chapter 231 administration of taxes - …files.hawaii.gov/tax/legal/hrs/hrs_231.pdfsection 231-1...

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231-11 Policetoaidassessingorcollectingofficers231-12 Repealed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



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



RecoveryofMoneyOwedtotheState

231-51 Purpose231-52 Definitions231-53 Setoffagainstrefund231-54 Hearings;appeals231-55 Finalizationofsetoff;creditondebt231-56 Chargesforsetoff;credittoagency231-57 Apportionmentofjointrefunds231-57.5 Notificationofaddressandsocialsecuritynumberofdebtorparent231-58 Rules231-59 Procedureadditional

Liens,Foreclosure

231-61 Taxliens;co-owners’rights231-62 Taxliens;foreclosure;property231-63 Taxliens;foreclosurewithoutsuit,notice231-64 Taxliens;registeredland231-65 Taxliens;notice,formof231-66 Taxliens;postponementofsale,etc.231-67 Taxliens;taxdeed;redemption231-68 Taxliens;costs231-69 Taxdeedasevidence231-70 Dispositionofsurplusmoneys

CivilCompliance;SpecialEnforcementSection

231-81 Specialenforcementsection;created231-82 Specialenforcementsection;functions,powers,andduties231-83 Investigatorsandpersonnel,appointmentandpower231-84 Righttoinspectionofbooks,records,andpremises;warrantsandwrits;levyandseizure231-85 Identificationofcash-economycases;retentionoffunds231-86 Violentinterferencewithataxofficial

CashEconomyEnforcement;Citations

231-91 Citationsforviolations;deposits231-92 Cash-basedbusinesses;injunction231-93 Cash-basedbusiness;defined231-94 Failuretoproducelicenseupondemand231-95 Failuretokeepadequatebooksandrecords231-96 Failuretorecordtransaction231-97 Repealed231-98 Taxavoidancepricefixing231-99 Possessionofcurrencyfortaxavoidancepurposes231-100 Interferencewithataxofficial

ThisisanunofficialcompilationoftheHawaiiRevisedStatutes.

Note

Performance-basedcontractstoacquireautomatedtaxsystems.L1996,c273.

Law Journals and Reviews

Hawaii’sGeneralExciseTaxLaw:AComprehensiveReviewoftheDecisions.IIHBJNo.13,atpg.1.TaxesinHawaiiSinceJanuary1973:ATaxSystemEvolves,ArthurB.Reinwald,13HBJNo.2Summer1977,pg.3.

§231-1 ADMINISTRATION OF TAXES


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]


ADMINISTRATION OF TAXES §231-3

§231-2 Taxation districts. Forthepurposeoftaxation,theStateisdividedintothefollowingfourdistricts:(1) ThecityandcountyofHonolulu,tobecalledthefirstdistrict;(2) ThecountiesofMauiandKalawao,tobecalledtheseconddistrict;(3) ThecountyofHawaii,tobecalledthethirddistrict;(4) ThecountyofKauai,tobecalledthefourthdistrict.[L19322d,c40,§2;RL1935,§1901;RL1945,§5102;

RL1955,§115-2;amL1967,c37,§1;HRS§231-2;amL2017,c12,§31]Cross References

Districts,generally,seechapter4.

Case Notes

Cited:33H.515,530.

§231-3 Department, general duties and powers. Thedepartmentoftaxationshallhavethefollowingdutiesandpowers,inadditiontoanyothersprescribedorgrantedbythischapter:

(1) Assessment:Tomakeanyassessmentbylawrequiredtobemadebythedepartment;(2) Collections:Toberesponsibleforthecollectionofalltaxesimposedundertitle14,exceptthosewhichby

lawaretobecollectedbycountytreasurers,andforsuchotherdutiesasareprovidedbylaw;(3) Constructionofrevenuelaws:Toconstruethetaxandrevenuelaws,theadministrationofwhichiswithinthe

scope of the department’s duties,whenever requested by any officer acting under those laws, or by aninterestedperson;

