofthecourt,settingforththedisobediencetoprocessorrefusaltoanswer,andthecourtorjudgeshallcitethepersontoappearbeforethecourtorjudgetoanswerthequestionsortoproducethebooks,papers,documents,orrecords,andupontheperson’srefusalsotodocommitthepersontojailuntilthepersontestifiesbutnotforalongerperiodthansixtydays.Notwithstandingtheservingofthetermofcommitmentbyanyperson,thedirectormayproceedinallrespectsasifthewitnesshadnotpreviouslybeencalledupontotestify.Witnesses(otherthanthetaxpayerorthetaxpayer’soritsofficers,directors,agents,andemployees)shallbeallowedtheirfeesandmileageasincasesinthecircuitcourts,tobepaidonvouchersofthedepartmentoftaxation,fromanymoneysavailableforexpensesofthedepartment.
(d) Anysubpoenaissuedunderthissectionthatdoesnotidentifythepersonwithrespecttowhoseliabilityorinvestigationthesubpoenaisissuedmaybeservedonanypersononlyafteracourtproceedinginwhichthedirectororanotherpersonestablishesthat:
(1) Thesubpoenarelatestotheinvestigationofaparticularpersonorascertainablegrouporclassofpersons;(2) Thereisareasonablebasisforbelievingthatthepersonorgrouporclassofpersonsmayfailormayhave
failedtocomplywithanyprovisionoftitle14;and(3) Theinformationsoughttobeobtainedfromtheexaminationofrecordsortestimonyandtheidentityofthe
personorpersonswithrespecttowhoseliabilitythesubpoenaisissuedisnotreadilyavailablefromothersources.
(e) Theprovisionsofthissectionareinadditiontoallotherprovisionsoflaw,andapplytoanytaxwithinthejurisdictionofthedepartment.[L1945,c196,§1;RL1955,§115-11;amLSp19592d,c1,§16;HRS§231-7;gench1985;amL2009,c166,§17]
Note
Applicabilityof2009amendment.L2009,c166,§27.
§231-7 Audits, investigations, hearings and subpoenas. [Section is effective July 1, 2011. For section effective until June 30, 2011, see above.] (a)Thedirectoroftaxation,andanyrepresentativeofthedirectordulyauthorizedbythedirector,mayconductanycivilauditorcriminalinvestigation,investigation,orhearing,relatingtoanyassessment,ortheamountofanytax,orthecollectionofanydelinquenttax,includinganyauditorinvestigationintothefinancialresourcesofanydelinquenttaxpayerorthecollectabilityofanydelinquenttax.
(b) Thedirectoroftaxationorotherpersonconductinghearingsmayadministeroathsandtaketestimonyunderoathrelatingtothematterofaudit,investigation,orhearing.
§231-7 ADMINISTRATION OF TAXES
CHAPTER231,Page10(UnofficialCompilation)
(c) Thedirectoroftaxationorrepresentativeofthedirectordulyauthorizedbythedirector,whenconductingacivilaudit,investigation,orhearingmaysubpoenawitnessesandrequiretheproductionofbooks,papers,documents,other designated objects, or any other record howevermaintained, including those electronically stored, that arerelevantormaterialtothecivilaudit,investigation,orhearing;providedthatthedirectoroftaxationordeputydirectoroftaxationshallgivewrittenapprovalfortheissuanceofasubpoenaonlyafterareviewoftheappropriatenessoftheissuance.Asubpoenaissuedunderthissubsection:
(1) Shallstatethatthesubpoenaisissuedbythedepartmentandshallcommandeachpersontowhomit isdirectedtoattendandgivetestimonyatthetimeandplacespecified,andmayalsocommandthepersontowhom the subpoena is directed to produce books, papers, documents, or other objects specificallydesignated;
(2) MaybeservedatanyplacewithintheStatebyaninvestigatorappointedpursuanttosection231-4.3oranyotherrepresentativeofthedirectordulyauthorizedbythedirector;
(3) Shallrequireattendanceofthepersononlyinthecountywhereinthepersonisservedwiththesubpoenaoratanyotherplaceasisagreeduponbythepersonandthedepartment;providedthatifthesubpoenaisserved in a countyother than that inwhich theperson resides, is employed,or transacts theperson’sbusinessinperson,thedepartmentshallbeartheperson’sexpensesfortraveltoandattendanceattheplacenamedinthesubpoenatothesameextentasprovidedbytherulesofcourtotherthantheexpensesofthetaxpayerorthetaxpayer’switnesses,officers,directors,agents,oremployees;and
(4) Shallcontainashort,plainstatementoftheperson’srightsandtheprocedureforenforcingandcontestingthesubpoena.
Ifanypersondisobeysanyprocessor,havingappearedinobediencethereto,refusestoanswerpertinentquestionsput to thepersonby thedirectororotherpersonconducting thecivil audit, investigation,orhearing,or toproduceanybooks,papers,documents,objects,orrecordspursuantthereto,thedirectormayapplytothecircuitcourtofthecircuitwhereinthecivilaudit,investigation,orhearingisbeingconducted,ortoanyjudgeofthecourt,settingforththedisobediencetoprocessorrefusaltoanswer,andthecourtorjudgeshallcitethepersontoappearbeforethecourtorjudgetoanswerthequestionsortoproducethebooks,papers,documents,objects,orrecords;providedthatthecourt,uponamotionpromptlymadebytheperson,mayquashormodifythesubpoenaifcompliancewouldbeunreasonableoroppressiveorwouldviolateanyprivilegethepersonwouldbeentitledtoexerciseinacourtproceeding.Ifthepersonfailsorrefusestoproducethesubpoenaedbooks,papers,documents,objects,orrecord,thecourtshallinstituteacontemptproceedingagainsttheperson,atwhichtimethecourtshalldeterminewhethergoodcauseisshownforthefailuretoobeythesubpoenaortherefusaltotestify;providedthatthecourt,onamotionpromptlymade,mayquashormodifythesubpoenaifcompliancewouldbeunreasonableoroppressiveorwouldviolateanyprivilegethepersonwouldbeentitledtoexerciseinacourtproceeding.Intheeventthatnogoodcauseisshown,thecourtdoesnotquashormodifythesubpoena,andthepersonfailsorrefusestocomplywiththesubpoena,thenthecourtshallcommitthepersontojailuntilthepersontestifies,butnotforalongerperiodthansixtydays.Notwithstandingtheservingofthetermofcommitmentbyanyperson,thedirectormayproceedinallrespectsasifthewitnesshadnotpreviouslybeencalledupontotestify.Witnesses(otherthanthetaxpayerorthetaxpayer’sofficers,directors,agents,andemployees)shallbeallowedtheirfeesandmileageasauthorizedincasesinthecircuitcourts,tobepaidonvouchersofthedepartmentoftaxation,fromanymoneysavailablefortheexpensesofthedepartment.
(d) SubjecttotheprivilegesapplicabletoanywitnessinthisState,thedirectoroftaxationoranyrepresentativeofthedirectordulyauthorizedbythedirector,whenconductingacriminalinvestigation,maysubpoenawitnesses,examinewitnessesunderoath,andrequiretheproductionofanybooks,papers,documents,otherdesignatedobjects,oranyother recordhowevermaintained, including thoseelectronicallystored, thatare relevantormaterial to theinvestigation; provided that the director of taxation or deputy director of taxation shall givewritten approval fortheissuanceofasubpoenaonlyafterareviewoftheappropriatenessoftheissuance.Asubpoenaissuedunderthissubsection:
(1) Shallstatethatthesubpoenaisissuedbythedepartmentandshallcommandeachpersontowhomit isdirectedtoattendandgivetestimonyatthetimeandplacespecified,andmaycommandthepersontowhomitisdirectedtoproducebooks,papers,documents,orotherobjectsspecificallydesignated;
(2) MaybeservedatanyplacewithintheStatebyaninvestigatorappointedpursuanttosection231-4.3oranyotherlawenforcementofficialwiththepowersofapoliceofficer;
(3) Shallrequireattendanceofthepersononlyinthecountywhereinthepersonisservedwiththesubpoenaoratanyotherplaceagreeduponbythepersonandthedepartment;providedthatifthesubpoenaisservedinacountyotherthanthatinwhichthepersonresides,isemployed,ortransactstheperson’sbusinessinperson,thedepartmentshallbeartheperson’sexpensesfortraveltoandattendanceattheplacenamedinthesubpoenatothesameextentasprovidedbytherulesofcourt;and
(4) Shallcontainashort,plainstatementoftheperson’srightsandtheprocedureforenforcingandcontestingthesubpoena.
Uponapplicationbythedirector,acircuitcourtofthecountywhereinthepersonresidesorisfoundmaycompelobediencetothesubpoena;providedthatthecourt,onamotionpromptlymade,mayquashormodifythesubpoena
CHAPTER231,Page11(UnofficialCompilation)
ADMINISTRATION OF TAXES §231-7.5
ifcompliancewouldbeunreasonableoroppressiveorwouldviolateanyprivilege thewitnessmaybeentitled toexerciseinacourtproceeding.
(e) Anysubpoenaissuedunderthissectionthatdoesnotidentifythepersonwithrespecttowhoseliability,audit,orinvestigationthesubpoenaisissuedmaybeservedontheintendedrecipientonlyafteracourtproceedinginwhichthedirectororanotherpersonestablishesthat:
(1) Thesubpoenarelatestotheliability,audit,orinvestigationofaparticularpersonorascertainablegrouporclassofpersons;
(2) Thereisareasonablebasisforbelievingthatthepersonorgrouporclassofpersonsmayfailormayhavefailedtocomplywithanyprovisionoftitle14;and
(3) Theinformationsoughttobeobtainedfromtheexaminationofrecordsortestimonyandtheidentityofthepersonorpersonswithrespecttowhoseliabilitythesubpoenaisissuedisnotreadilyavailablefromothersources.
(f) Thedepartmentshallpaytoafinancialinstitutionthatisservedasubpoenaissuedunderthissectionafeeforreimbursementoftheinstitution’scostsasarenecessaryandthathavebeendirectlyincurredbyoronbehalfoftheinstitutioninsearchingfor,reproducing,ortransportingbooks,papers,documents,orotherobjectsdesignatedinthesubpoena.Reimbursementshallbepaidattherateof$15perhourforresearchand50centsperpageforreproduction.
(g) A person or entity that is compelled to testify or produce documents, information, or other items by asubpoenaissuedpursuanttoanaudit,investigation,orhearingpertainingtoanotherpersonorentityshallnotbeliablefordamagesarisingfromcompliancewiththesubpoena.
(h) Theprovisionsofthissectionareinadditiontoallotherprovisionsoflaw,andapplytoanytaxwithinthejurisdictionofthedepartment.[L1945,c196,§1;RL1955,§115-11;amLSp19592d,c1,§16;HRS§231-7;amimpL1984,c90,§1;gench1985;amL2009,c166,§17;amL2011,c101,§2]
Note
Applicabilityof2009amendment. L2009,c166,§27.The2011amendmentshallapplytoanysubpoenaissuedonorafterJuly1,2011. L2011,c101,§4.
Cross Reference
TaxInformationReleaseNo.2002-1,“AuditofNetIncome,GeneralExcise,andUseTaxReturns;AppealRights;ClaimsforRefund;andPaymenttoStateUnderProtest”
§231-7.5 Expedited appeals and dispute resolution program. (a) The department shall be authorized toimplement an administrative appeals and dispute resolution program that shall expeditiously resolve all tax, penalty,interest,fine,assessment,andothersuchdisputesbetweenthedepartmentandthetaxpayerorreturnpreparer.Thedirectororthedirector’sdesignee,whoshallreportdirectlyandbeanswerablesolelytothedirector,shallserveasanindependentappealsofficerandshallbeauthorizedtocompromise,settle,orotherwiseresolveanydisputeonanybasis,includinghazardsandcostsoflitigation,consideringequallythepositionofthetaxpayerandthedepartmentonanimpartialbasis.Theindependentappealsofficershallnotbeinfluencedbyanydepartmenttaxcomplianceinitiativesandpolicies,orlossofrevenuetotheState.Decisionsoftheindependentappealsofficershallbeinwritingstatingthefacts,analysis,andconclusionsinsupport,whichshallbeprovidedtothetaxpayerandreturnpreparer.Personswhocurrentlyserveorhaveservedinthepreviousfiveyearsasanauditor,auditsupervisorormanager,collector,collectionsupervisorormanager,districtmanagerorsupervisor,ortaxcomplianceadministrator,shallnotbeeligibletobethedirector’sdesignee.
(b) Notwithstandinganyotherlawtothecontrary,includingtaxappealproceduressetforthunderchapter232,a taxpayershallbeeligible topetition thedepartmentonceforparticipation in theadministrativeappealsanddisputeresolutionprogramafterissuanceofanoticeofproposedassessment;providedthatifataxpayerhasfiledataxappealwiththetaxappealcourtorothercourt,thetaxpayershallfirstberequiredtoobtaintheapprovalofthedirectorandpermissionfromtherespectivecourtpriortopetitioningthedepartmentforparticipation.Thedirectorshallhavetherighttodenyapetitionforcause.
(c) Thedepartmentshalladoptprocedurestocarryoutthepurposesofthissection,includingproceduresrelatingtoexpartecommunicationsbetweenthedirectororthedirector’sdesigneeandotherdepartmentpersonneltoensurethatsuchcommunicationsdonotcompromiseorappeartocompromisetheindependenceoftheadministrativeappealsanddisputeresolutionprogram.
(d) Thedirectoroftaxationmayappointanadministrativeappealsofficerasnecessarytoadministerthissection,andperformotherdutiesasdirectedbythedirector.Theadministrativeappealsofficershallbeexemptfromchapter76andmaybealegaloraccountingprofessional;providedthatnoindividualappointedunderthissectionshallrenderlegalservicesreservedtotheattorneygeneralunderchapter28.[L2009,c166,§15;amL2012,c189,§4]
Note
Applicabilityofsection. L2009,c166,§27.
§231-8 ADMINISTRATION OF TAXES
CHAPTER231,Page12(UnofficialCompilation)
§231-8 Timely mailing treated as timely filing and paying. (a)Anyreport,claim,taxreturn,statement,orotherdocumentrequiredorauthorizedtobefiledwithoranypaymentmadetotheStatewhichis:
(1) Transmitted through theUnitedStatesmail,shallbedeemedfiledandreceivedby theStateon thedateshown by the post office cancellation mark stamped upon the envelope or other appropriate wrappercontainingit;
(2) MailedbutnotreceivedbytheStateorwherereceivedandthecancellationmarkisillegible,erroneous,oromitted,shallbedeemedfiledandreceivedonthedateitwasmailedifthesenderestablishesbycompetentevidencethatthereport,claim,taxreturn,statement,remittance,orotherdocumentwasdepositedintheUnitedStatesmailonorbeforethedatedueforfiling;andincasesofthenonreceiptofareport,taxreturn,statement,remittance,orotherdocumentrequiredbylawtobefiled,thesenderfileswiththeStateaduplicatewithinthirtydaysafterwrittennotificationisgiventothesenderbytheStateofitsnonreceiptofthereport,taxreturn,statement,remittance,orotherdocument.
(b) Ifanyreport,claim,taxreturn,statement,remittance,orotherdocumentissentbyUnitedStatesregisteredmail,certifiedmail,orcertificateofmailing,arecordauthenticatedbytheUnitedStatesPostOfficeoftheregistration,certification, or certificate shall be considered competent evidence that the report, claim, tax return, statement,remittance,orotherdocumentwasdeliveredtothestateofficerorstateagencytowhichaddressed,andthedateofregistration,certification,orcertificateshallbedeemedthepostmarkeddate.
(c) AnyreferenceinthissectiontotheUnitedStatesmailshallbetreatedasincludingareferencetoadesignateddeliveryservice,andanyreferencetoapostmarkbytheUnitedStatesPostalServiceshallbetreatedasincludingareferencetoanydaterecordedormarkedbythedesignateddeliveryservice.
Asusedinthissection,“designateddeliveryservice”meansanydeliveryservicedesignatedforpurposesofsection7502ofthefederalInternalRevenueCode.[L1967,c271,§1;HRS§231-8;amL1997,c297,§1]
Note
The1997amendmentappliestotaxableyearsbeginningafterDecember31,1996.L1997,c297,§7.
Cross Reference
TaxInformationReleaseNo.97-3,“TheExpansionofthe`TimelyMailingTreatedasTimelyFiling/PayingRule’toDocumentsandPaymentsDeliveredbyaDesignatedPrivateDeliveryService(PDS)”
TaxInformationReleaseNo.99-1,“FilingofTaxReturnsRequiredbyTaxpayersWhoPayTaxesbyElectronicFundsTransfer(EFT)”
[§231-8.5] Electronic filing of tax returns. Thedepartmentmayallowfilingbyelectronic,telephonic,oropticalmeansofanytaxreturn,application,report,orotherdocumentrequiredundertheprovisionsoftitle14administeredbythedepartment.Thedateoffilingshallbethedatethetaxreturn,application,report,orotherdocumentistransmittedtothedepartmentinaformandmannerprescribedbydepartmentalrulesadoptedpursuanttochapter91.Thedepartmentmaydeterminealternativemethodsforthesigning,subscribing,orverifyingofataxreturn,application,report,orotherdocumentthatshallhavethesamevalidityandconsequencesastheactualsigningbythetaxpayer.Afilingunderthissectionshallbetreatedinthesamemannerasafilingsubjecttothepenaltiesundersection231-39.[L1997,c176,§1]
§231-8.6 REPEALED. L2007,c9,§22.
§231-9 Tax collection; general duties, powers of director; dollar rounding. (a)Thedirectoroftaxationshallcollectalltaxesaccordingtotheassessments.Thedirectoroftaxationshalldulyandaccuratelyaccounttothedirectoroffinanceforthecollectionandtheamountoftaxesaccordingtosuchassessmentsandshallbeliableandresponsibleforthefullamountofthetaxesassessed,unlessthedirectoroftaxationshallunderoathaccountforthenoncollectionofthesametothefullsatisfactionofthedirectoroffinance,orshallbereleasedfromaccountabilityasprovidedinsection231-32.Thedirectoroftaxationshall,fromtimetotime,payovertothedirectoroffinancealltaxescollected,atsuchtimesasthedirectoroffinanceshalldirect.Thecountyattorneyofeachcountyshall,underthesupervisionanddirectionoftheattorneygeneral,assistthedirectoroftaxationinthecollectionofalltaxes.
(b) Thedirectoroftaxationmayrequiretheroundingoftaxreturnitems(upwardanddownward)tothenearestwholedollaramount;providedthatamountsof50centsshallberoundedupward.[L19322d,c40,§60;RL1935,§1955;RL1945,§5112;RL1955,§115-13;amLSp19592d,c1,§§14,16;amL1963,c114,§1;HRS§231-9;amimpL1984,c90,§1;gench1985;amL1996,c133,§1]
[§231-9.2] Offers in compromise. (a)Requestsforcompromisesauthorizedundersection231-3shallbesubmittedtothedepartmentandaccompaniedbythefollowing:
(1) Inthecaseofalump-sumofferincompromise,twentypercentoftheamountoftheoffer;or(2) Inthecaseofaperiodicpaymentofferincompromise,paymentintheamountofthefirstproposedinstallment.
Anyfailuretomakeaninstallmentotherthanthefirstinstallmentdueundertheofferincompromise,during
CHAPTER231,Page13(UnofficialCompilation)
ADMINISTRATION OF TAXES [§231-9.7]
theperiodtheofferisbeingevaluatedbythedepartment,maybetreatedbythedepartmentasawithdrawaloftheofferincompromise.
(b) Where an offer in compromise is not accepted by the department for any reason, paymentsmade undersubsection(a)shallbeappliedtothetaxfirstassessedorotheramountsimposedundertitle14.
(c) Thedepartmentmaywaivethepaymentrequirementsundersubsection(a)forindividualtaxpayerswhomeetthelow-incomecertificationguidelinespublishedbytheInternalRevenueServicefortheperiodinwhichtherequestforcompromisehasbeensubmitted.
(d) Thedirectoroftaxationshallprepareanyformsthatmaybenecessarytomeettherequirementsofthissection.Inaddition toanyotheradministrativerequirements, thedirectorof taxationmayalsorequire the taxpayer tofurnishreasonableinformationtoascertainthevalidityoftherequestforpaymentwaivermadeundersubsection(c).
(e) Thedepartmentmayadoptrulespursuanttochapter91necessarytoeffectuatethepurposesofthissection.(f) Asusedinthissection:“Lump-sumofferincompromise”meansanyofferofpaymentsmadeinfiveorfewerinstallments.“Periodicpaymentofferincompromise”meansanyofferofpaymentsmadeinsixormoreinstallments.[L2013,
c6,§1]Note
The2013amendmentdoesnotaffectrightsanddutiesthatmatured,penaltiesthatwereincurred,andproceedingsthatwerebegunbeforeApril5,2013. L2013,c6,§2.
[§231-9.3] Tax collection; mainland contractors working on federal construction projects. The director oftaxationshalldevelopasystemtodeterminewhencontractorsfromtheUnitedStatesmainlandarepresentinHawaiitoworkonfederalprojects,includingthestartingandanticipatedcompletiondatesforthesecontracts,toenforcethelawsrelatingtothecollectionofgeneralexcisetaxesonthesecontractorsthatmayberequiredunderchapter237.
TheUnitedStatesgovernmentisrequestedtoprovidetheinformationnecessarytoascertainthenamesandworkdatesofUnitedStatesmainlandcontractorsworkingonfederalprojects.ThedirectoroftaxationshallworkwiththeUnitedStatesgovernmenttoestablishthisinformationtoenforceandcollecttaxesowedtotheState.
Thedirectoroftaxationmaycontractwithbondedcollectionagencies,licensedattorneys,accountants,auditors,orotherpersonstopursueandcollectclaimsoftheStatewhenthemainlandcontractor,whoowesdelinquentgeneralexcisetaxesorissubjecttootherprovisionsunderchapter231,hasmovedbacktotheUnitedStatesmainland.
