new chapter 231 administration of taxes · 2020. 1. 24. · 231-1.6 personnel security program;...

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CHAPTER 231, Page 1 (Unofficial Compilation) ADMINISTRATION OF TAXES CHAPTER 231 ADMINISTRATION OF TAXES General Provisions Section 231-1 Definitions 231-1.5 Confidentiality privileges relating to taxpayer communications 231-1.6 Personnel security program; criminal history record checks 231-2 Taxation districts 231-3 Department, general duties and powers 231-3.1 Consideration paid not indicative of fair market value 231-3.2 Repealed 231-3.3 Auditor access to tax records or other information for reviews of exemptions, exclusions, credits, and deductions 231-3.4 Publication of reports 231-3.5 Suspension of running of the period of limitation during bankruptcy proceedings 231-3.6 Streamlined sales and use tax agreement compliance 231-4 Assessing officers eligible to appointment as collecting officers and vice versa 231-4.3 Investigators; appointment and powers 231-4.5 Administrative rules officer; specialists; appointment and duties 231-5 Deceased officers, duties of personal representatives, etc. 231-6 Oath, power to administer 231-7 Audits, investigations, hearings, and subpoenas 231-7.5 Expedited appeals and dispute resolution program 231-8 Timely mailing treated as timely filing and paying 231-8.5 Electronic filing of tax returns 231-8.6 Repealed 231-9 Tax collection; general duties, powers of director; dollar rounding 231-9.2 Offers in compromise 231-9.3 Tax collection; mainland contractors working on federal construction projects 231-9.4 Credit or debit card remittances 231-9.5 Assessment of additional taxes of corporations or partnerships 231-9.6 Fiduciaries, liability 231-9.7 Informalities not to invalidate assessments, mistakes in names or notices, etc. 231-9.8 Tax bills 231-9.9 Filing and payment of taxes by electronic funds transfer 231-10 Department; keep offices where 231-10.5 Closing audit letters 231-10.6 Rules or administrative guidance 231-10.7 Temporary rulemaking authority for regulation of tax matters 231-10.8 Tax clearance fees Police; District Judges 231-11 Police to aid assessing or collecting officers 231-12 Repealed Delinquent Taxes 231-13 Director; examination, investigation, and collection 231-14 Attorney

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Page 1: New CHAPTER 231 ADMINISTRATION OF TAXES · 2020. 1. 24. · 231-1.6 Personnel security program; criminal history record checks 231-2 Taxation districts 231-3 Department, general duties

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

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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

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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.

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§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]

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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

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[§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 title 14, 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

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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

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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, including thepower toarrest;provided thatsuchpowersshall remain inforceandeffectonlywhile inactualperformanceoftheirduties.Theseinvestigatorsshallconsistofpersonnelwhoseprimarydutyistoconductinvestigationsasdirectedbythedirector.Personsappointedandcommissionedunderthissectionshallbeexemptfromchapter76. [L2003,c136,§2]

[§231-4.5] Administrative rules officer; specialists; appointment and duties.  Thedirectoroftaxationmayappointanadministrativerulesofficer,andadministrativerulesspecialistsasnecessarytoassisttheadministrativerulesofficer.

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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 Audits,  investigations, hearings and subpoenas.  (a)Thedirectorof taxation,andany representativeofthedirectordulyauthorizedbythedirector,mayconductanycivilauditorcriminalinvestigation,investigation,orhearing,relatingtoanyassessment,ortheamountofanytax,orthecollectionofanydelinquenttax,includinganyauditorinvestigationintothefinancialresourcesofanydelinquenttaxpayerorthecollectabilityofanydelinquenttax.

(b) Thedirectoroftaxationorotherpersonconductinghearingsmayadministeroathsandtaketestimonyunderoathrelatingtothematterofaudit,investigation,orhearing.

(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.

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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,mayquashormodifythesubpoenaifcompliancewouldbeunreasonableoroppressiveorwouldviolateanyprivilege 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.

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CHAPTER231,Page11(UnofficialCompilation)

  ADMINISTRATION OF TAXES  §231-8.5

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 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. (a)Thedepartmentmayallowfilingbyelectronic,telephonic,oropticalmeansofanytaxreturn,application,report,orotherdocumentrequiredundertheprovisionsoftitle14administeredbythedepartment.