(4) Enforcementofpenalties:ToseethatpenaltiesareenforcedwhenprescribedbyanytaxorrevenuelawoftheState(theadministrationofwhichiswithinthescopeofthedepartment’sduties)fordisobedienceorevadingofitsprovisions,andtoseethatcomplaintismadeagainstpersonsviolatinganysuchlaw;intheexecutionofthesepowersanddutiesthedepartmentmaycallupontheattorneygeneraloranyoftheattorneygeneral’sdeputies,includingthecountyattorneysorpublicprosecutors,whosedutiesitshallbetoassistintheinstitutionandconductofallproceedingsorprosecutionsforpenaltiesandforfeitures,liabilities,andpunishmentsforviolationofthelawsadministeredbythedepartment;

(5) Forms:Toprescribeformstobeusedinorinconnectionwithanyassessment,includingformstobeusedinthemakingofreturnsbytaxpayersorinanyotherproceedingsconnectedwiththeassessment,andtochangethesamefromtimetotimeasdeemednecessary;

(6) Inspection,examinationofrecords:Toinspectandexaminetherecordsofallpublicofficerswithoutcharge,andtoexaminethebooksandpapersofaccountofanypersonforthepurposeofenablingthedepartmenttoobtainallinformationthatcouldinanymanneraidthedepartmentindischargingitsdutiesunderanytaxlaw;

(7) Recommendationsforlegislation:Torecommendtothegovernoranyamendments,changes,ormodificationsofthelawsasmayseemproperornecessarytoremedyinjusticeorirregularityintaxationortofacilitatetheassessmentoftaxes;

(8) Reporttogovernor:Toreporttothegovernorannually,andatsuchothertimesandinsuchmannerasthegovernormayrequire,concerningtheactsanddoingsandtheadministrationofthedepartment,andanyothermattersofinformationconcerningtaxationasmaybedeemedofgeneralinterest;

(9) Rules:Toadoptsuchrulesasthedepartmentmaydeempropereffectuallytocarryoutthepurposesforwhichthedepartmentisconstitutedandtoregulatemattersofprocedurebyorbeforethedepartment;

(10)Compromises:Withtheapprovalofthegovernor,tocompromiseanyclaimwherethetaxexceeds$50,000(exclusiveofpenaltiesandinterest)arisingunderanytaxlawtheadministrationofwhichiswithinthescopeofthedepartment’sduties,andtocompromiseanytaxclaimwherethetaxis$50,000orless(exclusiveofpenaltiesandinterest)withoutseekingtheapprovalofthegovernor;providedthatthedirectorshallhavethediscretiontoseektheapprovalofthegovernortocompromiseanytaxclaimwherethedirectordeemsitappropriate; and in each case the department shall post each proposed compromise, as set forth insubparagraphs(A)to(D),onthedepartment’sInternetwebsiteforfivecalendardaysbeforethedirectorsignsthecompromise,andthereshallbeplacedonfileinthedepartment’sofficeastatementof:(A) Thenameofthetaxpayerandtheamountandtypeoftaxassessed,orproposedtobeassessed;(B) Theamountofpenaltiesandinterestimposedorwhichcouldhavebeenimposedbylawwithrespect

totheamountoftaxassessed,ascomputedbythedepartment;(C) Thetotalamountofliabilityasdeterminedbythetermsofthecompromise,andtheactualpayments

madethereonwiththedatesthereof;and(D) Thereasonsforthecompromise.

Notwithstandingtheprovisionsofanylawmakingunlawfulthedisclosureoftaxreturnsorreturninformation,statementsonfileandincludedinthedepartment’sInternetwebsiteinrespectofcompromisesshallbeopentopublicinspection;

18-231-3-1.1

18-231-3-10

[§231-3.1] ADMINISTRATION OF TAXES


(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.


RuleofStrictconstructioninTaxCases,aQuestionofClassificationorExemption,ArthurB.Reinwald,11HBJ98.

Case Notes

Requireinformationreturn,33H.766.Commissionermayexercisetherighttoappealgiventheassessorby§232-19.44H.584,358P.2d539.Economyinadministrationisaproperfactorforconsiderationinassessmentoftaxes.56H.321,536P.2d91.