Thedirectoroftaxationmayadoptrulespursuanttochapter91toimplementthissection.[L2001,c206,§2]Revision Note
Subsectiondesignationdeletedpursuantto§23G-15(1).
[§231-9.4] Credit or debit card remittances. Inadditiontosections237-31,237D-6.5,and251-5,aswellasanyotherformofpaymentallowedunderprovisionsoftitle14administeredbythedepartment,thedirector,byrulesadoptedpursuanttochapter91,maypermittheuseofcreditordebitcardsforremittancesmadetothedepartment.Aservicefeeshallnotberequiredbythedepartmentfortheuseofdebitcardsforremittances,butmayberequiredbythedepartmentfortheuseofcreditcardsforremittances.
Forpurposesofthissection:“Creditcard”shallhavethesamemeaningasprovidedinsection478-1.“Debitcard”meansanycard,plate,orothersinglecreditdeviceissuedwithorwithoutafeetoacardholderto
purchasegoodsorservicesortoobtaincashthatisdebitedfromthecardholder’scheckingorotherbankaccount.[L1997,c179,§1]
[§231-9.5] Assessment of additional taxes of corporations or partnerships. Additionaltaxesofacorporationorpartnershipshallbeassessedtoitunderitscorporateorfirmname.[L1989,c14,§1(2)]
[§231-9.6] Fiduciaries, liability. Every personal representative, trustee, guardian, or other fiduciary shall beanswerableassuchfortheperformanceofallacts,matters,orthingsasarerequiredtobedoneinrespecttotheassessmentofthetaxesforwhichthefiduciaryisresponsibleinafiduciarycapacity.Thefiduciaryshallbeliableforthepaymentofthosetaxesuptotheamountoftheavailablepropertyheldbythefiduciary,butshallnotbepersonallyliable.Thefiduciarymayretainsomuchpropertyasmaybenecessarytopaythetaxesdue.Thefiduciarymayrecovertheamountoftaxespaidfromthebeneficiarytowhomthepropertyshallhavebeendistributed.[L1989,c14,§1(3)]
[§231-9.7] Informalities not to invalidate assessments, mistakes in names or notices, etc. Noassessmentoractrelatingtotheassessmentorcollectionoftaxesshallbeillegalnorshallsuchassessment,levy,orcollectionbeinvalidonaccountofmereinformalityormistakesinnames,notices,etc.[L1989,c14,§1(6)]
[§231-9.8] ADMINISTRATION OF TAXES
CHAPTER231,Page14(UnofficialCompilation)
[§231-9.8] Tax bills. Eachstatetaxcollectorshallmail,postageprepaid,ordelivertoallknownpersonsassessedtaxesinthestatetaxcollector’sdistrict,taxbillsdemandingpaymentoftaxesduefromeachofthem,butnopersonshallbeexcusedfromthepaymentofanytaxordelinquentpenaltiesthereonbyreasonoffailureontheperson’sparttoreceivesuchbill.Thebill,ifmailed,shallbeaddressedtothepersonconcernedattheperson’slastknownaddressorplaceofresidence.[L1989,c14,§1(7)]
§231-9.9 Filing and payment of taxes by electronic funds transfer. (a)Thedirectoroftaxationisauthorizedtorequireeverypersonwhosetaxliabilityforanyonetaxableyearexceeds$100,000andwhofilesataxreturnforanytax,includingconsolidatedfilers,toremittaxesbyoneofthemeansofelectronicfundstransferapprovedbythedepartment;providedthatforwithholdingtaxesundersection235-62,electronicfundstransfersshallapplytoannualtaxliabilitiesthatexceed$40,000.Notwithstandingthetaxliabilitythresholdsinthissubsection,thedirectoroftaxationisauthorizedtorequireanypersonwhoisrequiredtoelectronicallyfileafederalreturnorelectronicallyremitanyfederaltaxestothefederalgovernment,toelectronicallyfileastatereturnandelectronicallyremitanystatetaxesundertitle14tothedepartment.Thedirectorisauthorizedtograntanexemptiontotheelectronicfilingandpaymentrequirementsforgoodcause.
(b) Anypersonwhofilesataxreturnforanytaxandisnotrequiredbysubsection(a)toremittaxesbymeansofelectronicfundstransfermayelecttoremittaxesbyoneofthemeansofelectronicfundstransferapprovedbythedepartmentwiththeapprovalofthedirectoroftaxation.
(c) Ifapersonwhoisrequiredundersubsection(a),tofileareturnelectronicallyorremittaxesbyoneofthemeansofelectronicfundstransferapprovedbythedepartmentfailstofileelectronicallyortoremitthetaxesusinganapprovedmethodonorbeforethedateprescribedtherefor,unlessitisshownthatthefailureisduetoreasonablecauseandnottoneglect,thereshallbeaddedtothetaxrequiredtobesoremittedapenaltyoftwopercentoftheamountofthetax.Thepenaltyunderthissubsectionisinadditiontoanypenaltysetforthinsection231-39.
(d) Nolaterthantwentydayspriortotheconveningofeachregularsession,thedepartmentshallsubmitareporttothelegislaturecontaining:
(1) Thenumberoftaxpayerswhowereassessedthetwopercentpenaltypursuanttosubsection(c);(2) Theamountsofeachassessment;and(3) Thetotalamountofassessmentscollectedforthepreviousyear.[L1995,c121,§1;amL1997,c177,§§1,
3;amL2001,c44,§1;amL2004,c113,§2;amL2009,c196,§2]Revision Note
Subsection(d),enactedasanewsection,iscodifiedtothissectionpursuantto§23G-15.
Note
The2009amendmentappliestoreturnsandpaymentsdueafterMay31,2009.L2009,c196,§8.
Cross Reference
TaxInformationReleaseNo.95-6,“QuestionsandAnswersonPayingTaxesbyElectronicFundsTransfer”TaxInformationReleaseNo.99-1,“FilingofTaxReturnsRequiredbyTaxpayersWhoPayTaxesbyElectronicFundsTransfer(EFT)”TaxInformationReleaseNo.2004-1,“Act113,SessionLawsofHawaii2004,RelatingtoIncomeTaxWithholding”TaxAnnouncement 2005-01, “Instructions on Filing Federal Schedule B (Form 941), Report of Tax Liability for Semiweekly Schedule
Depositors,forHawaiiWithholdingTaxPurposes”
§231-10 Department; keep offices where. Thedepartmentoftaxationshallkeepofficesintheseveraldistricts,fortheconvenienceofthepublicbusiness.[L19322d,c40,§59;RL1935,§1956;RL1945,§5113;RL1955,§115-14;amLSp19592d,c1,§16;amL1967,c37,§1;HRS§231-10]
[§231-10.5] Closing audit letters. Attheconclusionofataxaudit, thedepartmentshallprovidetothetaxpayeraclosingauditletterthatshallconfirminwritingthedepartment’spositiononeachissueconsideredintheaudit,andwhichshallprovideguidanceonhowthetaxpayermayreportsuchissuesforpostaudityears.[L2009,c166,ptof§16]
Note
Applicabilityofsection. L2009,c166,§27.
[§231-10.6] Rules or administrative guidance. Rules,includingtemporaryrules,providingexamplesandsafeharborsshallbeimplementedtoexplaininclearandunambiguousterms,thepenaltiesandfinesprovidedunderanyprovisionoftitle14thatmaybeimposedagainstareturnpreparerortaxpayerforunderstatementoftaxliabilities,promotionofabusivetaxshelters,erroneousclaimsforrefundorcredit,orsubstantialunderstatementsormisstatementsoftax.Federallawsandadministrativeguidancemaybeusedtointerpretthissection.Anysuchpenaltiesorfinesshallfirstbeapprovedbythedirectorbeforeassessment.[L2009,c166,ptof§16]
18-231-9.9
CHAPTER231,Page15(UnofficialCompilation)
ADMINISTRATION OF TAXES §231-13
Note
Applicabilityofsection. L2009,c166,§27.
[§231-10.7] Temporary rulemaking authority for regulation of tax matters. (a)Notwithstandinganyother lawintitle14,chapter91,orchapter201Mtothecontrary,thedepartmentisauthorizedtoadoptanytemporaryrulesasthedepartmentmaydeemproperasprovidedinthissection.Temporaryrulesmayincludetheadoption,amendment,orrepealofanyrulesconcerninganymatterswhichthedepartmentisauthorizedtoregulate.
(b) Temporaryrulesshalltakeeffectsevendaysafternoticeofthetemporaryrulesisissued.Noticeunderthissubsectionshallrequire:
(1) Makingthetemporaryrulesavailableonthedepartment’sandthelieutenantgovernor’swebsites;(2) Makingcopiesofthetemporaryrulesavailabletothepublicforinspectionatthedepartment’sofficesor
copyingifanyrequiredfeeispaid;and(3) Providingpublicnoticeofthesubstanceofthetemporaryrulesatleastoncestatewide.
(c) Temporaryrulesshallbeapprovedbythegovernor.(d) Anytemporaryrulesissuedbythedepartmentshallalsobeissuedasproposedadministrativerulesthatshallbe
subjecttotheproceduralrequirementsofchapter91.(e) Temporaryrulesshallexpireeighteenmonthsfromthedatethetemporaryrulestakeeffect.(f) Temporaryrulesshallconspicuouslyprovidethefollowinginformationatthebeginningofthetemporaryrules’
text:(1) Noticestatingthetemporarynatureoftherules;(2) Theexpirationdateofthetemporaryrules;and(3) A statement advising that proposed administrative rules subject to chapter 91 are being simultaneously
proposedforformaladoption.(g) Temporaryrulesshallhavethesameforceandeffectasanyotheradministrativerules.[L2009,c166,ptof
§16]Note
Applicabilityofsection. L2009,c166,§27.
[§231-10.8] Tax clearance fees. Thedepartmentmaychargeafeeof$20foreachtaxclearanceapplicationsubmittedand$5foreachcertifiedcopyofataxclearance. [L2012,c180,§2]
Note
SectionappliestorequestsfortaxclearancesandrequestsforcertifiedcopiesoftaxclearancesreceivedonorafterJuly1,2012.L2012,c180,§4.
POLICE; DISTRICT JUDGES
§231-11 Police to aid assessing or collecting officers. Thedirectorof taxationor any assessingor collectingofficerofthedepartmentoftaxation,whenresistedorimpededintheexerciseofthedirector’sorassessingorcollectingofficer’soffice,mayrequireanypoliceofficertoaidthedirectororassessingorcollectingofficerinthedischargeofthedirector’sorassessingorcollectingofficer’sduties,andifanypoliceofficerrefusestorenderaid,thepoliceofficershallbedeemedguiltyofamisdemeanor.[L19322d,c40,§11;RL1935,§1918;RL1945,§5114;amL1945,c79,§6;RL1955,§115-15;amLSp19592d,c1,§16;HRS§231-11;amL2017,c12,§32]
§231-12 REPEALED. L1995,c92,§20.Note
L1995,c66,§5purportstoamendthissection.
Case Notes
Anactiononthejudgmentrecoveredfortaxes,asdistinguishedfromanactionfortaxes,cannotbemaintainedinthedistrictcourtiftheamountofthejudgmentexceedsthelimitofthecourts’jurisdiction.18H.278.
Inhearingcounterclaimoverwhichithadnojurisdiction,districtcourtdidnotloseitsjurisdictionoverthemainclaim.53H.642,500P.2d743.
DELINQUENT TAXES
§231-13 Director; examination, investigation, and collection. [Repeal and reenactment on June 30, 2017. L 2013, c 93, §4.] (a)Thedirectoroftaxationshallberesponsibleforthecollectionandgeneraladministrationofalltaxes,
§231-14 ADMINISTRATION OF TAXES
CHAPTER231,Page16(UnofficialCompilation)
includingdelinquenttaxes.Notwithstandinganyotherlawtothecontrary,thedirector,bycontract,mayselectandretainbondedcollectionagencies,licensedattorneys,accountants,andauditorsorotherpersonsforthepurposeofassessment,enforcement,orcollectionoftaxesfrompersonssubjecttotheprovisionsoftitle14administeredbythedepartment.
(b) Attheoptionofthedirector,anycontractenteredintounderthissectionmayprovideforcompensationon:(1) Afixedpricebasis;(2) Anhourlyratebasiswithorwithoutafixedcap;or(3) Acontingentfeearrangementtobespecifiedinthecontract;providedthatthisparagraphshallnotapplyto
auditorsandaccountants.AllcompensationshallbepayableoutofthetaxesrecoveredfortheStateorfromthetaxpayerinaccordancewiththetermsof,anduptotheamountauthorizedbythecontract,unlessotherwisedeterminedbythedirector.[L1933,c135,§2;RL1935,§1966;amL1937,c241,§1;RL1945,§5118;RL1955,§115-18;amLSp19592d,c1,§16;HRS§231-13;amL1982,c88,§2;amimpL1984,c90,§1;gench1985;amL1990,c34,§3;amL1997,c253,§1;amL1999,c68,§1;amL2013,c93,§1]
Note
Reports to legislature on contracts for the assessment, enforcement, or collection of taxes up through June 30, 2017; annual report of allcontractsto2014-2017legislature.L2013,c93,§2.
TheL2013amendmentshalltakeeffectonMay31,2013,providedthatonJune30,2017,c93shallberepealedandsection231-13,HawaiiRevisedStatutesshallbereenactedintheforminwhichitreadonthedayimmediatelypriortoMay31,2013.L2013,c93,§4.
§231-14 Attorney. Theattorneygeneralshallassignoneoftheattorneygeneral’sdeputiesasattorneyandlegaladvisorandrepresentativeofthedirectoroftaxation.Theattorneymayproceedtoenforcepaymentofanydelinquenttaxesbyanymeansprovidedbylaw.Anylegalproceedingmaybeinstitutedinthenameofthedirectororthedirector’sdeputy,thecollectorofthedistrictinwhichthedelinquencyexists,orinthenameofthecollectorofdelinquenttaxes.[L1933,c135,§3;RL1935,§1967;amL1937,c241,§2;RL1945,§5119;RL1955,§115-19;amLSp19592d,c1,§16;amL1967,c37,§1;HRS§231-14;amimpL1984,c90,§1;gench1985]
RETURNS AND RECORDS, GENERALLY; VALIDITY
§231-15 Returns to be signed. Every return statement, or other document required to be made for taxationpurposesshallbesignedinaccordancewithformsorregulationsprescribedbythedepartmentoftaxation.Whereformsorregulationshavenotbeenprescribed,everysuchreturn,statement,orotherdocumentshallbesignedbythepersonrequiredtomakethereturn,statement,orotherdocumentorbysomedulyauthorizedpersonintheperson’sbehalf.
Thedepartmentoftaxationmayrequirethat,ifanypersonorpersonsactuallyprepareorsignareturnforanotherperson, thepersonorpersonssopreparingorsigning the returnshall signastatementshowingsuchfactsandsuchauthoritytosignsuchreturnasmaybeprescribedbythedepartment,andthedepartmentmaybyregulationdefinetheclassesofpersonstowhomthisprovisionshallapply.
Anyotherprovisionoflawtothecontrarynotwithstanding,nooathshallberequireduponanytaxreturn.[L1943,c4,§§1,2,3;RL1945,§5123;RL1955,§115-21;amLSp19592d,c1,§16;HRS§231-15;amL1980,c211,§1]
[§231-15.3] Signature presumed authentic. Thefactthatanindividual’snameissignedonareturn,statement,orotherdocumentshallbeprimafacieevidenceforallpurposesthatthereturn,statement,orotherdocumentwasactuallysignedbytheindividual.[L2009,c166,ptof§16]
Note
Applicabilityofsection. L2009,c166,§27.
§231-15.5 Disclosure by return preparers. (a)Anypersonwhoisengagedinthebusinessofpreparing,orprovidingservicesinconnectionwiththepreparationof,taxreturnsoranypersonwho,forcompensation,preparesanytaxreturnforanyotherpersonand,withoutthewrittenconsentorrequestofthepersonforwhomthereturnisprepared:
(1) Disclosesanyinformationfurnishedtothereturnpreparerorpersonprovidingservicesfororinconnectionwiththepreparationofanyreturn;or
(2) Usestheinformationforanypurposeotherthantoprepareorassistinpreparinganyreturn,shallbeguiltyofamisdemeanorand,uponconvictionthereof,shallbefinednotmorethan$1,000orimprisoned
notmorethanoneyear,orboth.(b) Exceptasotherwiseprovided,thissectionshallnotapplytoadisclosureofinformationifthedisclosureis
madepursuanttosection231-3oranorderofacourt.[L1973,c106,§1;amL1974,c128,§1;amL2017,c12,§33]
§231-15.6 Returns of corporations or partnerships. Thereturns,statements,oranswersrequiredunderchaptersofthelawundertitle14administeredbythedepartment,inthecaseofacorporation,shallbemadebyanyofficerofthe
CHAPTER231,Page17(UnofficialCompilation)
ADMINISTRATION OF TAXES §231-15.8
corporation,orinthecaseofapartnership,byanyoneofthepartners.[L1989,c14,§1(4);amL1991,c263,§6;amL1994,c16,§1;amL1995,c66,§6]
§231-15.7 Returns by fiduciaries. Thereturns,statements,oranswersrequiredunderchaptersofthelawundertitle14administeredbythedepartmentshallbemadebythepersonalrepresentative,trustee,guardian,orotherfiduciaryinsuchcapacityinanytaxationdistrictinwhichreturnsarerequired.[L1989,c14,§1(5);amL1991,c263,§7;amL1994,c16,§2;amL1995,c66,§7]
§231-15.8 Time for performing certain acts postponed by reason of service in combat zone. (a)Thissectionshallapplytostatetaxlawssetforthinthistitle14thatprovideforthefilingwiththedirectoroftaxationofareturnorstatementofthetaxorpaymentoftheamounttaxable.
(b) ThissectionappliestoanyindividualservinginthearmedforcesoftheUnitedStates,orservinginsupportof thearmed forces, inanareadesignatedby thePresidentof theUnitedStatesbyExecutiveOrderasacombatzoneforpurposesofsection112(withrespecttocertaincombatpayofmembersofthearmedforces)ofthefederalInternalRevenueCodeof1986,asamended,atanytimeduringtheperiodsdesignatedbythePresidentbyExecutiveOrderastheperiodsofcombatantactivitiesinthezoneforthepurposesofsection112,orwhendeployedoutsidetheUnitedStatesawayfromtheindividual’spermanentdutystationwhileparticipatinginanoperationdesignatedbytheSecretaryofDefenseasacontingencyoperation(asdefinedinsection101(a)(13)oftitle10,UnitedStatesCode)orwhichbecamesuchacontingencyoperationbyoperationoflaw,atanytimeduringtheperioddesignatedbythePresidentbyExecutiveOrderastheperiodofcombatantactivitiesinsuchzoneforpurposesofsuchsectionoratanytimeduringtheperiodofsuchcontingencyoperation,orhospitalizedasaresultofinjuryreceivedwhileservinginsuchzoneoroperationduringsuchtime.
Theperiodofserviceinthezoneoroperation,plustheperiodofcontinuousqualifiedhospitalizationattributabletotheinjury,andthenextonehundredeightydaysthereafter,shallbedisregardedindetermininginrespectofanytaxliability(includinganyinterest,penalty,additionalamount,oradditiontothetax)oftheindividual:
(1) Whetheranyofthefollowingactswasperformedwithinthetimeprescribedtherefore:(A) Filinganytaxreturn(exceptincometaxwithheldatsource);(B) Paymentofanytax(exceptincometaxwithheldatsource)oranyinstallmentthereoforanyother
liabilitytotheStateinrespectofsuchtax;(C) Filingataxappealpursuanttochapter232oranactiontorecovermoneyspaidunderprotestpursuant
tosection40-35(b)ifthepaymentwasfortaxliabilityimposedpursuanttothistitle14;(D) Allowanceofacreditorrefundofanytax;(E) Filingaclaimforcreditorrefundofanytax;(F) Bringingsuituponanyclaimforcreditorrefund;(G) Assessmentofanytax;(H) Givingormakinganynoticeordemandforthepaymentofanytaxorwithrespecttoanyliabilityto
theStateinrespectofanytax;(I) Collectionbythedirector,bylevyorotherwise,oftheamountofanyliabilityinrespectofanytax;(J) BringingsuitbytheStateoranyrepresentativeoftheStateonitsbehalfinrespectofanyliabilityin
respectofanytax;and(K) AnyotheractrequiredorpermittedunderthetaxorrevenuelawsoftheStatepursuanttorulesadopted
bythedirector.(2) Theamountofanycreditorrefund.
(c) Thissectionshallapplytothespouseofanyindividualentitledtothebenefitsofthissection.Theprecedingsentenceshallnotcausethissectiontoapplyforanyspouseforanytaxableyearbeginningmorethantwoyearsafterthedatedesignatedundersection112(withrespecttocertaincombatpayofmembersofthearmedforces)ofthefederalInternalRevenueCodeof1986,asamended,asthedateofterminationofcombatantactivitiesinacombatzone.
(d) Theperiodofserviceinadesignatedcombatzoneshallincludetheperiodduringwhichanindividualentitledtobenefitsunderthissectionisinamissingstatus,withinthemeaningofsection6013(f)(3)(withrespecttojointreturnwhereanindividualisinmissingstatus)ofthefederalInternalRevenueCodeof1986,asamended.