(b) Iftherequirementsofsubsection(c)aresatisfied,thedepartmentmayrequireelectronicfilingofanytaxreturn,application,report,orotherdocumentrequiredundertheprovisionsoftitle14administeredbythedepartmentforthefollowingtaxpayers:

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§231-8.6 ADMINISTRATION OF TAXES

CHAPTER231,Page12(UnofficialCompilation)

(1) For withholding tax filings required under chapter 235, only employers whose total tax liability undersections235-61and235-62forthecalendarorfiscalyearexceeds$40,000;

(2) Forincometaxfilingsrequiredunderchapter235,onlytaxpayerswhoaresubjecttotaxundersection235-71,235-71.5,or235-72;

(3) Forgeneral excise taxfilings requiredunderchapter237,only taxpayerswhose total tax liabilityunderchapter237forthecalendarorfiscalyearexceeds$4,000;

(4) Fortransientaccommodationstaxfilingsrequiredunderchapter237D,onlyoperatorsandplanmanagerswhosetotaltaxliabilityunderchapter237Dforthecalendarorfiscalyearexceeds$4,000;and

(5) Forfilingsrequiredunderthefollowingchapters,alltaxpayerssubjecttotaxunderthosechapters:(A) 236E;(B) 239;(C) 241;(D) 243;(E) 244D;(F) 245;and(G) 251.

(c) Asaprerequisitetorequiringelectronicfilingundersubsection(b),thedepartmentshallprovide:(1) Anelectronicfilingoptiontothetaxpayer;and(2) Nolessthanninetydayspriorwrittennoticetothegeneralpublicofthedepartment’sintentiontorequire

electronicfiling.(d) Thedateoffilingshallbethedatethetaxreturn,application,report,orotherdocumentistransmittedtothe

department in a form andmanner prescribed by departmental rules adopted pursuant to chapter 91.The departmentmaydeterminealternativemethodsforthesigning,subscribing,orverifyingofataxreturn,application,report,orotherdocumentthatshallhavethesamevalidityandconsequencesastheactualsigningbythetaxpayer.Afilingunderthissectionshallbetreatedinthesamemannerasafilingsubjecttothepenaltiesundersection231-39.

(e) Ifapersonwhoisrequiredbythedepartmentundersubsection(b)toelectronicallyfileanytaxreturnfailstofileusinganapprovedmethod,unlessitisshownthatthefailureisduetoreasonablecauseandnottoneglect,thepersonshallbeliableforapenaltyoftwopercentoftheamountofthetaxrequiredtobeshownonthereturn.[L1997,c176,§1;amL2018,c66,§2]

§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,duringtheperiodtheofferisbeingevaluatedbythedepartment,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).

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CHAPTER231,Page13(UnofficialCompilation)

  ADMINISTRATION OF TAXES  §231-9.9

(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] 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,electronicfundstransfersshallapplytoannualtaxliabilities

18-231-9.9

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§231-10 ADMINISTRATION OF TAXES

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thatexceed$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]

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;

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ADMINISTRATION OF TAXES §231-13

(2) Makingcopiesofthetemporaryrulesavailabletothepublicforinspectionatthedepartment’sofficesorcopyingifanyrequiredfeeispaid;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.  Thedirector of 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. (a)Thedirectoroftaxationshallberesponsibleforthecollectionandgeneraladministrationofalldelinquenttaxes.Notwithstandinganyotherlawtothecontrary,thedirector,bycontract,mayselectandretainbondedcollectionagencies,licensedattorneys,accountants,andauditorsorotherpersonsforthepurposeofassessment,enforcement,orcollectionoftaxesfrompersonssubjecttotheprovisionsoftitle14administeredbythedepartment.

(b) Attheoptionofthedirector,anycontractenteredintounderthissectionmayprovideforcompensationon:(1) Afixedpricebasis;(2) Anhourlyratebasiswithorwithoutafixedcap;or(3) Acontingentfeearrangementtobespecifiedinthecontract;providedthatthisparagraphshallnotapplyto

auditorsandaccountants.AllcompensationshallbepayableoutofthetaxesrecoveredfortheStateorfromthedebtorinaccordancewiththetermsof,anduptotheamountauthorizedbythecontract,unlessotherwisedeterminedbythedirector.[L1933,c135,§2;RL1935,§1966;amL1937,c241,§1;RL1945,§5118;RL1955,§115-18;amLSp19592d,c1,§16;HRS

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§231-13;amL1982,c88,§2;amimpL1984,c90,§1;gench1985;amL1990,c34,§3;amL1997,c253,§1;amL1999,c68,§1;amL2013,c93,§§1,4]

§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,shallbemadebyanyofficerofthecorporation,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,orwhendeployedoutsidethe

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  ADMINISTRATION OF TAXES  §231-15.8

UnitedStatesawayfromtheindividual’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,inanycaseinwhichtheaddressofthepersonlastknowntothedirectorisinanareaforwhichUnitedStatespostofficesunderinstructionsofthePostmasterGeneral,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.