[§231-3.1] Consideration paid not indicative of fair market value. Wheresalesaremadebyataxpayer,taxableunder title14, toother affiliated companiesorpersons, orunderother circumstanceswhere the relationbetween thetaxpayerandthebuyerissuchthattheconsiderationpaid,ifany,isnotindicativeofthefairmarketvalue,thetaxpayershallpay the taxes imposedunder title14,measuredby thefairmarketvalue,correspondingasnearlyaspossible tothegrossproceedsofsalesoflikequalityandcharacterbyotherpersons,wherenocommoninterestexistsbetweenthebuyerandsellerbutthecircumstancesandconditionsareotherwisesimilar.Ifnosuchcomparablesalesexistbetweennonaffiliatedbuyersandsellers,thedepartmentmayprescribeequitableanduniformrulesforascertainingthefairmarketvalueofthesale.

Asusedinthissection,“affiliatedcompaniesorpersons”meanstwoormoreorganizations,trades,orbusinesses(whetherornotincorporated,organizedintheUnitedStates,oraffiliated)ownedorcontrolleddirectlyorindirectlybythesameinterests,includingcompaniesorpersonsdescribedinsection237-23.5.[L2002,c153,§2]

§231-3.2 REPEALED. L2007,c9,§21.

18-231-3-14


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



(2) Amodel2seller,whoshallbeasellerwhoselectsacertifiedautomatedsystemtousewhichcalculatestheamountoftaxdueonatransaction;or

(3) Amodel3seller,whoshallbeasellerwhousesitsownproprietaryautomatedsalestaxsystemthathasbeencertifiedasacertifiedautomatedsystem.

(b) Acertifiedserviceproviderinmodel1shallbeallowedamonetaryallowanceinaccordancewiththetermsofthecontractthatthestatesparticipatinginthestreamlinedsalesandusetaxagreementexecutewiththeprovider.Thedirectorshallprescribetheallowanceinaccordancewiththetermsofthecontract,whichshallbefundedentirelyfrommoneycollectedinmodel1.

Amonetaryallowancetoacertifiedserviceprovidermaybebasedononeormoreofthefollowingincentives:(1) Abaseratethatappliestotaxabletransactionsprocessedbytheprovider;and(2) For a period not to exceed twenty-four months following a voluntary seller’s registration through the

streamlinedsalesandusetaxagreement’scentralregistrationprocess,apercentageoftaxrevenuegeneratedfor amember state by the voluntary seller for eachmember state forwhich the seller does not have arequirementtoregistertocollectthetax.

(c) Amodel2sellershallbeallowedamonetaryallowancethatthedirectorshallprescribeinaccordancewiththetermsagreedtobythememberstatesofthestreamlinedsalesandusetaxagreement.Thememberstatesinitiallyanticipatethattheywillprovideamonetaryallowancetosellersundermodel2basedonthefollowing:

(1) Eachsellershallreceiveabaserateforaperiodnottoexceedtwenty-fourmonthsfollowingthecommencementofparticipationbytheseller;and

(2) For a period not to exceed twenty-four months following a voluntary seller’s registration through thestreamlinedsalesandusetaxagreement’scentralregistrationprocess,apercentageoftaxrevenuegeneratedfor amember state by the voluntary seller for eachmember state forwhich the seller does not have arequirementtoregistertocollectthetax.

(d) Amodel3sellerandallothersellersthatarenotundermodel1ormodel2shallbeallowedamonetaryallowance that the director shall prescribe in accordance with the terms agreed to by the member states of thestreamlinedsalesanduse taxagreement.Thememberstates initiallyanticipate that theywillprovideamonetaryallowancetosellersundermodel3andtoallothersellersthatarenotundermodels1or2basedonthefollowing:

(1) For a period not to exceed twenty-four months following a voluntary seller’s registration through thestreamlinedsalesandusetaxagreement’scentralregistrationprocess;and

(2) Apercentageoftaxrevenuegeneratedforamemberstatebythevoluntarysellerforeachmemberstateforwhichthesellerdoesnothavearequirementtoregistertocollectthetax.

(e) Pursuanttothestreamlinedsalesandusetaxagreement,thedirectorisauthorizedtoacceptcertifiedautomatedsystemsandcertifiedserviceproviderstoaidintheadministrationofthecollectionofthetaximposedunderchapter237andchapter238.

(f) Nopersonrequiredtocollectanytaximposedbychapter237or238,oranytaxauthorizedtobecollectedunderthestreamlinedsalesandusetaxagreementshallbeheldliableforhavingchargedandcollectedtheincorrectamountofsalesorusetaxbyreasonofrelianceonerroneousdataprovidedbythedirectorwithrespecttotaxrates,boundaries,ortaxingjurisdictionassignments.