(e) Notwithstandingsubsection(b),anyactionorproceedingauthorizedbysection231-24(regardlessof thetaxable year forwhich the tax arose) aswell as any other action or proceeding authorized by law in connectiontherewith,maybetaken,begun,orprosecuted.Inanyothercaseinwhichthedirectordeterminesthatcollectionoftheamountofanyassessmentwouldbejeopardizedbydelay,subsection(b)shallnotoperatetostaycollectionoftheamountbylevyorotherwiseasauthorizedbylaw.Thereshallbeexcludedfromanyamountassessedorcollectedpursuanttothissubsectiontheamountofinterest,penalty,additionalamount,andadditiontothetax,ifany,inrespectoftheperioddisregardedundersubsection(b).Inanycasetowhichthissubsectionrelates,ifthedirectorisrequiredtogiveanynoticetoormakeanydemanduponanyperson,therequirementshallbedeemedtobesatisfiedifthenoticeordemandispreparedandsigned,inanycaseinwhichtheaddressofthepersonlastknowntothedirectorisin
§231-16 ADMINISTRATION OF TAXES
CHAPTER231,Page18(UnofficialCompilation)
anareaforwhichUnitedStatespostofficesunderinstructionsofthePostmasterGeneral,byreasonofthecombatantactivities,arenotacceptingmailfordeliveryatthetimethenoticeordemandissigned.Inthiscasethenoticeordemandshallbedeemedtohavebeengivenormadeuponthedateitissigned.
(f) TheassessmentorcollectionofanytaxorofanyliabilitytotheStateinrespectofanytaxoranyactionorproceedingbyoronbehalfof theState inconnection therewith,maybemade, taken,begun,orprosecuted inaccordancewithlaw,withoutregardtosubsection(b),unlesspriortotheassessment,collection,action,orproceedingitisascertainedthatthepersonconcernedisentitledtothebenefitsofsubsection(b).
(g) TreatmentofindividualsperformingDesertShieldservices:(1) AnyindividualwhoperformedDesertShieldservices(andthespouseoftheindividual)shallbeentitledto
thebenefitsofthissectioninthesamemannerasiftheserviceswereservicesreferredtoinsubsection(b).(2) Forpurposesof this subsection,“DesertShieldservices”meansanyservices in thearmedforcesof the
UnitedStatesorinsupportofthearmedforcesiftheseservicesareperformedintheareadesignatedbythePresidentasthe“PersianGulfDesertShieldarea”andtheservicesareperformedduringtheperiodbeginningonAugust2,1990,andendingonthedateonwhichanyportionofthePersianGulfDesertShieldareaisdesignatedbythePresidentasacombatzonepursuanttosection112(withrespecttocertaincombatpayofmembersofthearmedforces)ofthefederalInternalRevenueCodeof1986,asamended.
(h) Forpurposesofthissection,“qualifiedhospitalization”meansanyhospitalizationoutsidetheUnitedStatesandanyhospitalization inside theUnitedStates,except thatnotmore thanfiveyearsofhospitalization inside theUnitedStatesmaybetakenintoaccountunderthissubsection.Thefive-yearperiodofqualifiedhospitalizationinsidetheUnitedStatesshallnotapplyforpurposesofapplying thissectionwithrespect to thespouseofan individualentitledtothebenefitsofsubsection(b).
(i) Ifanindividualisentitledtothebenefitsofthissectionwithrespecttoanyreturnandthereturnistimelyfiled(determinedaftertheapplicationofsubsection(b))section231-23(d)(1)withrespecttothelimitationsforcomputinginterestshallnotapplyandinterestshallbepaidfromtheduedateofthereturnregardlessofwhenthereturnisfiled.
(j) Ifanindividualisentitledtothebenefitsofsubsection(b),then,withrespecttoclaiminganycreditpursuanttostatetaxlawssetforthinthistitle14andanygeneralcreditenactedpursuanttoArticleVII,section6,oftheStateConstitution,thelimitationperiodprescribedforsuchclaimsshallbedeterminedaftertheapplicationofsubsection(b).[L1991,c208,§2;amL2004,c89,§2]
Note
The2004amendmentappliestotaxableyearsbeginningafterDecember31,2003,exceptasotherwiseprovidedinthisAct.L2004,c89,§6.
Cross References
Civilreliefforstatemilitaryforces,seechapter657D.TaxInformationReleaseNo.2003-2,“ExtensionofDeadlinesandOtherTaxReliefforMembersoftheArmedForces,Reserves,andHawaii
NationalGuard”
§231-16 Copies of returns. Exceptasotherwiseprovidedbylaw,copiesofanytaxreturnfiledwiththedepartmentoftaxationshallbefurnishedtothetaxpayerfilingthereturnortothetaxpayer’srepresentativewhohaswrittenauthorizationtobeprovidedsuchcopiesuponthepaymentof$1perpageand$1foranycertificationthereofbythedepartment.[L1963,c24,§1;Supp,§115-21.5;HRS§231-16;amL1980,c212,§1;amimpL1984,c90,§1;gench1985]
Cross References:
Modificationoffees,see§92-28.
§231-17 Notices, how given. Unlessotherwiseprovided,everynotice,thegivingofwhichbythedepartmentoftaxationisrequiredorauthorized,shallbedeemedtohavebeengivenonthedatewhenthenoticewasmailed,properlyaddressedtotheaddresseeattheaddressee’slastknownaddressorplaceofbusiness.[L1953,c125,§2;RL1955,§115-22;amLSp19592d,c1,§16;HRS§231-17;amimpL1984,c90,§1;gench1985]
§231-18 Tax and other officials permitted to inspect returns; reciprocal provisions. Notwithstanding theprovisionsofanylawmakingitunlawfulforanyperson,officer,oremployeeoftheStatetomakeknowninformationimpartedbyanytaxreturnorpermitanytaxreturntobeseenorexaminedbyanyperson,itshallbelawfulto:
(1) PermitadulyaccreditedtaxofficialoftheUnitedStates,anystateorterritory,anycountyofthisState,ortheMultistateTaxCommissiontoinspectanytaxreturnofanytaxpayer;
(2) Furnishtoanofficial,commission,ortheauthorizedrepresentativethereofanabstractofthereturnorsupplythe official, commission, or the authorized representative thereofwith information concerning any itemcontainedinthereturnordisclosedbythereportofanyinvestigationofthereturnorofthesubjectmatterofthereturnfortaxpurposesonly;or
(3) Providetaxreturninformationtotheauditorpursuanttosection23-5(a).
CHAPTER231,Page19(UnofficialCompilation)
ADMINISTRATION OF TAXES [§231-19.5]
TheMultistateTaxCommissionmaymaketheinformationavailabletoadulyaccreditedtaxofficialoftheUnitedStates,anystateorterritory,ortheauthorizedrepresentativethereof,fortaxpurposesonly.[L1937,c109,§1;RL1945,§5124;RL1955,§115-23;HRS§231-18;amL1974,c139,§1;amimpL1984,c90,§1;gench1985;amLSp2005,c9,§3;amL2014,c136,§3]
§231-19 REPEALED. L1989,c14,§20.
[§231-19.3] Disclosure of letter rulings, et al. Notwithstandinganylawtothecontrary,anyandalladvicegivenorcommunicationsmadebythedepartment,includingbutnotlimitedtoletterrulingsanddeterminationletters,containingtaxadvice,shallbedisclosed to thepublicunderstandardsandproceduresundersection6110of thefederal InternalRevenueCodeof1986,asamended,theregulationsthereunder,andfederalcourtinterpretations.[L2009,c166,ptof§16]
Note
Applicabilityofsection. L2009,c166,§27.
[§231-19.5] Public inspection and copying of written opinions. (a) Written opinions shall be open to publicinspectionandcopyingasprovidedinthissection,notwithstandingsections235-116,236D-15,237-34,and237D-13andanyotherlawrestrictingdisclosureoftaxreturnsortaxreturninformationtothecontrary.Exceptasprovidedinsubsection(f),regardingthedisclosureofthetextofwrittenopinions,chapter92Fshallnotapplytotaxreturnsandtaxreturninformation.
Awrittenopinionmaynotbeusedorcitedasprecedentunlessotherwiseprovidedbydepartmentrules.(b) Forpurposesofthissection,theterm“writtenopinion”meansawrittenstatementissuedbythedepartment
toataxpayer,ortothetaxpayer’sauthorizedrepresentativeonbehalfofthetaxpayer,thatinterpretsandappliesanyprovisionintitle14administeredbythedepartmenttoaspecificsetofacts.Awrittenopiniongenerallyrecitestherelevantfacts,setsforththeapplicableprovisionsoflaw,andshowstheapplicationofthelawtothefacts.Awrittenopinionshallnotinclude:
(1) Anywrittencommunicationfromthedepartmenttoanypersoninconnectionwiththeexaminationorauditofanyperson’staxreturn,orinconnectionwithcollectionactivitiesrelatingtoanyperson’sdelinquenttaxliability;
(2) Aninformationletter,whichisawrittenstatementissuedbythedepartmentthatprovidesgeneralinformationbycallingattentiontoawell-establishedinterpretationorprincipleoftaxlaw,whetherornotitappliestoaspecificsetoffacts.Aninformationlettermaybeissuedwhenthenatureoftherequestfromthetaxpayersuggests that the taxpayer is seekinggeneral information,orwhere thedepartmentbelieves thatgeneralinformationwillassistthetaxpayer;or
(3) Adeterminationletter,whichisawrittenstatementissuedbythedepartmentthatappliesaninterpretationorprincipleof tax lawclearlyestablishedbystatute, rule,writtenopinion,orpublishedcourtdecision toaparticularsetoffacts.Adeterminationletterincludesthegrantordenialofconsent,permission,exemptionorregistration,oraroutinecorrespondenceinresponsetotaxpayerinquiries.Adeterminationlettershallbedesignatedassuch,andshallindicatetheclearlyestablishedinterpretationorprincipleappliedanditssource.
(c) Before making a written opinion available for public inspection and copying under subsection (a), thedepartmentwhere possible shall segregate from the opinion trade secrets or other confidential, commercial, andfinancial information, and identifying details such as the name, address, and social security or tax identificationnumberofthepersontowhomthewrittenopinionpertainsandofanyotherpersonidentifiedinthewrittenopinion.Segregatedtextshallnotbedisclosedunderthissection.
(d) Uponissuanceofanywrittenopinion,thedepartmentshallmailanoticeofintentiontodisclosetheopiniontogetherwithacopyoftheopinionshowingthetextthedepartmentproposestosegregatetoanypersontowhomthewrittenopinionpertains(oranyknownsuccessorininterest,personalrepresentative,orotherpersonauthorizedbylawtoactfororonbehalfofsuchperson).
(e) Exceptasotherwiseprovidedinsubsection(h),awrittenopinion,assegregatedundersubsection(c),shallbeopentopublicinspectionandcopyingnoearlierthanseventy-fivedays,andnolaterthanninetydays,afterthedepartment’snoticeofintentiontodiscloseismailed.Atthewrittenrequestofapersontowhomthewrittenopinionpertains(orasuccessorininterest,personalrepresentative,orotherpersonauthorizedbylawtoactfororonbehalfoftheperson),theprecedingperiodmaybeextended,butthedepartmentshallmakethewrittenopinionavailablefor inspectionandcopyingno later thanonehundredeightydaysafter thenotice todisclose ismailed, includingextensions.
(f) Thedepartment’sdecisionastowhatconstitutesawrittenopinionisfinal.Adecisionconcerningthedisclosureofthetextofwrittenopinionsmaybecontested,butonlyinthemannerandwithinthetimesetforthinthissubsection.Anypersonwhomeetstherequirementsofparagraph(1)or(2)andwhohasexhaustedtheadministrativeremediesasprescribedbyrulesadoptedbythedepartmentmayappealwithinsixtydaysofthedateofthedepartment’sdecisiontotheofficeofinformationpracticesinaccordancewithproceduresestablishedbytheofficeofinformationpractices
18-231-19.5
§231-20 ADMINISTRATION OF TAXES
CHAPTER231,Page20(UnofficialCompilation)
undersections92F-15.5and92F-42(1).Theofficeofinformationpracticesmayexaminethewrittenopinionatissue,incamera,toassistindeterminingwhetherit,oranypartofit,maybewithheld.Indeterminingwhetherinformationconstitutes a trade secret or other confidential, commercial, and financial information, the office of informationpracticesmay consider and apply, in addition to any other relevant sources, interpretations of those terms underchapter92F.
Onlythefollowingpersonsmaycontestadecisionofthedepartmentconcerningthedisclosureofwrittenopinions:(1) Anyperson:
(A) Towhomawrittenopinionpertains(orasuccessorininterest,personalrepresentative,orotherpersonauthorizedbylawtoactfororonbehalfoftheperson);
(B) Whohasamaterialinterestinmaintainingtheconfidentialityofanywrittenopinionorportionthereof;and
(C) Who disagreeswith a decision by the department not to segregate information from anywrittenopinion;or
(2) Anypersonwhoisaggrievedbythedepartment’sdenialofarequesttoinspectandcopyanywrittenopinionorportionthereof.
Anypersonaggrievedbyadecisionoftheofficeofinformationpracticesmayappealthedecisiontothecircuitcourtofthefirstjudicialcircuit,orofthejudicialcircuitinwhichtherequestforthewrittenopinionismadeorinwhichacopyofthewrittenopinionismaintainedbythedepartment.Theappealshallbefiledwithinthirtydaysafterthedateofthedecisionoftheofficeofinformationpractices.Thecircuitcourtshallhearthematterdenovo.Opinionsandrulingoftheofficeofinformationpracticesshallbeadmissible.Thecircuitcourtmayexaminethewrittenopinionatissue,incamera,toassistindeterminingwhetherit,oranypartofit,maybewithheld.
Any person advocating nondisclosure or segregation under paragraph (1) shall have the burden of proof andpersuasion,butanypersonunderparagraph(2)needonlyestablishthedenialofarequestandthedepartmentshallhavetheburdenofproofandpersuasiontojustifythedenialoftherequesttoinspectandcopy.
(g) Exceptforcasesthecircuitcourtconsidersofgreaterimportance,proceedingsbeforethecourt,asauthorizedbythissection,andappealstherefrom,shallbeassignedforhearingandtrialorforargumentattheearliestpracticabledateandexpeditedineveryway.
(h) Uponappeal to theofficeof informationpracticesoracourtunder subsection (f), thewrittenopinionatissueshallnotbemadeavailableforpublicinspectionandcopyingpendingthefinaldecisioninthecase.Ifthefinaldecisioninthecasedeterminesthatthewrittenopinionsubjecttotheappealshallbeopenandavailabletopublicinspectionandcopying,orthatconfidentialoridentifyinginformationmustbesegregated,thenthedepartmentshallmake thewrittenopinion available forpublic inspection and copyingnot later than thirtydays after thedecisionbecomesfinal.Theofficeofinformationpracticesorthecourtmayextendthisthirty-dayperiodforsuchtimeastheofficeofinformationpracticesorthecourtfindsnecessarytoallowthedepartmenttocomplywithitsdecision.
(i) The department shall compile yearly an index in such form as the department determines of allwrittenopinionsissuedduringtheprecedingcalendaryear.Copiesoftheindexshallbefurnisheduponthepaymentof50centsapage.Copiesofwrittenopinionsshallbefurnisheduponthepaymentof$1apage.
(j) Exceptasprovidedinthissection,writtenopinionsshallremainsubjecttoalllawsgoverningtaxreturnsandtaxreturninformationandthedepartmentshallnotberequiredbyanycourttodiscloseanywrittenopinionexceptasspecificallyauthorizedbytitle14.
(k) Noofficeroremployeeofthedepartmentshallbeinviolationofanylawprohibitingthedisclosureoftaxreturnsortaxreturninformation,orinviolationofanyotherlawrestrictingthedisclosureofinformation,duetothereleaseofanywrittenopinionpursuanttothissection.
(l) Thedepartmentmayadoptrulespursuanttochapter91toimplementthissection.[L1994,c115,§2]Cross Reference
TaxInformationReleaseNo.2009-01,“ProceduralGuidelinesforRequestingLetterRulings”
Law Journals and Reviews
2013LawandAdministrativeRulesGoverningAppealProceduresofHawaii’sOfficeofInformationPractices.36UHL.Rev.271(2014).
§231-20 Evidence, tax records as. Inrespectofeverytaxtheadministrationofwhichiswithinthescopeofthedepartmentoftaxation’sdutiesandexceptasotherwisespecificallyprovidedinthelawimposingthetax,thenoticesofassessments,recordsofassessments,andlistsorotherrecordsofpaymentsandamountsunpaid,preparedbyorundertheauthorityofthedepartment,orcopiesthereof,shallbeprimafacieproofoftheassessmentofthepropertyorpersonassessed,theamountdueandunpaid,andthedelinquencyinpayment,andthatallrequirementsoflawinrelationtheretohavebeencompliedwith.[L19322d,c40,§4;RL1935,§1911;RL1945,§5127;amL1953,c125,§3;RL1955,§115-25;amLSp19592d,c1,§16;HRS§231-20]
§231-21 Due date on Saturday, Sunday, or holiday. WhentheduedateforanyremittanceordocumentrequiredbyanylawimposingataxfallsonaSaturday,Sunday,orlegalholiday,theremittanceordocumentshallnotbedueuntil
CHAPTER231,Page21(UnofficialCompilation)
ADMINISTRATION OF TAXES §231-23
thenextsucceedingdaywhichisnotaSaturday,Sunday,orlegalholiday.[L1965,c133,§1;Supp,§115-25.5;HRS§231-21]
[§231-21.5] Effect of civil union. AllprovisionsoftheInternalRevenueCodereferredtointhischapterthatapplytoahusbandandwife,spouses,orpersoninalegalmaritalrelationshipshallbedeemedtoapplyinthischaptertopartnersinacivilunionwiththesameforceandeffectasiftheywere“husbandandwife”,“spouses”,orothertermsthatdescribepersonsinalegalmaritalrelationship.[L2011,c1,§3]
Note
SectionappliestotaxableyearsbeginningafterDecember31,2011.L2011,c1,§10.
Attorney General Opinions
Civilunionpartnershaveallthesamerights,benefits,protections,andresponsibilitiesunderthelawasmarriedcoupleswhoareoftheoppositegender;civilunionpartnershave thesame taxfilingstatusoptionsasmarriedcoupleswhoareof theoppositegender forHawaii income taxpurposesfortaxableyearsbeginningafterDecember31,2011.Att.Gen.Op.11-2.
ADJUSTMENTS AND REFUNDS
§231-22 REPEALED. L1989,c14,§21.
§231-23 Adjustments and refunds. (a) This subsection shall apply to all taxes except those collected underchapter247andthosecollectedunderachaptercontainingaprovisionforcreditandrefundoftheamountoftaxpaidinexcessofthetaximposedbysuchchapter.Astoalltaxpaymentsforwhicharefundorcreditisnotauthorizedbythissubsection(includingwithoutprejudicetothegeneralityofthecasesofunconstitutionalityhereinaftermentionedin(1)(C))theremediesprovidedbyappealorundersection40-35areexclusive.
(1) Iftheamountalreadypaidexceedsthatwhichshouldhavebeenpaidunderthechapterimposingaparticulartax,oriftheamountalreadypaidresultsinduplicationofpaymentinwholeorinpart,theexcesssopaidshallberefundedinthemannerprovidedinsubsection(c)subjecthowevertothefollowinglimitations:(A) Norefundshallbemadeunlessanapplicationfortherefundshallhavebeenmadewithinfiveyears
aftertheamounttoberefundedwaspaid;(B) Norecoursemaybehadexceptundersection40-35orbyappealforrefundsoftaxespaidpursuantto
anassessmentbythedirectoroftaxation,providedthatiftheassessmentbythedirectorshallcontainclericalerrors,transpositionoffigures,typographicalerrors,anderrorsincalculationorifthereshallbeanillegalorerroneousassessment,theusualrefundproceduresshallapply;or
(C) Norefundoroverpaymentcreditshallbemadeunlesstheoriginalpaymentofthetaxwasduetothelawhavingbeeninterpretedorappliedinrespectofthetaxpayerconcerneddifferentlythaninrespectoftaxpayersgenerally.
(2) Inanycasewhereataxpayerisentitledtoarefund,thetaxpayer,atthetaxpayer’selection,mayapplytheamountoftherefundasanoverpaymentcredittotaxessubsequentlyaccruingunderthesamechapterasthatunderwhichtherefundableamountwascollected.
(b) Thissubsectionshallapplytothetaxescollectedunderchapter247.Theremayberefundedinthemannerprovidedinsubsection(c)suchconveyancetaxashasbeenerroneouslyor
unjustlypaid.(c) Thissubsectionshallapplytoalltaxes.
(1) Allrefundsshallbepaidonlyuponaformtobeknownasa“refundvoucher”preparedbythecollector.Therefundvouchersshallsetforthallthedetailsofeachtransaction,shallbeapprovedbythedirector,andshallbe forwarded to the comptroller from time to time.The comptroller shall issue awarrant, in the formprescribedbysection40-52, for thepaymentofanysuch refundoutof the tax reserve fundhereinaftercreated; provided that if the person entitled to the refund is delinquent in the payment of any tax, thecomptroller,upondemandofthecollectorandafternoticetothedelinquenttaxpayer,shallwithholdtheamountofthedelinquenttaxes,togetherwithpenaltiesandinterestthereon,fromtheamountoftherefundandpaythesametothecollector.
(2) Thereisherebyappropriated,fromthegeneralrevenuesoftheStatenototherwiseappropriated,thesumof$25,000whichshallbesetasideasatrustfundtobeknownasthetaxreservefund.Allrefundsoftaxescollectedbythedepartmentunderchaptersofthelawundertitle14administeredbythedepartmentshallbemadeoutofthetaxreservefund.Thedirectoroftaxation,fromtimetotime,maydeposittaxescollectedunderchaptersofthelawundertitle14administeredbythedepartmentinthestatetreasurytothecreditofthetaxreservefundsothattheremaybemaintainedatalltimesafundnotexceeding$25,000.Theamountsdepositedshallbemadefromthetaxeswithrespecttowhichaparticularrefundismade.