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(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).TheMultistateTaxCommissionmaymaketheinformationavailabletoadulyaccreditedtaxofficialoftheUnited

States,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-13

18-231-19.5

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  ADMINISTRATION OF TAXES  [§231-19.5]

andanyotherlawrestrictingdisclosureoftaxreturnsortaxreturninformationtothecontrary.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’sdecisiontotheofficeofinformationpracticesinaccordancewithproceduresestablishedbytheofficeofinformationpracticesundersections92F-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,orofthejudicialcircuitinwhichtherequestforthewrittenopinionismadeorinwhichacopy

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ofthewrittenopinionismaintainedbythedepartment.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,theremittanceordocumentshallnotbedueuntilthenextsucceedingdaywhichisnotaSaturday,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.

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ADMINISTRATION OF TAXES §231-23

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:(1) Ifthetaxreturnasfiledbyataxpayershowstheamountalreadypaidexceedstheamountdeterminedtobe

thecorrectamountofthetaxdue,whetherornotthetaxwaspaidbyinstallments,andthetaxpayerrequestsarefundoftheoverpayment,theamountoftheoverpaymentshallberefundedinthemannerprovidedinsubsection(c)withinninetydaysoftheduedateofthetaxreturnorthedatethetaxreturnisfiled,whicheverislater;providedthatinterestontheoverpaymentshallbepaid:(A) Tothetaxpayeriftheamountoverpaidisnotrefundedwithinninetydays;and(B) Attherateofone-thirdofonepercentoftherefundamountforeachmonthorfractionthereofafter

theninety-dayperiod,untiltherefundandanyapplicableinterestispaidtothetaxpayer;(2) Ifanyoverpaymentoftaxesresultsorarisesfrom:

(A) Thetaxpayerfilinganamendedreturn;or(B) Adeterminationmadebythedirector;and

theoverpaymentisnotshownontheoriginalreturnasfiledbythetaxpayer,theamountoverpaidshallberefundedtothetaxpayerwithinninetydaysfromtheduedateoftheoriginalreturnorthedatetheoverpaymentisdiscoveredundersubparagraphs(A)or(B),whicheveroccurredlater;providedthatinterestshallbepaidtothetaxpayeriftheamountoverpaidisnotrefundedwithinninetydaysandattherateofone-thirdofone

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percentoftherefundamountforeachmonthorfractionthereofaftertheninety-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]

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

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  ADMINISTRATION OF TAXES  §231-25

(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,containingevidenceorstatementsrelatingtothepropertyorrightstopropertysubjecttolevy,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

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(E) Undeliveredmail.Mail,addressedtoanyperson,whichhasnotbeendeliveredtotheaddressee;and(7) Saleoftheseizedproperty.

(A) Noticeofsale.Thedirectorshall takepossessionandkeeptheleviedpropertyuntil thesale.Aftertakingpossession,thedirectorshallsellthetaxpayer’sinterestinthepropertyatpublicauctionafterfirstgivingfifteendays’publicnoticeofthetimeandplaceofthesaleinthedistrict,andbypostingthenoticeinatleastthreepublicplacesinthedistrictwherethesaleistobeheld;

(B) Assistanceinseizureandsale.Thedirectormayrequiretheassistanceofanysherifforauthorizedpoliceofficerofanycountytoaidintheseizureandsaleof theleviedproperty.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:

(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.

18-231-25.5

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ADMINISTRATION OF TAXES §231-29

(d) Notwithstandinganyotherprovisionsprovidedundertitle14,wheneverataxpayermakesapartialpaymentofaparticulardelinquentamount,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 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,toquiettitle

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§231-30 ADMINISTRATION OF TAXES

CHAPTER231,Page26(UnofficialCompilation)

toorfortheforeclosureofamortgageorotherlienuponrealorpersonalpropertyonwhichtheStatehasorclaimsataxlienunderchaptersofthelawundertitle14administeredbythedepartmentorchapter383;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,thenameandaddressofapersonresidingwithintheStateuponwhomprocessmaybeserved,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.Taxesthatthedepartmentfindstobeuncollectibleshallbeenteredinaspecialrecordandbedeletedfromtheotherbooks

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ADMINISTRATION OF TAXES §231-33

keptbythedepartment.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;

(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.Therecordingorfilingofthecertificate

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§231-34 ADMINISTRATION OF TAXES

CHAPTER231,Page28(UnofficialCompilation)

hastheeffectsetforthinthissection,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;

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]

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  ADMINISTRATION OF TAXES  [§231-36.5]

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:

(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:

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(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:

(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;

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  ADMINISTRATION OF TAXES  [§231-36.7]

(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:(1) Organizingorassistingintheorganizationof,orparticipatingdirectlyorindirectlyinthesaleof,aninterest

in:(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.Forpurposesof

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thissection,anyactivitydescribedinsubsection(a)(1)shallbetreatedasaseparateactivityforeachentityorarrangement.Participationineachsaledescribedinsubsection(a)(1)shallbetreatedasaseparateactivityforeachentityorarrangement.