(g) Inconnectionwithapurchaser’srequestfromasellerofovercollectedsalesorusetaxes,asellershallbepresumedtohaveareasonablebusinesspractice,ifinthecollectionofthesalesorusetaxes,theseller:

(1) Useseitheraproviderorasystem,includingaproprietarysystem,thatiscertifiedbytheState;and(2) HasremittedtotheStatealltaxescollectedlessanydeductions,credits,orcollectionallowances.

(h) Forthepurposesofthissection,“streamlinedsalesandusetaxagreement”meanstheagreementauthorizedunderchapter255D.[LSp2005,c3,§2]

§231-4 Assessing officers eligible to appointment as collecting officers and vice versa. Appointeestoofficesorpositionsinthedepartmentoftaxationfortheassessingoftaxesshallbeeligibleforappointmenttoofficesorpositionsinthedepartmentforthecollectionoftaxes,andviceversa.[L19322d,c40,§6;RL1935,§1904;RL1945,§5106;amL1951,c264,§2;RL1955,§115-6;amLSp19592d,c1,§16;HRS§231-4;amL1989,c14,§4(3)]

[§231-4.3] Investigators; appointment and powers. The director may appoint and commission one or moreinvestigatorsastheexigenciesofthepublicservicemayrequire.Personsappointedandcommissionedunderthissectionshallhaveandmayexerciseallofthepowersandauthorityandthebenefitsandprivilegesofapoliceofficerorofadeputysheriff, includingthepower toarrest;providedthatsuchpowersshall remaininforceandeffectonlywhile inactualperformanceoftheirduties.Theseinvestigatorsshallconsistofpersonnelwhoseprimarydutyistoconductinvestigationsasdirectedbythedirector.Personsappointedandcommissionedunderthissectionshallbeexemptfromchapter76. [L2003,c136,§2]

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



Theadministrativerulesofficershalldirecttheadoptionofrulesrelatedtotaxesadministeredbythedepartment,assistwiththeissuanceoftaxmemorandaandtaxinformationreleases,andperformotherdutiesasdirectedbythedirector.Theadministrativerulesofficerandtheadministrativerulesspecialistsshallbeexemptfromchapters76and77andmaybelegaloraccountingprofessionals;providedthatnoindividualappointedunderthissectionshallrenderlegalservicesreservedtotheattorneygeneralunderchapter28.[L1990,c102,§1]

§231-5 Deceased officers, duties of personal representatives, etc. Thepersonalrepresentativesofanydeceasedofficerofthedepartmentoftaxation,andallotherpersonsintowhosehandsanytaxlists,orrecords,papers,documents,orbooks,ortaxes,maycome,shalldeliverthesametothedepartment,andanyrefusalorwilfulfailuresotodoshallconstituteamisdemeanor.[L19322d,c40,§9;RL1935,§1909;RL1945,§5109;RL1955,§115-9;amLSp19592d,c1,§16;HRS§231-5;amL1976,c200,ptof§1]

§231-6 Oath, power to administer. Thedepartmentoftaxationmayadministeralloathsoraffirmationsrequiredtobetakenorbeadministeredunderchaptersofthelawundertitle14administeredbythedepartment,withrespecttoanymatterscomingwithinthescopeofthedutiesofthedepartment.[L19322d,c40,§10;RL1935,§1916;RL1945,§5110;RL1955,§115-10;amLSp19592d,c1,§16;HRS§231-6;amL1983,c217,§4;amL1985,c16,§3;amL1986,c340,§3;amL1991,c263,§4;amL1995,c66,§4]

§231-7 Hearings and subpoenas. [This section is effective until June 30, 2011. For section effective on July 1, 2011, see below.] (a)Thedirectoroftaxation,andanyrepresentativeofthedirectordulyauthorizedbythedirector,mayconductanyinquiry,investigation,orhearing,relatingtoanyassessment,ortheamountofanytax,orthecollectionofanydelinquenttax,includinganyinquiryorinvestigationintothefinancialresourcesofanydelinquenttaxpayerorthecollectabilityofanydelinquenttax.