(d) Thissubsectionshallapplytoarefundforanoverpaymentofatax:
§231-24 ADMINISTRATION OF TAXES
CHAPTER231,Page22(UnofficialCompilation)
(1) Ifthetaxreturnasfiledbyataxpayershowstheamountalreadypaidexceedstheamountdeterminedtobethecorrectamountofthetaxdue,whetherornotthetaxwaspaidbyinstallments,andthetaxpayerrequestsarefundoftheoverpayment,theamountoftheoverpaymentshallberefundedinthemannerprovidedinsubsection(c)withinninetydaysoftheduedateofthetaxreturnorthedatethetaxreturnisfiled,whicheverislater;providedthatinterestontheoverpaymentshallbepaid:(A) Tothetaxpayeriftheamountoverpaidisnotrefundedwithinninetydays;and(B) Attherateofone-thirdofonepercentoftherefundamountforeachmonthorfractionthereofafter
theninety-dayperiod,untiltherefundandanyapplicableinterestispaidtothetaxpayer;(2) Ifanyoverpaymentoftaxesresultsorarisesfrom:
(A) Thetaxpayerfilinganamendedreturn;or(B) Adeterminationmadebythedirector;andtheoverpaymentisnotshownontheoriginalreturnasfiled
bythetaxpayer,theamountoverpaidshallberefundedtothetaxpayerwithinninetydaysfromtheduedateoftheoriginalreturnorthedatetheoverpaymentisdiscoveredundersubparagraphs(A)or(B),whicheveroccurredlater;providedthatinterestshallbepaidtothetaxpayeriftheamountoverpaidisnotrefundedwithinninetydaysandattherateofone-thirdofonepercentoftherefundamountforeachmonthorfractionthereofaftertheninety-dayperiod,untiltherefundandanyapplicableinterestispaidtothetaxpayer;
(3) Forpurposesofanetincometaxreturn,ifanyoverpaymentofanytaxesresultsfromacarrybackofanetoperatingloss,theoverpaymentshallbedeemedtohavebeenmadeatthecloseofthetaxableyearinwhichthenetoperatinglossarises.Totheextentthatthecarrybackofnetoperatinglossresultsinreducingtheamountofunderpaymentoftaxesforpriortaxableyearoryears,interestthatwouldbechargeablebecauseoftheunderpaymentshallnotbeapplicablewithrespecttothatamountoramountsthatarecarriedback;and
(4) Inthecaseofcredit,interestshallbepaidinthesamemannerasparagraph(1).[L1939,c213,§1;RL1945,§5130;amL1949,c205,§1;RL1955,§115-28;amL1957,c152,§1;amLSp19592d,c1,§16;amL1963,c45,§1(c);amL1966,c10,§3;amL1967,c134,§2;HRS§231-23;amL1968,c32,§3;amL1971,c10,§1;amL1972,c200,§5;amL1974,c12,§1;amL1983,c217,§6;amimpL1984,c90,§1;gench1985;amL1985,c16,§5;amL1986,c340,§5;amL1989,c14,§4(4);amL1991,c136,§1andc263,§8;amL1992,c102,§1;amL1995,c66,§8;amL2003,c135,§2;amL2009,c40,§1;amL2010,c171,§1]
Note
The2010amendmentappliestotaxableyearsbeginningafterDecember31,2009.L2010,c171,§4.
Cross Reference
TaxInformationReleaseNo.2002-1,“AuditofNetIncome,GeneralExcise,andUseTaxReturns;AppealRights;ClaimsforRefund;andPaymenttoStateUnderProtest”
Case Notes
Mentionedwithrespecttoapplicableperiodforbringingactionforrefundofgeneralexcisetaxes.53H.1,486P.2d396.ProhibitsoriginalactionsbyinsurerstorecovermoneyspaidtoStatewithoutprotestunder§431-318.5H.App.122,678P.2d1101.
§231-24 Jeopardy assessments, etc. (a)IfthedepartmentoftaxationdeterminesthatataxpayerdesignstodepartquicklyfromtheState,ortoremovethetaxpayer’spropertytherefrom,ortoconcealthetaxpayer’sselforthetaxpayer’spropertytherein,ortodoanyotheracttendingtoprejudiceorjeopardize,inwholeorinpart,theassessmentorcollectionofanytaxtheadministrationofwhichiswithinthescopeofthedepartment’sduties,thedepartmentshallcausenoticeofthedeterminationtobegiventothetaxpayeraddressedtothetaxpayer’slastknownaddressorplaceofbusiness.Thedeterminationbythedepartmentshallbeforallpurposespresumptiveevidenceofthetaxpayer’sdesign.
(b) Uponmakingthedetermination,thedepartmentshallimmediatelyassess,insofarasnottheretoforeassessed,andshallcollect,thetaxandallpenaltiesandinterestprovidedforbylaw.Itshallnotbeadefensetoanyassessmentmadeunderthissection,ortoanydistraintorotherproceedingsforcollectioninitiatedunderthissection,thatthetaxableyearorothertaxperiodhasnotterminated,orthatthetimeotherwiseallowedbylawforfilingareturnhasnotexpired,orthatthenoticesotherwiserequiredbylawformakinganassessmenthavenotbeengiven,orthatthetimeotherwiseallowedbylawfortakingorprosecutinganappealorforpayingthetaxhasnotexpired.
(c) Nothinginthissectionshallprejudicetherightofanytaxpayertohavethemoneyscollectedheldapartorinaspecialfundpendingthepursuitofanyremedythetaxpayermayhavefortherecoverythereof,asotherwiseprovidedbylaw.
(d) Notwithstandingthissection,thecollectionofthewholeoranypartofthetaxmaybestayedbyfilingwiththedepartmentabondinsuchamount,andwithsuchsuretiesasthedepartmentdeemsnecessary,togetherwithsuchfurthersecurityasthedepartmentmayfromtimetotimerequire,conditionedforthepaymentoftheamountcollectionofwhichisstayedatthetimeatwhich,butforthissection,theamountwouldbedue.[L1953,c125,ptof§4;RL1955,§115-29;amLSp19592d,c1,§16;HRS§231-24;amimpL1984,c90,§1;gench1985]
CHAPTER231,Page23(UnofficialCompilation)
ADMINISTRATION OF TAXES §231-25
Cross Reference
TaxInformationReleaseNo.2002-1,“AuditofNetIncome,GeneralExcise,andUseTaxReturns;AppealRights;ClaimsforRefund;andPaymenttoStateUnderProtest”
COLLECTION PROCEEDINGS
§231-25 Payment, enforcement of by assumpsit action or by levy and distraint upon all property and rights to property. (a)Ifanytaxbeunpaidwhendue,thedirectoroftaxationmayproceedtoenforcethepaymentofthesame,withallpenalties,asfollows:
(1) Byactioninassumpsit,inthedirector’sownname,onbehalfoftheState,fortheamountoftaxesandcosts,or, if the tax is delinquent, for the amount of taxes, costs, penalties, and interest, in any district court,irrespectiveoftheamountclaimed.Executionmayissueuponanyjudgmentrenderedinanysuchactionwhichmaybesatisfiedoutofanyrealorpersonalpropertyofthedefendant;and
(2) Bylevyuponallpropertyandrightstoproperty(exceptsuchpropertyasisexemptundersubsection(b)(6))belongingtosuchtaxpayeroronwhichthereisalien,asthedirectormaydeemsufficienttosatisfythepaymentoftaxesdue,penaltiesandinterestifany,andthecostsandexpensesofthelevy.
(b) Thefollowingrulesareapplicabletothelevyasprovidedforinsubsection(a)(2):(1) Seizureandsaleofproperty.Theterm“levy”asusedinthissectionincludesthepowerofdistraintand
seizurebyanymeans.Exceptasprovidedinparagraph(2),alevyshallextendonlytopropertypossessedandobligationsexistingatthetimethereof.Inanycaseinwhichthedirectororthedirector’srepresentativemaylevyuponpropertyorrightstoproperty,thedirectormayseizeandsellthepropertyorrightstoproperty(whetherrealorpersonal,tangibleorintangible);
(2) Theeffectofalevyonsalaryorwagespayabletoorreceivedbyataxpayershallbecontinuousfromthedatethelevyisfirstmadeuntilthelevyisreleased.Thelevyonsalaryorwagesshallattachtotwenty-fivepercentofanysalaryorwagespayableorreceivedbythetaxpayer;
(3) Successiveseizures.WheneveranypropertyorrightstopropertyuponwhichlevyhasbeenmadeisnotsufficienttosatisfytheclaimoftheStateforwhichlevyismade,thedirectororthedirector’srepresentative,thereafter,andasoftenasmaybenecessary,mayproceedtolevyinlikemanneruponanyotherpropertyliabletolevyofthepersonagainstwhomaclaimexists,untiltheamountduefromtheperson,togetherwithallexpenses,isfullypaid;
(4) Surrenderofpropertysubjecttolevy.(A) Requirement.Anypersoninpossessionof(orobligatedwithrespectto)propertyorrightstoproperty
subject to levy uponwhich a levy has beenmade, upon demand of the director or the director’srepresentative,shallsurrenderthepropertyorrights(ordischargetheobligation)tothedirectororthedirector’srepresentative,exceptthatpartofthepropertyorrightsasis,atthetimeofthedemand,subjecttoanattachmentorexecutionunderanyjudicialprocess;
(B) Extentofpersonalliability.Anypersonwhofailsorrefusestosurrenderpropertyorrightstoproperty,subject to levy,upondemandby thedirectoror thedirector’s representative,shallbe liable in theperson’sownpersonandestatetotheStateinasumequaltothevalueofthepropertyorrightsnotsosurrendered,butnotexceedingtheamountoftaxesforthecollectionofwhichthelevyhasbeenmade,togetherwithcostsandinterestonthesumattherateofeightpercentayearfromthedateofthelevy.Anyamount(otherthancosts)recoveredunderthissubparagraphshallbecreditedagainstthetaxliabilityforthecollectionofwhichthelevywasmade;
(C) Penaltyforviolation.Inadditiontothepersonalliabilityimposedbysubparagraph(B),ifanypersonrequiredtosurrenderpropertyorrightstopropertyfailsorrefusestosurrenderthepropertyorrightstopropertywithoutreasonablecause,thepersonshallbeliableforapenaltyequaltofiftypercentoftheamountrecoverableundersubparagraph(B).Nopartofthepenaltyshallbecreditedagainstthetaxliabilityforthecollectionofwhichthelevywasmade;
(D) Effectofhonoringlevy.Anypersoninpossessionof(orobligatedwithrespectto)propertyorrightstopropertysubjecttolevyuponwhichalevyhasbeenmadewho,upondemandbythedirectororthedirector’srepresentative,surrendersthepropertyorrightstoproperty(ordischargestheobligation)tothedirectororthedirector’srepresentative(orwhopaysaliabilityundersubparagraph(B))shallbedischargedfromanyobligationorliabilitytothedelinquenttaxpayerandanyotherpersonwithrespecttothepropertyorrightstopropertyarisingfromthesurrenderorpayment;and
(E) Persondefined.Theterm“person,”asusedinsubparagraph(A),includesanofficeroremployeeofacorporationoramemberoremployeeofapartnership,whoasanofficer,employee,ormemberisunderadutytosurrenderthepropertyorrightstoproperty,ortodischargetheobligation;
(5) Productionofbooks.Ifalevyhasbeenmadeorisabouttobemadeonanyproperty,orrightstoproperty,anypersonhavingcustodyorcontrolofbooksorrecords,containingevidenceorstatementsrelatingtothe
§231-25.5 ADMINISTRATION OF TAXES
CHAPTER231,Page24(UnofficialCompilation)
propertyorrightstopropertysubjecttolevy,upondemandofthedirectororthedirector’srepresentative,shallexhibitthosebooksorrecordstothedirectororthedirector’srepresentative;
(6) Propertyexemptfromlevy.NotwithstandinganyotherlawoftheState,nopropertyorrightstopropertyshallbeexemptfromlevyotherthanthefollowing:(A) Wearingapparelandschoolbooks.Thoseitemsofwearingapparelandthoseschoolbooksthatare
necessaryforthetaxpayerorformembersofthetaxpayer’sfamily;(B) Fuel,provisions,furniture,andpersonaleffects.Ifthetaxpayeristheheadofafamily,somuchof
thefuel,provisions,furniture,andpersonaleffectsinthetaxpayer’shousehold,andofthearmsforpersonaluse,livestock,andpoultryofthetaxpayer,asdoesnotexceed$500invalue;
(C) Booksandtoolsofatrade,business,orprofession.Somanyofthebooksandtoolsnecessaryforthetrade,business,orprofessionofthetaxpayerasdonotexceedintheaggregate$250invalue;
(D) Unemployment benefits. Any amount payable to an individual with respect to the individual’sunemployment (including any portion thereof payable with respect to dependents) under anunemploymentcompensationlawoftheUnitedStatesortheState;and
(E) Undeliveredmail.Mail,addressedtoanyperson,whichhasnotbeendeliveredtotheaddressee;and(7) Saleoftheseizedproperty.
(A) Noticeofsale.Thedirectorshall takepossessionandkeeptheleviedpropertyuntil thesale.Aftertakingpossession,thedirectorshallsellthetaxpayer’sinterestinthepropertyatpublicauctionafterfirstgivingfifteendays’publicnoticeofthetimeandplaceofthesaleinthedistrict,andbypostingthenoticeinatleastthreepublicplacesinthedistrictwherethesaleistobeheld;
(B) Assistanceinseizureandsale.Thedirectormayrequiretheassistanceofanysherifforauthorizedpoliceofficerofanycountytoaidintheseizureandsaleoftheleviedproperty.Thedirectormayfurtherretaintheservicesofanypersoncompetentandqualifiedtoaidinthesaleoftheleviedproperty,providedthattheconsentofthedelinquenttaxpayerisobtained.Anysherifforthepersonsoretainedbythedirectorshallbepaidafairandreasonablefeebutinnocaseshallthefeeexceedtenpercentofthegrossproceedsofthesale.Anypersonotherthanasheriffsoretainedbythedirectortoassistthedirectormayberequiredtofurnishbondinanamounttobedeterminedbythedirector.Thefeesandthecostofthebondshallconstituteapartofthecostsandexpensesofthelevy;
(C) Timeandplaceofsale.Thesaleshalltakeplaceandbecompletedwithinonehundredeightydaysafterseizure;providedthatthetimeperiodsethereinshallbetolledduringthependencyofanyactioncommencedbyanypersonrelatingtotheseizedpropertyuntilafinalorderisrenderedinthataction,whetherbystipulationwiththepersonorbycourtorder,orupontheexpirationofanyextendedtimeasmaybeagreedupon;
(D) Mannerandconditionsofsale.Sufficientpropertyshallbesoldtopayalltaxes,penalties,interest,costs,andexpenses.Onpaymentofthepricebidforanypropertysold,thedeliverythereofwithabillofsalefromthedirectorshallvestthetitleofthepropertyinthepurchaser.Nochargeshallbemadeforthebillofsale.Allsurplusreceiveduponanysaleafterthepaymentofthetaxes,penalties,interest,costs,andexpenses,shallbereturnedtotheownerofthepropertysold,anduntilclaimedshallbedepositedwiththedepartmentsubjecttotheorderoftheowner.Anyunsoldportionofthepropertyseizedmaybeleftattheplaceofsaleattheriskoftheowner;and
(E) Redemptionofproperty. If theownerof thepropertyseizeddesires to retainor regainpossessionthereof,theownermaygiveasufficientbondwithsuretytoproducethepropertyatthetimeandplaceofsale,orpayalltaxes,penalties,interest,costs,andexpenses.[L19322d,c40,§69;RL1935,§1963;RL1945,§5131;amL1949,c311,§1(b);amL1955,c246,§1;RL1955,§115-30;amLSp19592d,c1,§16;amL1967,c37,§1;HRS§231-25;amL1972,c83,§2;gench1985;amL1989,c211,§10;amL1990,c281,§11;amL1998,c2,§66;amL2002,c153,§3;amL2013,c44,§1]
Rules of court
Applicabilityofrules,seeHRCPrule81(b)(8);DRCPrule81(b)(4).
Case Notes
Distressofgoods.2H.241;2H.259.Enforcingtaxlienbyforeclosureinequity.18H.170.Pre-hearingsummaryconstraintisconstitutional.57H.1,548P.2d246.
COLLECTION PROCEEDINGS
§231-25.5 Cost recovery fees for the administration of taxes. (a)Thedepartmentmaychargeandaddafeetoanyamountdueinaccordancewiththedepartment’sdutiesandpowersundersection231-3for:
18-231-25.5
CHAPTER231,Page25(UnofficialCompilation)
ADMINISTRATION OF TAXES §231-27
(1) Anycostorexpenseincurredbythedepartmentasaresultofanyactiontakentoenforcethecollectionoftaxes administered under title 14, including levy, seizure, foreclosure, and other similar acts, after thedepartmenthasmailedwrittennoticedemandingpaymentandadvisingthatcontinuedfailure topaytheamountduemayresultincollectionaction,includingtheimpositionoffeespursuanttothissection.Anysuchfeechargedagainstthetaxpayerforcosts,fees,andothercharges,mayincludeattorneys’fees,collectionagencyfees,courtfilingfees,recordingfees,andsimilarfees,incurredbythedepartmentinconnectionwiththecollectionaction;
(2) Department-sponsoredseminarsorworkshops,includingeducationalmaterialsinvariousmediaformats;(3) Researchandreferencematerialspublishedonmagneticmedia,CD-ROM,orothermachine-readableform;
and(4) There-issuanceofrefundcheckstotaxpayers;providedthatnofeeshallbechargediftheamountofthe
refundcheckislessthanthefee.(b) Thedirectormaywaiveanyfeeimposedbythedepartmentundertitle14incasesofhardshipasdetermined
bythedirector.(c) Interestshallnotaccruewithrespecttoanyfeechargedunderthissection.(d) Notwithstandinganyotherprovisionsprovidedundertitle14,wheneverataxpayermakesapartialpayment
ofaparticulardelinquentamount,theamountreceivedbythedepartmentshallfirstbecreditedtothefeesprovidedbythissection,intheorderthatthefeeswerecharged.
(e) The department shall prescribe the procedures relating to the charging of fees, the waiver of fees, thedocumentsandservicesforwhichthefeesmaybecharged,andtheamountofthefees,increasingordecreasingthefeesasnecessary,pursuanttorulesadoptedunderchapter91.[L1995,c14,§1;amL1996,c131,§1]
§231-26 Extraterritorial enforcement of tax laws. (a)ThecourtsoftheStateshallrecognizeandenforcetheliabilityfortaxeslawfullyimposedbythelawsofanystatewhichextendsalikecomity,whetherbystatuteorcaselaw,inrespectoftheliabilityfortaxeslawfullyimposedbythelawsofthisState.Shouldaclaimbemadeinthestatecourtsfortaxesbyastatewhosehighestcourthasnotyetpasseduponthequestionofenforcingextraterritorialrevenuelaws,thecourtsoftheStateshallenforcesuchclaimsuntilsuchtimeasthehighestcourtofthatstateprohibitstheenforcementofextraterritorialrevenuelaws.
(b) AnyandallauthorizedofficialsofastateentitledtoenforceitstaxclaimswithinthestatecourtsmaybringactioninthecourtsofthisStateforthecollectionofthetaxes.Thecertificateofthesecretaryofstateofsuchstate,orofthenearestequivalentofficial,thatsuchofficialshavetheauthoritytocollectthetaxessoughttobecollectedbytheactionshallbeconclusiveproofofthatauthority.
(c) TheattorneygeneralmaybringactioninthenameoftheState,orauthorizeactiontobebroughtinthenameoftheState,inthecourtsofanystatetocollecttaxeslegallyduetheState.
(d) The term “state” as used hereinmeans any state, territory, or possession of theUnitedStates.The term“taxes”ashereinemployedshallinclude:
(1) Anyandalltaxassessmentslawfullymade,whethertheybebaseduponareturnorotherdisclosureofthetaxpayer,upontheinformationandbeliefofthetaxingauthority,orotherwise;
(2) Anyandallpenaltieslawfullyimposedpursuanttoataxingstatute;and(3) Interestchargeslawfullyaddedtothetaxliabilitywhichconstitutesthesubjectoftheaction.
(e) InanycasewhereapersonowingdelinquenttaxestotheStatehasmovedfromtheStatetoanotherstateorcountry,issituatedinanotherstateorcountry,resides,ormaintainsaplaceofbusinessinanotherstateorcountry,thedirector,notwithstandinganyotherlawtothecontrary,bycontract,mayselectandretainbondedcollectionagencies,licensedattorneys,accountants,andauditorsorotherpersonstopursueandcollecttheclaimsoftheState.
(f) Attheoptionofthedirector,anycontractenteredintounderthissectionmayprovideforcompensationon:(1) Afixedpricebasis;(2) Anhourlyratebasiswithorwithoutafixedcap;or(3) Acontingentfeearrangementtobespecifiedinthecontract;providedthatthisparagraphshallnotapplyto
auditorsandaccountants.AllcompensationshallbepayableoutofthetaxesrecoveredfortheStateorfromthedebtorinaccordancewiththetermsof,anduptotheamountsauthorizedbythecontract,unlessotherwisedeterminedbythedirector.
(g) Suitsbroughtuponjudgmentsshallbegovernedbythelawrelatingthereto,andnotbythissection.[L1949,c311,§1(a);amL1953,c67,§1;RL1955,§115-31;amLSp19592d,c1,§16;HRS§231-26;amimpL1984,c90,§1;gench1985;amL1997,c253,§2;amL1999,c68,§2]
§231-27 Partial payment of taxes. Wheneverataxpayermakesapartialpaymentofaparticularassessmentoftaxes,theamountreceivedbythedepartmentoftaxationshallfirstbecreditedtointerest,thentopenalties,andthentoprincipal.[L1949,c312,§1;RL1955,§115-32;amLSp19592d,c1,§16;HRS§231-27]
§231-28 ADMINISTRATION OF TAXES
CHAPTER231,Page26(UnofficialCompilation)
§231-28 Tax clearance before procuring liquor licenses. Noliquorlicensesshallbeissuedorrenewedunlesstheapplicantthereforshallpresenttotheissuingagency,acertificatesignedbythedirectoroftaxation,showingthattheapplicantdoesnotowetheStateanydelinquenttaxes,penalties,orinterest;orthattheapplicanthasenteredintoandiscomplyingwithaninstallmentplanagreementwiththedepartmentoftaxationforthepaymentofdelinquenttaxesininstallments.[L1949,c352,§1;RL1955,§115-33;amL1963,c82,§1;amL1964,c6,§2;HRS§231-28;amL2009,c184,§1]
Attorney General Opinions
Taxpayer’sagreementtopayitsdelinquenttaxes,pursuanttoapaymentschedule,doesnotsatisfytherequirementsforliquorlicenserenewalunderthissectionand§281-45.At.Gen.Op.95-1.