(c) Attherequestofthedirectoroftaxation,acivilactionmaybebroughttoenjoinanypersondescribedinsubsection (a) fromengaging in any conduct described in subsection (a). Any actionunder this section shall bebroughtinthecircuitcourtofthecircuitwherethepersoninsubsection(a)residesorwheretheperson’sprincipalplaceofbusinessislocated.ThecourtmayexerciseitsjurisdictionovertheactionseparateandapartfromanyotheractionbroughtbytheStateagainstthosepersonsdescribedinsubsection(a).Ifthecourtfindsthatapersondescribedin subsection (a) has engaged in any conduct subject topenaltyunder subsection (b) and that injunctive relief isappropriatetopreventtherecurrenceofthatconduct,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]

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.

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ADMINISTRATION OF TAXES §231-40

(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,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]

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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”meansthechildsupportenforcementagencyoranagencyundercooperativeagreementwiththedepartmentwheneverthedepartmentisrequiredbylawtoenforceasupportorderonbehalfofanindividual.“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;

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  ADMINISTRATION OF TAXES  [§231-61]

(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.  The State, through the department of accounting and general services or thedepartmentoftaxation,uponrequestofaclaimantagency,shallsetoffanyvaliddebtdueandowingaclaimantagencybythedebtoragainstanydebtor’srefund.Anyamountoftherefundinexcessoftheamountretainedtosatisfythedebtshallberefundedtothedebtor.[L1982,c199,ptof§1;amL2019,c97,§1]

§231-54 Hearings; appeals.  Atthetimeasetoffisidentified,thedebtorshallbenotifiedbythecomptrollerorthedirectoroftaxationoftheState’sintentiontoapplythedebtor’sdebtagainsttherefund.Thenoticeshallstatethatthedebtorwithinthirtydaysmayrequestahearingbeforetheclaimantagencytocontestthesetoff.Noissuesthathavebeenpreviouslylitigatedshallbeconsideredatthehearing.Appealsfromthehearingallowedunderthissectionshallbeinaccordancewithchapter91.[L1982,c199,ptof§1;amL2019,c97,§2]

[§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.  Thedepartmentofaccountingandgeneralservicesorthedepartmentoftaxationshallnotifythechildsupportenforcementagencyoftheaddressandsocialsecuritynumberofeachdebtorwhohasbeensubjecttoasetoffbecauseofachildsupportdebt.[L1986,c332,§3;amL2019,c97,§3]

[§231-58] Rules.  Allstateagenciesmayadoptrulespursuanttochapter91forcarryingoutthepurposesofsections231-51to231-59.[L1982,c199,ptof§1]

§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,theregistrarshallcausethetaxlientobeindexedinthegeneralindexesofthebureauof

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conveyances.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,hasexistedthereonforthreeyears,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.Thenoticeshallalsobepostedforalikeperiodinatleast

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  ADMINISTRATION OF TAXES  [§231-69]

threeconspicuouspublicplaceswithinsuchtaxationdistrict,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] 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

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(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;

(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, or

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ADMINISTRATION OF TAXES §231-84

concurrentcollectionefforts;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;(3) Whetherpermissiontosearchthepremiseshasbeenrequestedinadvanceofrequestingthewarrantorwrit;(4) Theparticularbooks,records,items,articles,assets,orcontrabandreasonablybelievedtobeonthepremises;

and(5) Theallegedviolationreasonablybelievedtohaveoccurred,includingnonpaymentoftaxes;and,ifsearching

orseizinginfurtheranceofcollection,identificationoftheassetsreasonablybelievedtobeonthepremises.Thespecialenforcementsectionmayapplytothecircuitcourtwherethepersonislocatedforissuanceofsuch

warrantorwrit.Thespecialenforcementsectionmayexecutewarrantsorwritsofentry.Anypoliceofficer,criminalinvestigator,ordeputysheriffofthisStateoranycountyshallberequiredtorenderassistanceandaidtothespecialenforcementsectioninexecutingwarrantsandwrits,uponrequest.Criminallawenforcementagenciesthatassistthe

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specialenforcementsectionmaybecompensated,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]

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]

18-231-91

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  ADMINISTRATION OF TAXES  §231-96

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”

§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.

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[§231-97] ADMINISTRATION OF TAXES

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(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”

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