Hawaii Legal Reporter Citations
Automaticstayinbankruptcy.81-1HLR810555.
§231-29 Joinder of party defendant when State claims tax liens. Thedirectoroftaxation(orinthecaseofalienunderchapter383,thedirectoroflaborandindustrialrelations)maybenamedapartydefendantinanycivilactioninanystatecourtofcompetentjurisdictionorinthedistrictcourtoftheUnitedStatesforthedistrictofHawaii,toquiettitletoorfortheforeclosureofamortgageorotherlienuponrealorpersonalpropertyonwhichtheStatehasorclaimsataxlienunderchaptersofthelawundertitle14administeredbythedepartmentorchapter383;providedthatthejurisdictionconferredbythissectionshallbelimitedandshallnotoperateasaconsentbytheStatetobesuedastoitsclaimoftitletoorliensandencumbrancesonrealandpersonalpropertyotherthantheliensaforementioned.Serviceuponthedirectorshallbemadeasprovidedbytherulesofcourt.Inanyactioncontemplatedunderthissection,thedirectormayask,bywayofaffirmativerelief,fortheforeclosureoftheaforementionedstatetaxliens,butintheabsenceofsuchrequestforaffirmativerelief,uponanyforeclosuresalethepropertyshallbesoldsubjecttothetaxliens.Nothinginthissectionshallprecludethedirectorfromaskingforsuchotherandfurtherreliefasmighthavebeenclaimedbyinterventionintheaction.[L1953,c187,§1;RL1955,§115-34;amL1957,c185,§4;amLSp19592d,c1,§16;HRS§231-29;amL1973,c133,§1;amL1985,c16,§6;amL1986,c340,§6;amL1991,c263,§9;amL1995,c66,§9]
Cross References
Servicebymail,see§1-28.
Rules of Court
Service,seeHRCPrule4(d)(5).Astopleading,seeHRCPrules7,8,12.
§231-30 Unknown or nonresident delinquents; procedure to collect taxes from. Notwithstandingsection604-7(c):
(1) Unknownpersons.Inallcaseswheretaxesassessedtopersonsunknownaredelinquentandunpaidwhendue,actionmaybebroughtbythedepartmentoftaxationinthedistrictcourtofthecircuitinwhichtheassessmentwasmadeandthedefendantmaybenamedasunknown.Inanysuchcase,itshallbeagoodandsufficientserviceofsummons,bindingonallpartiesininterest,ifundertheorderofthedistrictcourtthetitleandthesubstanceoftheactionandsummons,includingareturndaynotlessthanthreeweeksfromthedateoftheissuanceofsuchsummons,andcallingonallpartiesininteresttoappearanddefend,shallbepublishedonceaweekfor threeconsecutiveweeks insomenewspaperofgeneralcirculation in theState,and thedistrictcourtsaregivenjurisdictiontoordertheservice.Inthesummonsandinthenoticepublished,abriefdescriptionof thepropertyassessedshallbegiven.Anyjudgmententeredagainst thedefendantshallbeenforcedonlyagainstthepropertyforwhichthetaxwasassessed,unlessthedefendanthasappearedintheactionanddefendedonthemerits,inwhichcasethedefendantshallbeliabletoapersonaljudgmentwithrespecttotheclaimsodefended.
(2) Nonresidentdelinquents.Wheretaxesassessedtononresidentsofthetaxationdistrictaredelinquentandunpaidwhendue,serviceofsummonsmaybemadeinanypartoftheState,orbyexercisebythedistrictcourtofthepowersconferredoncircuitcourtswithrespecttodefendantswhocannotbeservedwithprocesswithintheState,withthesameeffectasiftheactionhadbeenbroughtinthecircuitcourt.[L19322d,c40,§70;RL1935,§1964;RL1945,§5132;RL1955,§115-35;amLSp19592d,c1,§16;amL1967,c37,§1;HRS§231-30;amL1973,c133,§2;amimpL1984,c90,§1;gench1985]
§231-31 Nonresidents engaged in business, etc., service of process on, designation of agent for service of process. Everynonresidentindividualwho,jointly,severally,orjointlyandseverally,issubjecttoataxuponthegrossornetincomefrom,orsalesof,anoccupation,trade,orbusinesscarriedonintheState,inwholeorinpart,oruponthecarryingonofsuchoccupation,trade,orbusiness,orupontheuseorkeepingforuseofpropertytherein,shallfilewiththedepartmentoftaxationinthedistrictinwhichtheoccupation,trade,orbusinessiscarriedon,thenameandaddress
CHAPTER231,Page27(UnofficialCompilation)
ADMINISTRATION OF TAXES §231-33
ofapersonresidingwithintheStateuponwhomprocessmaybeserved,andindefaultofsuchdesignation,andifthenonresidentindividualcannotbefoundintheState,serviceofprocessinanyactionforthecollectionofthetaxesmaybemadeonanymanager,superintendent,orotherpersonincharge,employedinthecarryingonoftheoccupation,trade,orbusiness,withlikeeffectasifthepersonsoservedhadbeendesignatedbythenonresidentasthenonresident’sagentforsuchpurpose;providedthatnothingthereinshallprecludetheserviceofprocessinanyothermannerprovidedbylaw.[L1953,c67,§2;RL1955,§115-36;amLSp19592d,c1,§16;amL1967,c37,§1;HRS§231-31;amimpL1984,c90,§1;gench1985]
Rules of Court
Service,seeHRCPrule4(d)(1).
§231-32 Records of delinquent taxes, uncollectible delinquent taxes. Thedepartmentoftaxationshallprepareandmaintain,opentopublicinspection,acompleterecordoftheamountsoftaxesassessedineachdistrictthathavebecomedelinquentwiththenameofthedelinquenttaxpayerineachcase,butitshallnotbenecessarytoperiodicallycomputeontherecordstheamountofpenaltiesandinterestupondelinquenttaxes.
Thedepartment,fromtimetotime,maypreparelistsofalldelinquenttaxesthatinitsjudgmentareuncollectible.Taxesthatthedepartmentfindstobeuncollectibleshallbeenteredinaspecialrecordandbedeletedfromtheotherbookskeptbythedepartment.Thedepartmentshallthenbereleasedfromanyfurtherdutytocollectthesetaxes.Noaccountshallbedeletedunlessthedepartmentfindsthatthereisreasonablecausetodeletetheaccount,consideringfactorssuchasthefinancialconditionofthetaxpayer,inabilitytolocatethetaxpayer,costsofcollectionagainsttheamountoftaxowed,healthofthetaxpayer,andfutureincomeprospectsofthetaxpayer.Anyitemswrittenoffmaybetransferredbacktothedelinquenttaxrollifthedepartmentfindsthattheallegedfactsaspreviouslypresentedtoitwerenottrueorthattheitemsareinfactcollectible.[L19322d,c40,§68;RL1935,§1962;amL1937,c203,§1;amL1939,c182,§1;amL1941,c254,§1;RL1945,§5133;amL1951,c133,§3;RL1955,§115-37;amLSp19592d,c1,§16;amL1967,c37,§1;HRS§231-32;amL2013,c33,§2]
Note
The2013amendmentisretroactivetoJanuary1,2013.L2013,c33,§4.
§231-33 Tax debt due the State; lien. (a)Withinthemeaningofthissection:(1) The terms“mortgagee”, “pledgee”, and“purchaser”donot includeanyperson towhompropertyoran
interestinpropertyisconveyed(A)assecurityfororinsatisfactionofanantecedentorpre-existingdebtofadebtorwhoisinsolventwithinthemeaningoftheBankruptcyAct,or(B)astrustee,assignee,oragentforthebenefitofoneormorecreditors,otherthanmortgagebondholders.
(2) Theterm“motorvehicle”meansanyself-propelledvehicletobeoperatedonthepublichighways.(3) Theinterestofaparty,ifrequiredtoberecordedorenteredofrecordinanypublicofficeinordertobevalid
againstsubsequentpurchasers,doesnotarisepriortothetimeofsuchrecordingorentryofrecord.(4) Anemployerorotherpersonwhoisrequiredbyanytaxlawtowithholdtaxatthesource,ortocollectatax,
andwhoismadeliableforthetaxiftheemployerorotherpersondoesnotfulfilltheemployer’sorotherperson’sdutiesinthatregard,shallbedeemedapersonliableforthetax.
(5) Theterm“realproperty”includesleaseholdorotherinterestinrealpropertyandalsoanypersonalpropertysoldormortgagedwithrealpropertyifaffixedtotherealpropertyanddescribedintheinstrumentofsaleormortgage.
(b) AnystatetaxwhichisdueandunpaidisadebtduetheStateandconstitutesalieninfavoroftheStateuponallpropertyandrightstoproperty,whetherrealorpersonal,belongingtoanypersonliableforthetax.Thelienforthetax,includingpenaltiesandinterestthereon,arisesatthetimethetaxisassessed,oratthetimeareturnthereofisfiled,oratthetimeoffilingbythedepartmentoftaxationofthecertificateprovidedforbysubsection(f)whicheverfirstoccurs.Fromandafterthetimethelienarisesitisaparamountlienuponthepropertyandrightstopropertyagainstallparties,whethertheirinterestarosebeforeorafterthattime,exceptasotherwiseprovidedinthissection.
(c) Thelienimposedbysubsection(b)isnotvalidasagainst:(1) Amortgageeorpurchaserof realproperty,or the lienofa judgmentcreditoruponrealproperty,whose
interestarosepriortotherecordingbythedepartmentofthecertificateprovidedforbysubsection(f);(2) Amortgageeorpurchaserofamotorvehiclewhobecomesthelegalownerorowneratatimewhenthetax
lienandencumbrancerecordprovidedforbysection286-46doesnotshowthelien.(d) Astotangiblepersonalproperty,possessionofwhichisheldbyapersonliablefortaxforthepurposeofsale
tothepublicintheordinarycourseoftheperson’sbusiness,thelienimposedbysubsection(b)isextinguishedastoanysuchpropertysoldintheordinarycourseofthebusinessbyorunderthedirectionofthepersontoanypurchaserforvaluableconsideration.Astosecurities,negotiableinstruments,andmoney,thelienimposedbysubsection(b):
(1) Isextinguishedastosuchpropertyuponpassageoftitletoapersonwithoutnoticeorknowledgeoftheexistenceofthelien,foranadequateandfullconsiderationinmoneyormoney’sworth;
§231-34 ADMINISTRATION OF TAXES
CHAPTER231,Page28(UnofficialCompilation)
(2) Isnotvalidasagainstamortgageeorpledgeeforanadequateandfullconsiderationinmoneyormoney’sworth,whoislocatedoutsidetheStateandtakespossessionoftheproperty,ifatthetimeoftakingpossessionofthepropertythemortgageeorpledgeeiswithoutnoticeorknowledgeoftheexistenceofthelien.Themererecordingorfilingofthecertificateprovidedforbysubsection(f)doesnotconstitutenoticeforthepurposesofthissubsection.
(e) Subject to theprovisionsof this subsection, the lien imposedby subsection (b) is not valid as against amortgagee,pledgee,orpurchaserwhogivesnotice to thedepartmentona formprescribedby itof themortgage,pledge,orpurchasemadeorabouttobemade,withadescriptionofthepropertyencumberedorconveyedorproposedtobeencumberedorconveyedthereby,andwhoseinterestinthepropertyarisespriortotherecordingorfilingbythedepartmentofthecertificateprovidedforbysubsection(f)orwithintendaysafterthefiling.Ifthenoticeisgiventhelienimposedbysubsection(b)isvalidagainstthepartygivingthenotice,astoanytaxessetforthinacertificatefiledasprovidedinsubsection(f)withintheperiodoffifteendaysafterthenotice.Thedepartmentmaywaivealloranypartoftheperiodhereinallowed.
(f) ThedepartmentmayrecordinthebureauofconveyancesatHonolulu,orinrespectofalienonamotorvehicle,filewiththecountydirectoroffinance,acertificatesettingforththeamountoftaxesdueandunpaid,whichhavebeenreturned,assessed,orastowhichanoticeofproposedassessmenthasissued.Thecertificateshallidentifythetaxpayer,thetaxpayer’slastknownaddress,andthetaxortaxesinvolved.Therecordingorfilingofthecertificatehastheeffectsetforthinthissection,butnothinginthissectionshallbedeemedtorequirethatacertificaterecordedorfiledbythedepartmentmustincludetheamountofanypenaltyorinterest,inordertoprotectthelientherefor.Thecertificate,ifrecordedorfiledwiththecountydirectoroffinance,shallbeenteredofrecordasprovidedbylaw.Recordationofthecertificateinthebureauofconveyancesshallbedeemed,atsuchtime,forallpurposesandwithoutanyfurtheraction,toprocurealienonlandregisteredinthelandcourtunderchapter501.Anycostincurredinthefilingofthecertificateshallbeapartofthelienforthetaxthereinsetforth.
(g) Thedepartmentmayissueacertificateofdischargeofanypartofthepropertysubjecttothelienimposedbythissection,uponpaymentinpartialsatisfactionofsuchlien,ofanamountnotlessthanthevalueasdeterminedbythedepartmentofthelienontheparttobesodischarged,orifthedepartmentdeterminesthatthelienontheparttobedischargedhasnovalue.Anysuchdischargesoissuedshallbeconclusiveevidenceofthedischargeofthelienasthereinprovided.
(h) Thelienimposedbysubsection(b)maybeforeclosedinacourtproceedingorbydistraintundersection231-25.
(i) Thissectionshallnotapplytoataxleviedbyachapterwhichcontainsaspecificprovisionforalienforthetaxleviedbythechapter,anyprovisioninthissectiontothecontrarynotwithstanding.[L1957,c185,§1;amLSp19592d,c1,§16;amL1963,c104,§1;Supp,§115-37.5;amL1966,c33,§2;HRS§231-33;amimpL1984,c90,§1;gench1985;amL1989,c20,§1]
Cross Reference
Tax InformationReleaseNo. 96-6, “Priority of StateTaxLienUnderHRS §231-33;Use of FormD-37 (Notice ofMortgage, Pledge orPurchase)”
Case Notes
Federalcourt’sequitablediscretiontoawardattorney’sfeestotheinterpleaderstakeholderwasnotprecludedbythestatutoryprioritygivenbythestatetaxlienstatute.488F.Supp.2d1084(2007).
Pre-hearingtaxliendoesnotviolatedueprocess.57H.1,548P.2d246.
Hawaii Legal Reporter Citations
Realpropertytaxlienisparamount.79HLR79-0723.
PENALTIES AND INTEREST
Note
PartheadingamendedbyL1995,c92,§3.
Cross Reference
TaxInformationReleaseNo.2010-07,“VoluntaryDisclosurePractice”SupersededbyTIR2016-02.
§231-34 Attempt to evade or defeat tax. Anypersonwhowilfullyattemptsinanymannertoevadeordefeatanytaximposedundertitle14,oritspayment,inadditiontootherpenaltiesprovidedbylaw,shallbeguiltyofaclassCfelonyand,uponconviction,shallbesubjecttooneoranycombinationofthefollowing:
(1) Afineofnotmorethan$100,000;(2) Imprisonmentofnotmorethanfiveyears;or(3) Probation;
CHAPTER231,Page29(UnofficialCompilation)
ADMINISTRATION OF TAXES [§231-36.4]
providedthatacorporationshallbefinednotmorethan$500,000.[L1943,c4,§4;RL1945,§5134;RL1955,§115-38;amLSp19592d,c1,§16;HRS§231-34;amL1995,c92,§4;amL1999,c303,§1]
Cross Reference
TaxInformationReleaseNo.95-4,“EmployeeWithholdingCertificate”
§231-35 Wilful failure to file return, supply information, or secure a license. Anypersonrequiredtomakeareturn,makeareport,keepanyrecords,supplyanyinformation,orsecureanylicenserequiredundertitle14,whowilfullyfailstomakethereturn,makethereport,keeptherecords,supplytheinformation,orsecurethelicense,atthetimeortimesrequiredbylaw,shallinadditiontootherpenaltiesprovidedbylaw,beguiltyofamisdemeanoranduponconviction,shallbesubjecttooneoranycombinationofthefollowing:
(1) Afineofnotmorethan$25,000;(2) Imprisonmentofnotmorethanoneyear;or(3) Probation;
providedthatacorporationshallbefinednotmorethan$100,000.[L19322d,c40,§13;RL1935,§1912;amimpL1943,c4,§4;RL1945,§5135;RL1955,§115-39;HRS§231-35;amimpL1984,c90,§1;gench1985;amL1995,c92,§5;amL1996,c54,§2;amL1999,c303,§2]
Cross Reference
TaxInformationReleaseNo.95-4,“EmployeeWithholdingCertificate”
§231-36 False and fraudulent statements; aiding and abetting. (a) Any person who wilfully makes andsubscribesanyreturn,statement,orotherdocumentrequiredtobemadeundertitle14,exceptchapter238,whichcontainsorisverifiedbyawrittendeclarationthatitistrueandcorrectastoeverymaterialmatter,andwhichthepersondoesnotbelievetobetrueandcorrectastoeverymaterialmattershallbeguiltyofaclassCfelonyand,uponconviction,shallbesubjecttooneoranycombinationofthefollowing:
(1) Afineofnotmorethan$100,000;(2) Imprisonmentofnotmorethanthreeyears;or(3) Probation;
providedthatacorporationshallbefinednotmorethan$500,000;andprovidedfurtherthat,ifthepersonwilfullymakesandsubscribesanyreturn,statement,orotherdocumentrequiredtobemadeunderchapter238,whichcontainsorisverifiedbyawrittendeclarationthatitistrueandcorrectastoeverymaterialmatterandwhichthepersondoesnotbelievetobetrueandcorrect,thenthepersonshallbeguiltyofamisdemeanorand,uponconviction,shallbesubjecttooneoranycombinationofthefollowing:
(1) Afineofnotmorethan$2,000;(2) Imprisonmentofnotmorethanoneyear;or(3) Probation;
(b) Anypersonwhowilfullyaidsorassistsin,orprocures,counsels,oradvisesthepreparationorpresentationofanytaxreturn,affidavit,claim,orotherdocumentrequiredtobemadeundertitle14,whichisfraudulentorisfalseastoanymaterialmatter,regardlessofwhetherthefalsityorfraudiswiththeknowledgeorconsentofthepersonauthorizedorrequiredtopresentthereturn,affidavit,claim,ordocumentshallbeguiltyofaclassCfelonyand,uponconviction,shallbesubjecttooneoranycombinationofthefollowing:
(1) Afineofnotmorethan$100,000;(2) Imprisonmentofnotmorethanthreeyears;or(3) Probation;
providedthatacorporationshallbefinednotmorethan$500,000.[L19322d,c40,§14;RL1935,§1902;RL1945,§5136;RL1955,§115-40;HRS§231-36;amL1995,c92,§6;amL1998,c103,§1;amL1999,c303,§3]
Cross Reference
TaxInformationReleaseNo.95-4,“EmployeeWithholdingCertificate”
Case Notes
Where,pursuantto§231-40,theCheekinterpretationofthewilfulnessrequirement--thatajurymustbepermittedtoconsiderevidenceofadefendant’sgoodfaithbeliefthatdefendant’sconductdidnotviolatethetaxlaws,evenifthatbeliefwasnotobjectivelyreasonable,indeterminingwhetherdefendant actedwilfully--was adoptedandapplied in construing subsection (a), the trial court erred in excludingdefendant’s exhibitpursuanttoHRErules401and403onthegroundsthatdefendant’sanalysisofthetaxlawswasirrelevantandthatevidenceofdefendant’slegaltheorieswouldconfusethejury.119H.60(App.),193P.3d1260(2008).
[§231-36.4] Wilful failure to collect and pay over tax. Anypersonrequiredtocollect,accountfor,andpayoveranytaximposedbytitle14,whowilfullyfailstocollectortruthfullyaccountforandpayoversuchtaxshallbeguiltyofaclassCfelony,inadditiontootherpenaltiesprovidedbylawand,uponconviction,shallbesubjecttooneoranycombinationofthefollowing:
[§231-36.5] ADMINISTRATION OF TAXES
CHAPTER231,Page30(UnofficialCompilation)
(1) Afineofnotmorethan$100,000;(2) Imprisonmentofnotmorethanfiveyears;or(3) Probation;
providedthatacorporationshallbefinednotmorethan$500,000.[L2009,c166,§21]Note
Applicabilityofsection. L2009,c166,§27.
[§231-36.5] Understatement of taxpayer’s liability by tax return preparer. (a)Ataxreturnpreparerwhounderstatesaperson’staxliabilitybaseduponunreasonablepositionsonataxreturnorclaimfortaxrefundshallpayapenaltyof$500withrespecttoeachsuchtaxreturnorclaimfortaxrefund.
(b) Ataxreturnpreparerwho:(1) Wilfullyunderstatesaperson’staxliability;or(2) Recklesslydisregardsanytaxlaworruleinunderstatingaperson’staxliability,
baseduponunreasonablepositionsonataxreturnorclaimfortaxrefundshallpayapenaltyof$1,000,withrespecttoeachsuchtaxreturnorclaimfortaxrefund.
(c) Forpurposesofsubsections(a)and(b),understatementsofliabilityusingunreasonablepositionsoccurwhen:(1) Anypartofataxreturnorclaimfortaxrefundisbasedonapositionthatdoesnothavesubstantialauthority;(2) Thetaxreturnpreparerwhopreparedthetaxreturnorclaimfortaxrefundkneworreasonablyshouldhave
knownoftheunreasonableposition;and(3) Theunreasonablepositionwasnotadiscloseditemasdefinedinsubsection(h)orwasfrivolous.
(d) Ifwithinthirtydaysafterthenoticeanddemandofanypenaltyundersubsection(a)or(b)ismade,thetaxreturnpreparer:
(1) Paysanamountthatisnotlessthanfifteenpercentofthepenaltyamount;and(2) Filesaclaimforrefundoftheamountsopaid,noactiontolevyorfileaproceedingincourttocollectthe
remainderofthepenaltyshallbecommencedexceptinaccordancewithsubsection(e).(e) Anaction that isstayedpursuant tosubsection(d)maybebroughtthirtydaysaftereitherofthefollowing
events,whicheveroccursfirst:(1) Thetaxreturnpreparerfailstofileanappealtothetaxappealcourtwithinthirtydaysafterthedayonwhich
theclaimforrefundofanypartialpaymentofanypenaltyundersubsection(a)or(b)isdenied;or(2) Thetaxreturnpreparerfailstofileanappealtothetaxappealcourtforthedeterminationofthetaxreturn
preparer’sliabilityforthepenaltyassessedundersubsection(a)or(b)withinsixmonthsafterthedayonwhichtheclaimforrefundwasfiled.
Nothing in this subsection shall be construed to prohibit anycounterclaim for the remainderof thepenalty in anyproceeding.
(f) Ifthereisafinaladministrativedeterminationpursuanttosection231-7.5,orafinaljudicialdecisionthatthepenaltyassessedundersubsection(a)or(b)shouldnotapply,thenthatportionofthepenaltyassessedshallbevoided.Anyportionofthepenaltythathasbeenpaidshallberefundedtothetaxreturnpreparerasanoverpaymentoftaxwithoutregardtoanyperiodoflimitationsthat,butforthissubsection,wouldapplytothemakingoftherefund.
(g) Attherequestofthedirectoroftaxation,acivilactionmaybebroughttoenjoinataxreturnpreparerfromfurtheractingasataxreturnpreparerorfromengaginginconductprohibitedundersubsection(a)or(b)asfollows:
(1) Anyactionunderthissubsectionmaybebroughtinthecircuitcourtofthecircuitinwhichthetaxreturnpreparerresidesorhasaprincipalplaceofbusiness,orinwhichthetaxpayerwithrespecttowhosetaxreturntheactionisbroughtresides;
(2) ThecourtmayexerciseitsjurisdictionovertheactionseparateandapartfromanyotheractionbroughtbytheStateagainstthetaxreturnpreparerortaxpayer;
(3) Ifthecourtfindsthatataxreturnpreparerhasengagedinconductsubjecttopenaltyundersubsection(a)or(b)andthatinjunctivereliefisappropriatetopreventtherecurrenceofthatconduct,thecourtmayenjointheprepareraccordingly;and
(4) Ifthecourtfindsthatataxreturnpreparerhascontinuallyorrepeatedlyengagedinconductprohibitedundersubsection(a)or(b)andthataninjunctionprohibitingthatconductwouldnotbesufficienttopreventthepreparer’sinterferencewiththeproperadministrationofthischapter,thecourtmayenjointhepreparerfromactingasataxreturnpreparer.
(h) Forpurposesofthissection:“Discloseditem”meansanyitemwhere:(1) Therelevantfactsaffectingtheitem’staxtreatmentareadequatelydisclosedinataxreturnorinastatement
attachedtoataxreturn;and(2) Thereisareasonablebasisforthetaxtreatmentoftheitembythetaxpayer.
“Substantialauthority”means,inadditiontoanydefinitionofsubstantialauthorityincorporatedbysubsection(j),thatthefollowingauthoritysupportsthetaxtreatmentofanitem:
CHAPTER231,Page31(UnofficialCompilation)
ADMINISTRATION OF TAXES [§231-36.7]
(1) Statutoryprovisions;(2) Proposedorfinaladministrativerules;(3) Taxinformationreleasesorprocedures;(4) Departmentoftaxationannouncementsorofficialexplanations;(5) Courtcases;(6) Legislativeintentreflectedincommitteereportsandfloorstatements;(7) Privateletterrulings,comfortletters,technicaloradviceletters,andwrittendeterminationstotheextentthey
arevalidandnotoverruledbyotherauthority;or(8) Noticesorotherofficialpronouncementsofthedepartmentoftaxation.
“Taxreturnpreparer”meansanypersonwhopreparesforcompensation,orwhoemploysoneormorepersonstoprepareforcompensation,anyreturnoftaximposedundertitle14oranyclaimforrefundoftaximposedundertitle14.Forpurposesofthisdefinition,thepreparationofasubstantialportionofareturnorclaimforrefundshallbetreatedasifitwerethepreparationofthereturnorclaimforrefund.
Apersonshallnotbeataxreturnpreparermerelybecausetheperson:(1) Furnishestyping,reproducing,orothermechanicalassistance;(2) Preparesareturnorclaimforrefundoftheemployer(orofanofficeroremployeeoftheemployer)bywhom
thepersonisregularlyandcontinuouslyemployed;(3) Preparesasafiduciaryareturnorclaimforrefundforanyotherperson;or(4) Preparesaclaimforrefundforataxpayerinresponsetoanynoticeofdeficiencyissuedtothetaxpayerorin
response to anywaiver of restriction after the commencement of an audit of the taxpayer, or of anothertaxpayerifadeterminationintheauditoftheothertaxpayerdirectlyorindirectlyaffectsthetaxliabilityofthetaxpayer.
“Understatement of liability” shall have the samemeaning as stated in section 231-36.6(b).The determinationofwhetherthereisanunderstatementofliabilitymaybemadewithoutregardtoanyadministrativeorjudicialactioninvolvingthetaxpayer.
(i) Thepenaltyimposedbythissectionshallbeinadditiontoanyotherpenaltyprovidedbylaw.(j) ThissectionshallbeconstruedinaccordancewithregulationsandjudicialinterpretationsforSection6694of
theInternalRevenueCode.[L2009,c166,§1]Note
Applicabilityofsection. L2009,c166,§27.
[§231-36.6] Substantial understatements or misstatements of amounts; penalty. (a)Thereshallbeaddedtothetaxanamountequaltotwentypercentoftheportionofanyunderpaymentthatisattributabletoanysubstantialunderstatementofanytaxinataxableyear.Thepenaltyunderthissectionshallbeinadditiontoanyotherpenaltyassessablebylaw.
(b) Exceptasprovidedundersubsection(c),thereisasubstantialunderstatementoftaxforanytaxableyeariftheamountoftheunderstatementforthetaxableyearexceedsthegreaterof:
(1) Tenpercentofthetaxrequiredtobeshownonthereturnforthetaxableyear;or(2) $1,500.
(c) InthecaseofacorporationotherthanacorporationtaxableundersubchapterSoftheInternalRevenueCode,thereisasubstantialunderstatementoftaxforanytaxableyeariftheamountoftheunderstatementforthetaxableyearexceedsthegreaterof:
(1) Tenpercentofthetaxrequiredtobeshownonthereturnforthetaxableyear;or(2) $30,000.
(d) Theamountofanyunderstatementshallbereducedbythatportionoftheunderstatementthatisattributableto:(1) Thetaxtreatmentofanyitembythetaxpayerifthereisorwassubstantialauthorityforsuchtreatment;or(2) Anyitemiftherelevantfactsaffectingtheitem’staxtreatmentareadequatelydisclosedinthereturnorina
statementattachedtothereturnandthereisareasonablebasis,asdefinedundersection23l-36.8,forthetaxtreatmentbythetaxpayer.
Thereductioninthissubsectionshallnotapplytoanyitemattributabletoataxshelterasdescribedinsection231-36.7.(e) Thissectionshallbeconstruedinaccordancewithregulationsandjudicialinterpretationsgiventosection6662
oftheInternalRevenueCode.(f) Forpurposesofthissection,“understatement”meanstheexcessof:
(1) Theamountoftaxrequiredtobeshownonthereturnforthetaxableyear;over(2) Theamountoftaximposedthatisshownonthereturn,reducedbyanyrebateasthattermisdefinedby
section62l1(b)(2)oftheInternalRevenueCode.[L2009,c166,§4]Note
Applicabilityofsection. L2009,c166,§27.
[§231-36.7] Promoting abusive tax shelters. (a)Apersonpromotesanabusivetaxshelterby:
§231-36.8 ADMINISTRATION OF TAXES
CHAPTER231,Page32(UnofficialCompilation)
(1) Organizingorassistingintheorganizationof,orparticipatingdirectlyorindirectlyinthesaleof,aninterestin:(A) Apartnershiporotherentity;(B) Anyinvestmentplanorarrangement;or(C) Anyotherplanorarrangement;and
(2) Inconnectionwithanyactivitydescribedunderparagraph(1),making,furnishing,orcausinganotherpersontomakeorfurnishastatementwithrespectto:(A) Whetheranydeductionorcreditisallowed;(B) Whetheranyincomemaybeexcluded;or(C) Thesecuringofanyothertaxbenefitbyreasonofholdinganinterestintheentityorparticipatinginthe
planorarrangement, whichthepersonknowsorhasreasontoknowisfalseorfraudulentorisagrossvaluationoverstatementas
toanymaterialmatter.(b) Apersonfoundpromotinganabusivetaxsheltershallpay,withrespecttoeachactivitydescribedinsubsection
(a),apenaltyof$1,000or,ifthepersonestablishesthattheabusivetaxsheltergeneratedlessthan$1,000ofgrossincome,thenonehundredpercentofthegrossincomederivedortobederivedbythepersonfromtheactivity.Forpurposesofthissection,anyactivitydescribedinsubsection(a)(1)shallbetreatedasaseparateactivityforeachentityorarrangement.Participationineachsaledescribedinsubsection(a)(1)shallbetreatedasaseparateactivityforeachentityorarrangement.
(c) At the requestof thedirectorof taxation, a civilactionmaybebrought toenjoinanypersondescribed insubsection(a)fromengaginginanyconductdescribedinsubsection(a).Anyactionunderthissectionshallbebroughtinthecircuitcourtofthecircuitwherethepersoninsubsection(a)residesorwheretheperson’sprincipalplaceofbusinessislocated.ThecourtmayexerciseitsjurisdictionovertheactionseparateandapartfromanyotheractionbroughtbytheStateagainstthosepersonsdescribedinsubsection(a).Ifthecourtfindsthatapersondescribedinsubsection(a)hasengagedinanyconductsubjecttopenaltyundersubsection(b)andthatinjunctivereliefisappropriatetopreventtherecurrenceofthatconduct,thecourtmayenjointhepersonaccordingly.
(d) Thedirectormaywaivealloranypartof thepenaltyprovidedbysubsection(b)withrespecttoanygrossvaluationoverstatementonashowingthattherewasareasonablebasisforthevaluationandthatthevaluationwasmadeingoodfaith.
(e) Forpurposesofthissection,“grossvaluationoverstatement”meansanystatementofvalueforanypropertyorservicesif:
(1) Thevaluesostatedexceedstwohundredpercentoftheamountdeterminedtobethecorrectvaluation;and(2) Thevalueofthepropertyorservicesisdirectlyrelatedtotheamountofanydeductionorcreditallowableto
anyparticipant.(f) Thepenaltyimposedbythissectionshallbeinadditiontoanyotherpenaltyprovidedbylaw.(g) Thissectionshallbeconstruedinaccordancewithregulationsandjudicialinterpretationsgiventosection6700
oftheInternalRevenueCode.[L2009,c166,§2]Note
Applicabilityof2009amendment.L2009,c166,§27.
§231-36.8 Erroneous claim for refund or credit. (a)Ifaclaimforrefundorcreditwithrespecttotaxismadeforanexcessiveamount,thepersonmakingtheclaimshallbeliableforapenaltyinanamountequaltotwentypercentoftheexcessiveamount;providedthatthereshallbenopenaltyassessedwherethepenaltycalculationunderthissectionresultsinanamountoflessthan$400.
(b) Itshallbeadefensetothepenaltyunderthissectionthattheclaimforrefundorcredithadareasonablebasis.Apersonclaimingthereasonablebasisdefenseshallhavetheburdenofprooftodemonstratethereasonablenessoftheclaim.
(c) Thissectionshallbeconstruedinaccordancewithregulationsandjudicialinterpretationsgiventosection6676oftheInternalRevenueCode.
(d) Forpurposesofthissection:“Excessiveamount”meanstheamountbywhichtheamountoftheclaimforrefundorcreditforanytaxableyear
exceedstheamountoftheclaimallowableforsuchtaxableyear.“Reasonablebasis”meansastandardofcareused in taxreporting that issignificantlyhigher thannotfrivolous
or not patently improper.A reasonable basis positionwill bemore than arguable andbased on at least one ormoreauthoritiesofeitherstateorfederaltaxadministration.Apositionisconsideredtohaveareasonablebasisifareasonableandwell-informedanalysisbyapersonknowledgeableintaxlawwouldleadthatpersontoconcludethatthepositionhasapproximatelyaone-in-four,orgreater,likelihoodofbeingsustainedonthemerits.Areasonablebasisincludesinnocentmistakeswhere theexcessiveamount is theresultof inadvertence,mathematicalerror,orwhereotherwisedefinedasinnocentbythedirectorpursuanttoaformalpronouncementissuedwithoutregardtochapter91.
(e) Thissectionshallnotapplytoanyportionofanunderpaymentonwhichapenaltyisimposedundersection231-36.6.[L2009,c166,§3;amL2012,c185,§1]
CHAPTER231,Page33(UnofficialCompilation)
ADMINISTRATION OF TAXES §231-39
Note
Applicabilityofsection.L2009,c166,§27.The2012amendmentappliestotaxableyearsbeginningafterDecember31,2011. L2012,c185,§4.
§231-37 Neglect of duty, etc., misdemeanor. Any officer of the department of taxation, the state director offinance,anypersondulyauthorizedbythedirectoroftaxation,oranypoliceofficer,onwhomdutiesareimposedunderthischapter,whowilfullyfailsorrefusesorneglectstoperformfaithfullyanydutyordutiesasrequiredbythischapter,shallbedeemedguiltyofamisdemeanor.[L19322d,c40,§12;RL1935,§1915;RL1945,§5137;amL1945,c79,§7;RL1955,§115-41;amLSp19592d,c1,§§14,16;amL1963,c114,§1;HRS§231-37;amL1974,c139,§2;amL2017,c12,§34]
§231-38 REPEALED. L1995,c92,§21.
§231-39 Additions to taxes for noncompliance or evasion; interest on underpayments and overpayments. (a)Exceptasotherwiseprovided,thissectionshallapplytoeverytaxorrevenuelawoftheStatethatprovidesforthefilingwiththedirectoroftaxationofareturnorstatementofthetaxortheamounttaxable.
(b) Thereshallbeaddedtoandbecomeapartofthetaximposedbysuchtaxorrevenuelaw,andcollectedassuch:
(1) Failuretofiletaxreturn.Incaseoffailuretofileanytaxreturnrequiredtobefiledonthedateprescribedtherefor(determinedwithregardtoanyextensionoftimeforfiling),unlessitisshownthatthefailureisduetoreasonablecauseandnotduetoneglect,thereshallbeaddedtotheamountrequiredtobeshownastaxonthe returnfiveper centof the amountof the tax if the failure is fornotmore thanonemonth,with anadditionalfivepercentforeachadditionalmonthorfractionthereofduringwhichthefailurecontinues,notexceedingtwenty-fivepercentintheaggregate.Forpurposesofthisparagraph,theamountoftaxrequiredtobeshownonthereturnshallbereducedbytheamountofanypartofthetaxwhichispaidonorbeforethedateprescribedforpaymentofthetaxandbytheamountofanycreditagainstthetaxwhichmaybeclaimeduponthereturn.Thisparagraphshallnotapplytoanyfailuretofileadeclarationofestimatedtaxrequiredbysection235-97.
(2) Failuretopaytax.(A) Ifanypartofanyunderpaymentisduetonegligenceorintentionaldisregardofrules(butwithoutintent
todefraud),thereshallbeaddedtothetaxanamountuptotwenty-fivepercentoftheunderpaymentasdeterminedbythedirector.
(B) Ifanypartofanyunderpaymentoftaxrequiredtobeshownonareturnisduetofraud,thereshallbeaddedtothetaxanamountuptofiftypercentoftheunderpaymentasdeterminedbythedirector.
(C) Ifanypenaltyisassessedundersubparagraph(B)(relatingtofraud)foranunderpaymentoftaxwhichisrequiredtobeshownonareturn,nopenaltyunderparagraph(1)(relatingtofailuretofilethereturn)shallbeassessedwithrespecttothesameunderpayment.
(3) Failuretopaytaxafterfilingtimelyreturns.Ifareturnisfiledonorbeforethedateprescribedthereforandtheamountshownastaxonthereturnisnotcompletelypaidwithinsixtydaysoftheprescribedfilingdate,thereshallbeaddedtotheunpaidtaxanamountuptotwentypercentasdeterminedbythedirector.
(4) Interestonunderpaymentornonpaymentoftax.(A) Ifanyamountoftaxisnotpaidonorbeforethelastdateprescribedforpayment,interestonsuch
amountattherateoftwo-thirdsofonepercentamonthorfractionofamonthshallbepaidfortheperiodbeginningwiththefirstcalendardayafterthedateprescribedforpayment,section231-21tothecontrarynotwithstanding,tothedatepaid.
(B) Iftheamountofanytaxisreducedbyreasonofacarrybackofanetoperatinglossallowedunderchapter235,suchreductionintaxshallnotaffectthecomputationofinterestunderthisparagraphfortheperiodendingwiththelastdayofthetaxableyearinwhichthenetoperatinglossarises.
(C) Interestprescribedunderthisparagraphonanytaxshallbepaiduponnoticeanddemand,andshallbeassessed,collected,andpaidinthesamemannerastaxes.
(D) Nointerestunderthisparagraphshallbeimposedoninterestprovidedbythisparagraph.(E) Ifanyportionofataxissatisfiedbycreditofanyoverpayment,thennointerestshallbeimposedunder
thisparagraphontheportionofthetaxsosatisfiedforanyperiodduringwhich,ifthecredithadnotbeenmade,interestwouldhavebeenallowablewithrespecttotheoverpayment.
(F) Interestprescribedunderthisparagraphonanytaxmaybeassessedandcollectedatanytimeduringtheperiodwithinwhichthetaxtowhichtheinterestrelatesmaybecollected.
(G) Thisparagraphshallnotapplytoanyfailuretopayestimatedtaxrequiredbysection235-97.(c) Notaxpayershallbeexemptfromanypenaltyorinterestbyreasonofhavingcontestedthetax,butonlyto
theextentthatthetaxisadjudgedtobeexcessiveorcontrarytolaw.[L1953,c125,§4;RL1955,§115-43;amL1967,
§231-40 ADMINISTRATION OF TAXES
CHAPTER231,Page34(UnofficialCompilation)
c134,§1;HRS§231-39;amL1974,c138,§1;amL1988,c386,§1;amL1991,c136,§2;amL1992,c102,§2;amL1994,c15,§1]
Cross References
Costrecoveryfeesfortheadministrationoftaxes,see§231-25.5.TaxInformationReleaseNo.92-2,“TheAdministrationandApplicationoftheConveyanceTaxLaw”Tax Information Release No. 2008-03, “Deposits in the Nature of Cash Bond Made to Suspend the Running of Interest on Potential
Underpayments”
Case Notes
Erroneousbeliefthatnotaxliabilityexistedheldnot“reasonablecause”withinmeaningofsubsection(b)(1).57H.436,559P.2d264.
§231-40 Interpretation. Sections231-34,231-35,231-36,and231-36.4shallbeconstrued inaccordancewithjudicialinterpretationsgiventosimilarprovisionsofTitle26oftheUnitedStateCode;consistenttherewith,theterm“wilfully”shallmeanavoluntary,intentionalviolationofaknownlegalduty.[L1995,c92,ptof§2;amL2009,c166,§22;amL2011,c43,§3]
Case Notes
Where,pursuanttothissection,theCheekinterpretationofthewilfulnessrequirement--thatajurymustbepermittedtoconsiderevidenceofadefendant’sgoodfaithbeliefthatdefendant’sconductdidnotviolatethetaxlaws,evenifthatbeliefwasnotobjectivelyreasonable,indeterminingwhetherdefendantactedwilfully--wasadoptedandappliedinconstruing§231-36(a),thetrialcourterredinexcludingdefendant’sexhibitpursuanttoHRErules401and403onthegroundsthatdefendant’sanalysisofthetaxlawswasirrelevantandthatevidenceofdefendant’slegaltheorieswouldconfusethejury.119H.60(App.),193P.3d1260.
[§231-40.5] Statute of limitations; extension for substantial omissions. (a)Notwithstandinganyotherlawtothecontrarylimitingthetimeforassessmentofanytax,ifataxpayeromitsanamountof:
(1) Grossincomeorgrossproceedsofsale;(2) Grossrentalorgrossrentalproceeds;(3) Price,value,orconsiderationpaidorreceivedforanyproperty;(4) Grossreceipts;or(5) Gallonage,tonnage,cigarettecount,day,orotherweightormeasureapplicabletoanytax,
properlyincludablethereinthatisinexcessoftwenty-fivepercentoftheamountstatedinthereturn,thetaxmaybeassessedoraproceedingincourtwithrespecttothetaxwithoutassessmentmaybebegunwithoutassessment,atanytimewithinsixyearsafterthereturnwasfiled.
(b) Indetermininganyamountomitted, there shall notbe taken intoaccountanyamount that is stated in thereturnifsuchamountisdisclosedinthereturnorinastatementattachedtothereturninamanneradequatetoapprisethedepartmentoftaxationofthenatureandamountofsuchitem.
(c) ThissectionshallbeconstruedinaccordancewithregulationsandjudicialinterpretationsgiventoSection6501oftheInternalRevenueCode.[L2009,c166,§5]
Note
Applicabilityofsection.L2009,c166,§27.
§231-41 Statute of limitation for criminal penalties. Notwithstanding any laws to the contrary, prosecutionsundersections231-34,231-35,231-36,and231-36.4shallbecommencedwithinsevenyearsafterthecommissionoftheoffense.[L1995,c92,ptof§2;amL2009,c166,§23;amL2011,c43,§4]
RECOVERY OF MONEY OWED TO THE STATE
§231-51 Purpose. Thepurposeofsections231-52to231-59istopermittheretentionofstateincometaxrefundsofthosepersonswhooweadebttotheState,whoaredelinquentinthepaymentofchildsupportpursuanttosection576D-1,whohavedefaultedonaneducationloannoteheldbytheUnitedStudentAidFunds,Inc.,whoowefederalincometaxestotheUnitedStatesTreasurer,orwhoreceiveamedicaidoverpaymentsubjecttorecoveryundersection346-59.6.[L1982,c199,ptof§1;amL1985,c256,§1;amL1986,c87,§1;amL1988,c199,§1;amL1998,c153,§1andc293,§3]
Cross References
Civilreliefforstatemilitaryforces,seechapter657D.
§231-52 Definitions. Asusedinsections231-51to231-59,unlessthecontextotherwiserequires:“Claimantagency”includesanystateagency,board,commission,department,institution,thejudiciary,orotherstate
organization,oranysubdivisionthereof.Inthecaseofdelinquentchildsupportpursuanttosection576D-1,“claimantagency”meansthechildsupportenforcementagencyoranagencyundercooperativeagreementwiththedepartment
CHAPTER231,Page35(UnofficialCompilation)
ADMINISTRATION OF TAXES [§231-58]
wheneverthedepartmentisrequiredbylawtoenforceasupportorderonbehalfofanindividual.“Claimantagency”includesthedepartmentofbudgetandfinancewhenactingonbehalfandattherequestoftheUnitedStudentAidFunds,Inc.tocollectdefaultededucationloannotesincurredunderthefederalHigherEducationActof1965(PublicLaw89-329,79Stat.1219),asamended;providedthatthedepartmenthasacontractwiththeUnitedStudentAidFunds,Inc.underchapter309whenactingasaclaimantagency.“Claimantagency”includesthedepartmentoftaxationwhenactingonbehalfandattherequestoftheInternalRevenueServiceundertheUnitedStatesDepartmentoftheTreasury,andwhentheInternalRevenueServiceisauthorizedbyfederallawtoadministrativelyimposealevyuponarefundofadebtorinsatisfactionofthefederalincometaxesassessedunderInternalRevenueCodeof1986,asamended.
“Debt”includes:(1) Anydelinquencyinperiodiccourt-orderedoradministrative-orderedpaymentsforchildsupportpursuantto
section576D-1,inanamountequaltoorexceedingthesumofpaymentswhichwouldbecomedueoveraone-monthperiod;
(2) Anyliquidatedsumexceeding$25whichisdueandowinganyclaimantagency,regardlessofwhetherthereisanoutstandingjudgmentforthatsum,andwhetherthesumhasaccruedthroughcontract,subrogation,tort,operationoflaw,orjudicialoradministrativejudgmentororder;
(3) AnydefaultededucationloannoteheldbytheUnitedStudentAidFunds,Inc.incurredunderthefederalHigherEducationActof1965(PublicLaw89-329,79Stat.1219),asamended;
(4) AnyfederalincometaxesdueandowingtotheUnitedStatesTreasurer;(5) Anymedicaidoverpaymentundersection346-59.6;or(6) Anyunpaidcourt-orderedrestitutionenforceableasaciviljudgmentpursuanttosection706-647.
“Debtor”includesanypersonwhoowesadebttoanyclaimantagency,whoisdelinquentinpaymentofcourt-orderedoradministrative-orderedchildsupportpayments,pursuanttosection576D-1,whohasdefaultedonaneducationloannoteheldbytheUnitedStudentAidFunds,Inc.incurredunderthefederalHigherEducationActof1965(PublicLaw89-329,79Stat.1219),asamended,orwhoowesfederalincometaxestotheUnitedStatesTreasurer.
“Refund”includesanystateincometaxrefundwhichisorwillbedueanydebtor,oranyothersumsduetoadebtorfromtheState.[L1982,c199,ptof§1;amL1985,c256,§2;amL1986,c87,§2andc332,§5;amL1987,c112,§1;amL1988,c199,§2;amL1998,c66,§1,c153,§2,andc293,§4;amL2017,c77,§3]
[§231-53] Setoff against refund. TheState,throughthedepartmentofaccountingandgeneralservices,uponrequestofaclaimantagency,shallsetoffanyvaliddebtdueandowingaclaimantagencybythedebtoragainstanydebtor’srefund.Anyamountoftherefundinexcessoftheamountretainedtosatisfythedebtshallberefundedtothedebtor.[L1982,c199,ptof§1]
[§231-54] Hearings; appeals. At the time a setoff is identified, the debtor shall be notified by the comptroller,departmentofaccountingandgeneralservices,oftheState’sintentiontoapplythedebtor’sdebtagainsttherefund.Thenoticeshallstatethatthedebtorwithinthirtydaysmayrequestahearingbeforetheclaimantagencytocontestthesetoff.Noissuesthathavebeenpreviouslylitigatedshallbeconsideredatthehearing.Appealsfromthehearingallowedunderthissectionshallbeinaccordancewithchapter91.[L1982,c199,ptof§1]
[§231-55] Finalization of setoff; credit on debt. Uponcompletionof thehearingandappealprocesssetout insection231-54,oruponthedebtor’sfailuretotimelyrequestahearingpursuanttothatsection,thesetoffshallbecomefinal.Theamountofthesetoffafterdeductionofanychargeauthorizedbysection231-56shallbecreditedbytheclaimantagencyagainstthedebtor’sdebt.[L1982,c199,ptof§1]
[§231-56] Charges for setoff; credit to agency. TheStatemaychargetheclaimantagencyforthecostofthesetoff;providedthatthechargesshallnotexceedtheproceedsofthecollection.TheStatemaydesignateasinglepercentagetoberetainedfromtheproceedsofthesetoffasachargeforcostofassistance.Thenetproceedsofasetoff,afterdeductionofanycharge,shallbecreditedtotheclaimantagency’saccountorfund.[L1982,c199,ptof§1]
[§231-57] Apportionment of joint refunds. Inthecaseofasetoffagainstajointincometaxrefund,theStatemaymakeseparaterefundsofwithheldtaxesuponrequestbyahusbandorwifewhohasfiledthejointreturn.TherefundpayabletoeachspouseshallbeproportionedtothegrossearningsofeachshownbytheinformationreturnsfiledbytheemployerorotherwiseshowntothesatisfactionoftheState.[L1982,c199,ptof§1]
§231-57.5 Notification of address and social security number of debtor parent. Thedepartmentofaccountingandgeneralservicesshallnotifythechildsupportenforcementagencyoftheaddressandsocialsecuritynumberofeachdebtorwhohasbeensubjecttoasetoffbecauseofachildsupportdebt.[L1986,c332,§3]
[§231-58] Rules. Allstateagenciesmayadoptrulespursuanttochapter91forcarryingoutthepurposesofsections231-51to231-59.[L1982,c199,ptof§1]
§231-59 ADMINISTRATION OF TAXES
CHAPTER231,Page36(UnofficialCompilation)
§231-59 Procedure additional. Thesetoffprocedureauthorizedbysections231-53to231-57.5isinadditiontoandnotinsubstitutionofanyotherremedyavailablebylaw.[L1982,c199,ptof§1;amL2017,c12,§35]
LIENS, FORECLOSURE
[§231-61] Tax liens; co-owners’ rights. (a)Ifacotenancyexistsandwithintheperiodofataxlien,allofthetaxes,interest,penalties,andotheradditionstothetax,dueanddelinquentatthetimeofpayment,arepaidbyacotenant,thecotenantshallhavealieninanamountequaltotheamountpaidbythecotenantontheinterestofanynoncontributingcotenantuponrecordinginthebureauofconveyances,withinninetydaysafterthecotenant’spayment,aswornnoticesettingforththeamountclaimed,abriefdescriptionofthelandaffectedbytaxkeyorotherwise,sufficienttoidentifytheland,thetaxespaidandthenameofthecotenantuponwhoseinterestthelienisasserted.Whenanoticeofthetaxlienisrecordedbyacotenant,theregistrarshallcausethetaxlientobeindexedinthegeneralindexesofthebureauofconveyances.Ifthelandaffectedisregisteredinthelandcourtthenoticeshallalsocontainareferencetothenumberofthecertificateoftitleofthelandandshallbefiledandregisteredintheofficeoftheassistantregistrarofthelandcourt,andtheregistrar,intheregistrar’scapacityasassistantregistrarofthelandcourt,shallmakeanotationofthefilingthereofoneachlandcourtcertificateoftitlesospecified.
Thecotenant’slienshallhavethesamepriorityasthelienorliensoftheStateforthetaxespaidbythecotenant,andmaybeenforcedbyanactioninthenatureofasuitinequity.Thelienshallcontinueforthreeyearsafterrecordingorregistering,oruntilterminationoftheproceedingsforenforcementthereofifsuchproceedingsarebegunandnoticeofthependencythereofisrecordedorfiledandregisteredasprovidedbylaw,withintheperiod.
(b) Thedirectororthedirector’ssubordinate,incaseofastatetaxlien,andthecreditorcotenant,incaseofacotenant’slien,attheexpenseofthedebtor,uponpaymentoftheamountofthelien,shallexecuteanddelivertothedebtoraswornsatisfactionthereof,includingareferencetothenameofthepersonassessedorcotenantaffectedasshownintheoriginalnotice,thedateoffilingoftheoriginalnotice,adescriptionofthelandinvolved,andthenumberofthecertificateoftitleofthelandifregisteredinthelandcourt.Whenrecordedinthebureauofconveyancesorfiledandregisteredintheofficeoftheassistantregistrarofthelandcourt,inthecaseofacotenant’slien,whichcontainsthereferencetothebookandpageoftheoriginallien,theswornsatisfactionshallbeenteredinthegeneralindexesofthebureauofconveyances,andifanotationoftheoriginalnoticewasmadeonanylandcourtcertificateoftitlethefilingofthesatisfactionshallalsobenotedonthecertificate.
Thissectionastocotenancyshallapply,aswell,inanycaseofownershipbymorethanoneassessableperson.[L1989,c14,ptof§1(1)]
Cross References
Recordation,see§502-31.5.
§231-62 Tax liens; foreclosure; property. (a) Upon enforcement or foreclosure by the State, in anymannerwhatsoever,ofanystatetaxlienonrealproperty,allstatetaxesofwhatsoevernatureandhowsoeveraccruinganddueatthetimeoftheforeclosuresalefromthetaxpayeragainstwhosepropertythetaxlienissoenforcedorforeclosedshallbesatisfiedasfaraspossibleoutoftheproceedsofthesaleremainingafterpaymentofthe:
(1) Costsandexpensesoftheenforcementandforeclosure,includingatitlesearch,ifany;(2) Amountofsubsistingstatetaxliensonrealproperty;and(3) Amountofanyrecordedliensagainsttheproperty,intheorderoftheirpriority.
(b) Theliensmaybeenforcedbyactionofthestatetaxcollectorinthecircuitcourtofthejudicialcircuitinwhichthepropertyissituated.Jurisdictionisconferreduponthecircuitcourtstohearanddetermineallproceedingsbroughtorinstitutedtoenforceandforeclosesuchstatetaxliens,andtheproceedingshadbeforethecircuitcourtsshallbeconductedinthesamemannerandformasordinaryforeclosureproceedings.
(c) IftheownersorclaimantsofthepropertyagainstwhichastatetaxlienissoughttobeforeclosedareatthetimewithouttheStateorcannotbeservedwithintheState,oriftheownersareunknown,andthefactshallbemadetoappearbyaffidavittothesatisfactionofthecourt,anditshallinlikemannerappearprimafaciethatacauseofactionexistsagainstsuchownersorclaimantsoragainstthepropertydescribedinthecomplaintorthatsuchownersorclaimantsarenecessaryorproperpartiestotheaction,thecourtmaygrantanorderthattheservicemaybemadeinthemannerprovidedbysections634-23to634-27.Inanysuchcaseitshallnotbenecessarytoobtainjudgmentandhaveexecutionissuedandreturnedunsatisfied,beforeproceedingtoforeclosethelienfortaxesinthemannerprovided.[L1989,c14,ptof§1(1);amL2017,c12,§36]
[§231-63] Tax liens; foreclosure without suit, notice. Allrealpropertyonwhichalienforstatetaxesexistsmaybesoldbywayofforeclosurewithoutsuitbythestatetaxcollector,andincaseanylien,oranypartthereof,hasexisted
CHAPTER231,Page37(UnofficialCompilation)
ADMINISTRATION OF TAXES [§231-68]
thereonforthreeyears,shallbesoldbythestatetaxcollectoratpublicauctiontothehighestbidder,forcash,tosatisfythelien,togetherwithallinterest,penalties,costs,andexpensesdueorincurredonaccountofthetax,lien,andsale,thesurplus,ifany,toberenderedtothepersontheretoentitled.Thesaleshallbeheldatanypublicplaceproperforsalesonexecution,afternoticepublishedatleastonceaweekforatleastfoursuccessiveweeksimmediatelypriortheretoinanynewspaperwithageneralcirculationofatleastsixtythousandpublishedintheStateandanynewspaperofgeneralcirculationpublishedanddistributedinthetaxationdistrictwhereinthepropertytobesoldissituated,ifthereisanewspaperpublishedinthetaxationdistrict.
Iftheaddressoftheownerisknownorcanbeascertainedbyduediligence,includinganabstractoftitleortitlesearch,thestatetaxcollectorshallsendtoeachownernoticeoftheproposedsalebyregisteredmail,withrequestforreturnreceipt.If theaddressof theownerisunknown, thestate taxcollectorshallsendanoticeto theownerat theowner’slastknownaddressasshownontherecordsofthedepartmentoftaxation.Thenoticeshallbedepositedinthemailatleastforty-fivedayspriortothedatesetforthesale.Thenoticeshallalsobepostedforalikeperiodinatleastthreeconspicuouspublicplaceswithinsuchtaxationdistrict,andifthelandisimprovedoneofthethreepostingsshallbeontheland.[L1989,c14,ptof§1(1)]
[§231-64] Tax liens; registered land. Ifthelandhasbeenregisteredinthelandcourt,thestatetaxcollectorshallalsosendbyregisteredmailanoticeoftheproposedsaletoanypersonholdingamortgageorotherlienregisteredintheofficeoftheassistantregistrarofthelandcourt.Thenoticeshallbesenttoanysuchpersonattheperson’slastaddressasshownbytherecordsintheofficeoftheregistrar,andshallbedepositedinthemailatleastforty-fivedayspriortothedatesetforthesale.[L1989,c14,ptof§1(1)]
[§231-65] Tax liens; notice, form of. Thenoticeofsaleshallcontainthenamesofthepersonsassessed,thenamesofthepresentowners(sofarasshownbytherecordsofthetaxofficeandtherecords,ifany,intheofficeoftheassistantregistrarofthelandcourt),thecharacterandamountofthetax,andthetaxyearoryears,withinterest,penalties,costs,expenses,andchargesaccruedortoaccruetothedateappointedforthesale,abriefdescriptionofthepropertytobesold,andthetimeandplaceofsale,andshallwarnthepersonsassessed,andallpersonshavingorclaimingtohaveanymortgageorotherlienthereonoranylegalorequitableright,title,orotherinterestintheproperty,thatunlessthetax,withallinterest,penalties,costs,expenses,andchargesaccruedtothedateofpayment,ispaidbeforethetimeofsaleappointed,thepropertyadvertisedforsalewillbesoldasadvertised.Thestatetaxcollectormayincludeinoneadvertisementofnoticeofsalenoticeofforeclosureuponmorethanoneparcelofrealproperty,whetherornotownedbythesamepersonandwhetherornottheliensareforthesametaxyearoryears.[L1989,c14,ptof§1(1)]
[§231-66] Tax liens; postponement of sale, etc. Ifatthetimeappointedforthesalethestatetaxcollectordeemsitexpedientandfortheinterestofallpersonsconcernedthereintopostponethesaleofanypropertyorpropertiesforwantofpurchasers,orforothersufficientcause,thestatetaxcollectormaypostponethesalefromtimetotime,untilthesaleiscompleted,givingnoticeofeveryadjournmentbyapublicdeclarationthereofatthetimeandplacelastappointedforthesale;providedthatthesaleofanypropertymaybeabandonedatthetimefirstappointedoranyadjourneddate,ifnoproperbidisreceivedsufficienttosatisfythelien,togetherwithallinterest,penalties,costs,expenses,andcharges.[L1989,c14,ptof§1(1)]
[§231-67] Tax liens; tax deed; redemption. Thestatetaxcollectororthestatetaxcollector’sassistant,onpaymentofthepurchaseprice,shallmake,execute,anddeliverallproperconveyancesnecessaryinthepremisesandthedeliveryoftheconveyancesshallvestinthepurchaserthetitletothepropertysold;providedthatthedeedtothepremisesshallberecordedwithinsixtydaysafterthesale;providedfurtherthatthetaxpayermayredeemthepropertysoldbypaymenttothepurchaseratthesale,withinoneyearfromthedatethereof,orifthedeedshallnothavebeenrecordedwithinsixtydaysafterthesale,thenwithinoneyearfromthedateofrecordingofthedeed,oftheamountpaidbythepurchaser,togetherwithallcostsandexpenseswhichthepurchaserwasrequiredtopay,includingthefeeforrecordingthedeed,andinadditionthereto,interestonsuchamountattherateoftwelvepercentayear,butinacaseofredemptionmorethanoneyearafterthedateofsalebyreasonofextensionoftheredemptionperiodonaccountoflaterecordingofthetaxdeed,interestshallnotbeaddedfortheextendedredemptionperiod.[L1989,c14,ptof§1(1)]
[§231-68] Tax liens; costs. Thedirectoroftaxationbyrulemayprescribeascheduleofcosts,expenses,andchargesandthemannerinwhichtheyshallbeapportionedbetweenthevariouspropertiesofferedforsaleandthetimeatwhicheachcost,expense,orchargeisdeemedtoaccrue.Thecosts,expenses,andchargesshallbeaddedtoandbecomeapartofthetaxlienonthepropertyforthelastyearinvolvedinthesaleorproposedsale,thetaxforwhichisdelinquent.Thecosts,expenses,andchargesmayincludeprovisionforthemakingofandthesecuringofcertificatesofsearchesofanyrecordstofurnishinformationtobeusedinorinconnectionwiththenoticeofsaleortaxdeed,orinanycasewherethedirectordeemsitadvisable;providedthatthestatetaxcollectorshallnotberequiredtomakesuchsearchesortocausethemtobemadeexceptasprovidedbysection231-64withrespecttomortgagesorotherliensregisteredintheofficeoftheassistantregistrarofthelandcourt.[L1989,c14,ptof§1(1)]
[§231-69] ADMINISTRATION OF TAXES
CHAPTER231,Page38(UnofficialCompilation)
[§231-69] Tax deed as evidence. Thetaxdeedreferredtoinsection231-67isprimafacieevidencethat:(1) Thepropertydescribedby thedeedon thedateof thesalewassubject toa lienor liensforstate taxes,
penalties,andinterestintheamountstatedinthedeed,forthetaxyearsthereinstated,andthatthestatetaxes,penalties,andinterestweredueandunpaidonthedateofsale;
(2) Costs,expenses,andchargesdueorincurredonaccountofthestatetaxes,liens,andsalehadaccruedatthedateofthesaleintheamountstatedinthedeed;
(3) Thepersonwhoexecutedthedeedwastheproperofficer;(4) Atapropertimeandplacethepropertywassoldatpublicauctionasprescribedbylaw,andbytheproper
officer;(5) Thesalewasmadeuponfullcompliancewithsections231-63to231-68andalllawsrelatingthereto,and
aftergivingnoticeasrequiredbylaw;and(6) Thegranteenamedinthedeedwasthepersonentitledtoreceivetheconveyance.[L1989,c14,ptof§1(1)]
[§231-70] Disposition of surplus moneys. (a)Theofficerchargedwiththedutyofdistributingthesurplusarisingfromataxsaleundersections231-63to231-68shallpayfromthesurplusallstatetaxes,includinginterestandpenalties,ofwhatsoevernatureandhowsoeveraccruing,asprovidedinsection231-62,andtheofficermaypayfromthesurplusthecostofasearchofanyrecordswheresuchsearchisdeemedadvisablebytheofficertoascertainthepersonorpersonsentitledtothesurplus;providedthatnothinginthissectionshallbeconstruedtorequirethestatetaxcollectortomakeorcauseanysuchsearchtobemade.Iftheofficerisindoubtastothepersonorpersonsentitledtothebalanceofthefundtheofficermayrefusetodistributethesurplusandanyclaimantmaysuetheofficerortheofficer’ssuccessorinofficeinthecircuitcourtinthecircuitwithinwhichthepropertysoldwassituated.Theofficermayrequiretheclaimantstointerplead,inwhicheventtheofficershallstatethenamesofallclaimantsknowntotheofficer,andshallcausethemtobemadepartiestotheaction.Ifintheofficer’sopiniontheremaybeotherclaimantswhoareunknown,theofficermayapplyforanorderorordersjoiningallpersonsunknownhavingorclaimingtohaveanylegalorequitableright,title,orinterestinthemoneysoranypartthereoforanylienorotherclaimwithrespectthereto.
(b) Anyordersofthecourtorsummonsinthemattermaybeservedasprovidedbylawortherulesofcourt,andallpersonshavinganyinterestinthemoneyswhoareknown,includingtheguardiansofsuchofthemasareunderlegalageorunderanyotherlegaldisability(andifanyoneormoreofthemisunderlegalageorunderotherlegaldisabilityandwithoutaguardianthecourtshallappointaguardianadlitemtorepresent themtherein)shallhavenoticeoftheactionbypersonalserviceuponthem.AllpersonshavinganyinterestinthemoneyswhosenamesareunknownorwhoifknowndonotresidewithintheState,orforanyreasoncannotbeservedwithprocesswithintheStateshallhavenoticeoftheactionasprovidedbysections634-23to634-27,exceptthatanypublicationofsummonsshallbeinatleastonenewspaperpublishedintheStateandhavingageneralcirculationinthecircuitwithinwhichthepropertysoldwassituated,andtheformofnoticetobepublishedshallprovideabriefdescriptionofthepropertywhichwassold.
(c) Allexpensesincurredbytheofficershallbemetoutofthesurplusmoneysrealizedfromthesale.[L1989,c14,ptof§1(1)]
CIVIL COMPLIANCE; SPECIAL ENFORCEMENT SECTION
Note
PartrepealedonJune30,2014.L2009,c134,§13(3).The2013 amendment repealsSection13(3)ofAct 134,SLH2009 effectiveApril 30, 2013.Deletes the sunset provisions for the special
enforcementsectionofthedepartmentoftaxation.L2013,c58,§3.
§231-81 Special enforcement section; created. [(a)]Thereiscreatedwithinthedepartmentoftaxationthespecialenforcementsectiontocarryoutcivilenforcementeffortsasdirectedbythedirectoroftaxation.Thedirectormaystaffthesectionastheexigenciesofthepublicservicemayrequire.
[(b)]Thedepartmentoftaxationshallreporttothelegislaturenolaterthanthirtydayspriortotheconveningofeachregularsessionthestateresourcescommittedtoimplementing[Act134,SessionLawsofHawaii2009]andtheadditionalrevenuesraisedtherefor.[L2009,c134,ptof§2,§9;amL2013,c58,§1]
Revision Note
L2009,c134,§9iscodifiedtothissectionpursuantto§23G-15.
§231-82 Special enforcement section; functions, powers, and duties. Thespecialenforcementsectionshallhavethefollowingfunctions,powers,andduties:
(1) Investigatereportedorsuspectedviolationsoftaxlawsforcivilenforcementpurposes,includingthroughcovertmeans,withastatedpriorityofinvestigatingcash-basedbusinessesasdefinedinsection231-93;
CHAPTER231,Page39(UnofficialCompilation)
ADMINISTRATION OF TAXES §231-84
(2) Enforcethetaxlawsbyissuing,enforcing,orexecutingcitations,fines,infractions,assessments,liens,levies,writs,warrants,injunctions,orotherprocess;
(3) Serveas fraud referral specialists toassist in thedevelopmentand reviewof fraudcases forappropriatedispositionofpotentiallyfraudulentactivities,includingreferraltocriminalinvestigatorsandassessmentofcivilfraudpenalties;providedthatpersonnelassignedtothespecialenforcementsectionmaynotparticipateinanycriminalinvestigation;
(4) Organizeandholdpublicinformationalmeetingsonissuesoftaxlaws,includingcompliancedeficienciesinsegmentsoftheeconomy,andundertakeanyotheractivitiestoencouragetaxpayers,practitioners,orotherstomaintainresponsibilityandcompliancewiththeirtaxobligations;
(5) Coordinatewithothersectionsordivisionswithinthedepartmentoftaxation,otherdepartmentsorbranchesofthestategovernment,anybranchesofthecountygovernment,orthefederalgovernmentonmattersrelatingtocivilenforcementofthetaxlaws,includingjointinvestigations,information-sharing,arrangements, orconcurrentcollectionefforts;providedthatpersonnelassignedtothespecialenforcementsectionmaynotparticipateinanycriminalinvestigation;
(6) Compile information received by third parties, including taxpayers, competitors, government agencies,confidentialsources,orpublicsourcesanddelegatethisinformationwithinthedepartmentforproperhandling.Properhandlingmayincludereferralinternallytoothercivilorcriminalenforcementsections;
(7) Conductinvestigations,research,andstudiesofmattersrelevanttothecomplexorsensitivecivilenforcementofthetaxlaws;and
(8) Performsuchotheractsasmaybeincidentaltotheexerciseofthefunctions,powers,anddutiessetforthinthissectionorasotherwisedirectedbythedirectoroftaxation.[L2009,c134,ptof§2;amL2013,c58,§1]
§231-83 Investigators and personnel, appointment and power. (a) The director of taxation may appoint,commission,ordetail to thespecialenforcementsectiononeormorepersonsas investigators, investigatorassistants,andothersupportstaffas theexigenciesof thepublicservicemayrequire. Investigatorsmaybe legaloraccountingprofessionals; provided that their primary duty is to conduct investigations pursuant to the authorities of the specialenforcementsectionandtheyshallnotconductorparticipateincriminalinvestigationsofthetaxlawsorrenderlegaladvice.Investigatorsmayserveprocessandapplyforandexecutesearchwarrantsorwritsofentrypursuanttosection231-84butshallnototherwisehavethepowersofapoliceofficerordeputysheriff.
(b) Notwithstandinganyother law to thecontrary relating toemployment,bargaining, labor,orcompensationrightsorduties,anypersonappointed,commissioned,ordetailedtothespecialenforcementsection:
(1) Maybeanemployeeofthedepartmentinanycapacity,includingexemptfromorsubjecttochapters76and89asanemployeeofthedepartment;
(2) Shallbeexemptfromchapters76and89forpurposesoftheirappointment,commission,ordetailcapacityasinvestigator,whetherfull-time,part-time,ortemporary;
(3) Maybeappointed,commissioned,ordetailedinanycapacity,andwhoseappointment,commission,ordetailmaybedismissedatthepleasureofthedirectoroftaxation;
(4) Ifappointed,commissioned,ordetailedonatemporarybasis,shallhavetherighttoreturntotheperson’ssamepositionortoarelatedpositioninthesameclassordivisionwithinthedepartmentwhentheperson’sappointmentexpires.Thereturnrightsprovidedunder thissectionshallapply topersonsexemptfromorsubjecttochapters76and89;and
(5) Maybepaidovertimeasprescribedbyanapplicablecollectivebargainingagreementorexistingpolicyforexcludedemployees.Thecompensationrightsunderthissectionshallapplytopersonsexemptfromorsubjecttochapters76and89.[L2009,c134,ptof§2;amL2013,c58,§1]
§231-84 Right to inspection of books, records, and premises; warrants and writs; levy and seizure. (a)Uponpresentingcredentials,thespecialenforcementsectionmayexamineanybooks,papers,records,andanyarticleoritemof businesstransactedofanypersonengagedinbusinessinthisStatetoverifytheaccuracyofthereportingandpaymentofthetaxesimposedbylaw.Everypersoninpossessionofanybooks,papers,records,orarticlesoritemsofbusinesstransacted,andtheperson’sagentsandemployees,shallprovidethespecialenforcementsectionthemeans,facilities,andopportunitiesfortheexaminationsuponrequest,totheextentreasonablypossibleunderthecircumstances.
(b) Thespecialenforcementsectionmayinspecttheoperations,premises,andstorageareasofanypersonengagedinbusinessinthisStateduringregularbusinesshours.
(c) Thespecialenforcementsectionmayinspecttheoperations,premises,andstorageareasofanypersonengagedinbusinessinthisStateatanytime,withoutnotice,upontheissuanceofawarrantorwritofentrybaseduponprobablecauseofaviolationundertitle14.Thedeterminationofprobablecauseforpurposesofthissectionshallbemadebaseduponthestandardofprobablecauseforanadministrativeorcivilsearchorseizure.Applicationforasearchwarrantorwritofentryunderthissectionshallbemadebymakingadeclaration,underoath,whichincludesthefollowing:
(1) Thetaxpayer’sformofbusiness;(2) Thetaxpayer’sinterestinandaddressofthepremisessoughttobesearched;
§231-85 ADMINISTRATION OF TAXES
CHAPTER231,Page40(UnofficialCompilation)
(3) Whetherpermissiontosearchthepremiseshasbeenrequestedinadvanceofrequestingthewarrantorwrit;(4) Theparticularbooks,records,items,articles,assets,orcontrabandreasonablybelievedtobeonthepremises;
and(5) Theallegedviolationreasonablybelievedtohaveoccurred,includingnonpaymentoftaxes;and,ifsearching
orseizinginfurtheranceofcollection,identificationoftheassetsreasonablybelievedtobeonthepremises.Thespecialenforcementsectionmayapplytothecircuitcourtwherethepersonislocatedforissuanceofsuch
warrantorwrit.Thespecialenforcementsectionmayexecutewarrantsorwritsofentry.Anypoliceofficer,criminalinvestigator,ordeputysheriffofthisStateoranycountyshallberequiredtorenderassistanceandaidtothespecialenforcementsectioninexecutingwarrantsandwrits,uponrequest.Criminallawenforcementagenciesthatassistthespecialenforcementsectionmaybecompensated,asdeterminedbythedirector;providedthatnopersonoragencyshallbecompensatedonthebasisofaspecificpercentageorfractionofthemoneycollectedfromtaxpayers.
(d) Thespecialenforcementsection’sabilitytoinspectshallincludeinspectionofallstatements,books,papers,andrecordsinwhateverformat,includingelectronicformat,articlesoritemsofbusinesstransacted,includinginventory,supplies,stock,andcashonhand,pertainingtothesalesorotherbusinessactivitiesofanypersontoverifytheaccuracyofthereportingandpaymentoftaxesimposedbylaw.
(e) Thespecialenforcementsectionmayseizeandlevyanyassetsinthecustodyorcontrolofanypersonpursuanttothischapter,andsubjecttoallrightsofappealsetforthherein.[L2009,c134,ptof§2;amL2013,c58,§1]
§231-85 Identification of cash-economy cases; retention of funds. Notwithstanding any law to the contrary,eachfiscalyear,thespecialenforcementsectionmayidentifyanytaxpayer,assessment,investigation,orcollectionmatterasamatterofthespecialenforcementsection.Allrevenuescollectedfromspecialenforcementsectionmattersshallbedepositedintothetaxadministrationspecialfund.[L2009,c134,ptof§2;amL2013,c58,§1]
§231-86 Violent interference with a tax official. Any personwho interferes, hinders, obstructs, prevents, orimpedesanyinvestigatororemployeeofthedepartmentwithviolenceorthreatofviolence,shallbeguiltyofaclassCfelonyand,uponconviction,shallbesubjecttooneoranycombinationofthefollowing:
(1) Afineofnotmorethan$4,000;(2) Imprisonmentfornotmorethanthreeyears;or(3) Probation;
providedthatacorporationshallbefinednotlessthan$10,000.Thissectionshallbeconstruedinaccordancewithregulationsandjudicialinterpretationsgiventosimilarprovisions
oftheInternalRevenueCode.[L2009,c134,ptof§2;amL2013,c58,§1]
CASH ECONOMY ENFORCEMENT; CITATIONS
Note
PartrepealedonJune30,2014.L2009,c134,§13(3).The2013 amendment repealsSection13(3)ofAct 134,SLH2009 effectiveApril 30, 2013.Deletes the sunset provisions for the special
enforcementsectionofthedepartmentoftaxation.L2013,c58,§3.
§231-91 Citations for violations; deposits. (a) The special enforcement section may issue cease and desistcitationstoanypersonifthespecialenforcementsectionhascausetobelievethepersonhasviolated,isviolating,orisabouttoviolateanyprovisionoftitle14oradministrativeruleadoptedthereunder.Aceaseanddesistcitationmayincludeamonetaryfineforanyunlawfulact.
(b) Thedepartmentmayrecommendlegislationdefiningthecircumstancesandthecivilmonetaryfinescitableforunlawfulactionsundertitle14.
(c) Anyfineassessedunderthissectionshallbeamatterofthespecialenforcementsectionundersection231-85andshallberetainedanddepositedintothetaxadministrationspecialfund.
(d) Anyfineassessedshallbedueandpayablethirtydaysafterissuance,subjecttoappealrightsprovidedundersubsection(e);providedthatifpaymentofthefineisdeterminedtobeinjeopardy,suchfineshallbepayableimmediatelyandshallbeimmediatelycollected.Afindingofjeopardyshallbemadeinwriting,settingforththespecificreasonsforthefinding.Thefindingofjeopardyshallbesubjecttoimmediateappealundersubsection(e),andatthetaxpayer’srequesttheappealshallbeexpeditedandheardassoonasreasonablypracticable.Anyamountoffinecollectedunderjeopardyshallonlybereturneduponafindingbythedirectoroftaxationorthecircuitcourtthattherewasnoviolationoftitle14pursuanttoappealrightsprovidedundersubsection(e).
(e) Cease and desist citations may be appealed to the director of taxation or the director’s designee, and thedeterminationofthedirectormaybeappealedtothecircuitcourt,pursuanttochapter91.[L2009,c134,ptof§2;amL2013,c58,§1]
18-231-91
CHAPTER231,Page41(UnofficialCompilation)
ADMINISTRATION OF TAXES §231-95
Cross Reference
TaxInformationReleaseNo.2013-01,“AdvancedNoticeofProposedAdministrativeRulesRelatingtoCashEconomyEnforcement”
§231-92 Cash-based businesses; injunction. The special enforcement section, with the director of taxation’sapproval,maybringcivilactionsinthecircuitcourtwherethecash-basedbusinessislocatedtoenjoinanyunlawfulactundertitle14,includinganyadministrativeruleadoptedthereunder,byacash-basedbusiness.Totheextentprovidedbystatute,thespecialenforcementsectionmayincludeinanyactionanassessmentofamonetaryfine.[L2009,c134,ptof§2;amL2013,c58,§1]
Cross Reference
TaxInformationReleaseNo.2013-01,“AdvancedNoticeofProposedAdministrativeRulesRelatingtoCashEconomyEnforcement”
§231-93 Cash-based business; defined. For purposes of sections 231-91 to 231-100, “cash-based business”meansanypersonwhooperatesabusiness,includingfor-profitornot-for-profit,wheretransactionsingoodsorservicesareexchangedsubstantiallyforcashandwherethebusinessisfound,baseduponreasonablecauseincludingobservationorevidence,tohavemetoneofthefollowingfactors:
(1) Isfoundtohavesubstantiallyunderreportedormisrepresentedtheproperamountoftaxliabilityonanyreturnorothersubmissionto thedepartment. Forpurposesof thisparagraph,anamounthasbeensubstantiallyunderreportediftheamountproperlyincludibleonthereturnorsubmissionisinexcessoftwenty-fivepercentoftheamountstatedonthereturnorsubmission;
(2) Isrequiredtobelicensed,registered,orpermittedundertitle14andisinfactnotsolicensed,registered,orpermitted;
(3) Hasapastpatternofnoncomplianceofobligationsundertitle14;(4) Doesnothaveafixedandpermanentprincipalplaceofbusiness;(5) Hasnotobtainedanyrequiredtaxclearance;(6) Hasfailedtomaintainadequatebooksandrecords,or thoserecordsrequiredtobemaintainedbylawor
administrativerule;(7) Doesnotacceptchecksorelectronicpaymentdevicesforbusinesstransactions;providedthatabusinessmay
establishreasonablecriteriaforacceptingpersonalchecks;(8) Offerspricedifferentialsorotherwisedeviatesfromusualbusinesspracticeswhenthebusinesstransaction
substantiallyinvolvespaymentofcash,exceptwherethereisabonafidebusinessreasonforapricedifferential,suchastheavoidanceofmerchantfeesimposedbycreditcardcompanies;or
(9) Anyotherfactorrelevanttodescribingacash-basedbusinesscapableofnoncomplianceasdeterminedbythedirectoroftaxationandissuedpursuanttoataxinformationrelease;
providedthatabusinessshallnotbedeemedtohavemetanyofthesefactorswhileagenuinedisputeastothatfactorispendinginacontestedcasebeforeanyadministrativeagencyorinanycourt.[L2009,c134,ptof§2;amL2013,c58,§1]
Cross Reference
TaxInformationReleaseNo.2013-01,“AdvancedNoticeofProposedAdministrativeRulesRelatingtoCashEconomyEnforcement”
§231-94 Failure to produce license upon demand. Everypersonrequiredtobelicensedorpermittedundertitle14,whetherornotsolicensedorpermitted,shallberequiredtoproducethelicenseorpermitupondemandbythespecialenforcementsection.Failuretoproducethelicenseorpermitupondemandshallbeunlawful.Anypersonwhoviolatesthissectionshallbesubjecttoafinenottoexceed$500;providedthatifthepersonisacash-basedbusiness,thefineshallnotexceed$1,000.Itshallbeanabsolutedefensetothissectionifthepersonproducesalicenseorpermitnumberonfilewiththedepartmentandthedepartmentconfirmsthatthepersonassociatedwiththenumberistrueandaccurate.[L2009,c134,ptof§2;amL2013,c58,§1]
Cross Reference
TaxInformationReleaseNo.2013-01,“AdvancedNoticeofProposedAdministrativeRulesRelatingtoCashEconomyEnforcement”
§231-95 Failure to keep adequate books and records. Itshallbeunlawfulforanypersonrequiredundertitle14tokeepbooksorrecordstofailtoproducethebooksorrecordsupondemandbythespecialenforcementsection,orassoonthereafterasisreasonableunderthecircumstances.Anypersonwhoviolatesthissectionshallbesubjecttoafinenottoexceed$1,000;providedthatifthepersonisacash-basedbusiness,thefineshallnotexceed$2,000.[L2009,c134,ptof§2;amL2013,c58,§1]
Cross Reference
TaxInformationReleaseNo.2013-01,“AdvancedNoticeofProposedAdministrativeRulesRelatingtoCashEconomyEnforcement”
18-231-94
18-231-95
§231-96 ADMINISTRATION OF TAXES
CHAPTER231,Page42(UnofficialCompilation)
§231-96 Failure to record transaction. (a) Itshallbeunlawfulforanypersondoingbusinessunderchapter237,otherthancasualsales,toconductanytransactionincashandfailto:
(1) Offerareceiptorotherrecordofthetransaction;and(2) Maintainacontemporaneouslygeneratedrecordofallbusinesstransactionsconductedeachday,
whetherhandwrittenorgeneratedbyamanuallyoperatedorelectroniccashregister.Eachdayapersonisinviolationofthissectionshallbetreatedasaseparateviolation.
(b) Exceptasprovidedinsubsection(c),anypersonwhoviolatesthissectionshallbesubjecttoafinenottoexceed$1,000;providedthatifthepersonisacash-basedbusiness,thefineshallnotexceed$2,000.
(c) Iftheperson,includingacash-basedbusiness,isotherwiseincompliancewithtitle14atthetimeofviolationofthissection,thefineforaviolationofthissectionshallbecommensuratewiththeviolation,asdeterminedbythedepartmentinaccordancewithrulesadoptedpursuanttochapter91.[L2009,c134,ptof§2;amL2011,c102,§1;amL2013,c58,§1andc162,§1]
Cross Reference
TaxInformationReleaseNo.2013-01,“AdvancedNoticeofProposedAdministrativeRulesRelatingtoCashEconomyEnforcement”
[§231-97] REPEALED. L2011,c102,§2.
§231-98 Tax avoidance price fixing. Itshallbeunlawfulforanypersontosell,offertosell,orotherwiseconveymorethanonepriceforanybusinesstobetransactedwhenthelowerpriceisofferedifthetransactionispaidforincash.Itshallnotbeanoffenseunderthissectionifabusinesschargesahigherpriceforlegitimatebusinesspurposes,suchasforthepurposeofrecoveringanychargesassessedthebusiness,includingforfacilitatingelectronicpayment.Anypersonwhoviolatesthissectionshallbesubjecttoafinenottoexceed$2,000;providedthatifthepersonisacash-basedbusiness,thefineshallnotexceed$3,000.[L2009,c134,ptof§2;amL2013,c58,§1]
Cross Reference
TaxInformationReleaseNo.2013-01,“AdvancedNoticeofProposedAdministrativeRulesRelatingtoCashEconomyEnforcement”
§231-99 Possession of currency for tax avoidance purposes. It shallbeunlawful for anypersonengaged inbusinessinthisStatetopossesscurrencyintheformofcoinornote,wherethepossessionisfortaxavoidancepurposes.It shall be the department’s burden to establish that currency is possessed for tax avoidance purposes; provided thatcircumstantialevidencemaybeusedbythedepartmentinanyproceeding.Anypersonwhoviolatesthissectionshallbesubjecttoafinenottoexceed$2,000;providedthatifthepersonisacash-basedbusiness,thefineshallnotexceed$3,000.[L2009,c134,ptof§2;amL2013,c58,§1]
Cross Reference
TaxInformationReleaseNo.2013-01,“AdvancedNoticeofProposedAdministrativeRulesRelatingtoCashEconomyEnforcement”
§231-100 Interference with a tax official. It is unlawful for any person to intentionally interferewith, hinder,obstruct,prevent,orimpedeanyinvestigator,auditor,collector,orotheremployeeofthedepartmentfromobtaininglicenseinformation,books,records,articles,oritemsofbusinesstransacted,orotherinformationorpropertyrightfullyentitledthedepartment.Anypersonwhoviolatesthissectionshallbesubjecttoafineofnotmorethan$2,000.Itshallbeanabsolutedefensetothefineunderthissectionthatthepersonactedwithgoodcause.[L2009,c134,ptof§2;amL2013,c58,§1]
Cross Reference
TaxInformationReleaseNo.2013-01,“AdvancedNoticeofProposedAdministrativeRulesRelatingtoCashEconomyEnforcement”
18-231-96
18-231-98
18-231-100