(b) The director or other person conducting hearings may administer oaths and take testimony under oathrelatingtothematterofinquiryorinvestigation,andsubpoenawitnessesandrequiretheproductionofbooks,papers,documents,andrecordspertinenttosuchinquiry.

(c) Ifanypersondisobeysanyprocessor,havingappeared inobedience thereto, refuses toanswerpertinentquestionsputtothepersonbythedirectororotherpersonconductingthehearing,ortoproduceanybooks,papers,documents,orrecordspursuantthereto,thedirectororotherpersonconductingthehearingmayapplytothecircuitcourtofthecircuitwhereintheinquiryorinvestigationisbeingconducted,ortoanyjudgeofthecourt,settingforththedisobediencetoprocessorrefusaltoanswer,andthecourtorjudgeshallcitethepersontoappearbeforethecourtorjudgetoanswerthequestionsortoproducethebooks,papers,documents,orrecords,andupontheperson’srefusalsotodocommitthepersontojailuntilthepersontestifiesbutnotforalongerperiodthansixtydays.Notwithstandingtheservingofthetermofcommitmentbyanyperson,thedirectormayproceedinallrespectsasifthewitnesshadnotpreviouslybeencalledupontotestify.Witnesses(otherthanthetaxpayerorthetaxpayer’soritsofficers,directors,agents,andemployees)shallbeallowedtheirfeesandmileageasincasesinthecircuitcourts,tobepaidonvouchersofthedepartmentoftaxation,fromanymoneysavailableforexpensesofthedepartment.

(d) Anysubpoenaissuedunderthissectionthatdoesnotidentifythepersonwithrespecttowhoseliabilityorinvestigationthesubpoenaisissuedmaybeservedonanypersononlyafteracourtproceedinginwhichthedirectororanotherpersonestablishesthat:

(1) Thesubpoenarelatestotheinvestigationofaparticularpersonorascertainablegrouporclassofpersons;(2) Thereisareasonablebasisforbelievingthatthepersonorgrouporclassofpersonsmayfailormayhave

failedtocomplywithanyprovisionoftitle14;and(3) Theinformationsoughttobeobtainedfromtheexaminationofrecordsortestimonyandtheidentityofthe

personorpersonswithrespecttowhoseliabilitythesubpoenaisissuedisnotreadilyavailablefromothersources.

(e) Theprovisionsofthissectionareinadditiontoallotherprovisionsoflaw,andapplytoanytaxwithinthejurisdictionofthedepartment.[L1945,c196,§1;RL1955,§115-11;amLSp19592d,c1,§16;HRS§231-7;gench1985;amL2009,c166,§17]

Note

Applicabilityof2009amendment.L2009,c166,§27.

§231-7 Audits, investigations, hearings and subpoenas. [Section is effective July 1, 2011. For section effective until June 30, 2011, see above.] (a)Thedirectoroftaxation,andanyrepresentativeofthedirectordulyauthorizedbythedirector,mayconductanycivilauditorcriminalinvestigation,investigation,orhearing,relatingtoanyassessment,ortheamountofanytax,orthecollectionofanydelinquenttax,includinganyauditorinvestigationintothefinancialresourcesofanydelinquenttaxpayerorthecollectabilityofanydelinquenttax.

(b) Thedirectoroftaxationorotherpersonconductinghearingsmayadministeroathsandtaketestimonyunderoathrelatingtothematterofaudit,investigation,orhearing.



(c) Thedirectoroftaxationorrepresentativeofthedirectordulyauthorizedbythedirector,whenconductingacivilaudit,investigation,orhearingmaysubpoenawitnessesandrequiretheproductionofbooks,papers,documents,other designated objects, or any other record howevermaintained, including those electronically stored, that arerelevantormaterialtothecivilaudit,investigation,orhearing;providedthatthedirectoroftaxationordeputydirectoroftaxationshallgivewrittenapprovalfortheissuanceofasubpoenaonlyafterareviewoftheappropriatenessoftheissuance.Asubpoenaissuedunderthissubsection:

(1) Shallstatethatthesubpoenaisissuedbythedepartmentandshallcommandeachpersontowhomit isdirectedtoattendandgivetestimonyatthetimeandplacespecified,andmayalsocommandthepersontowhom the subpoena is directed to produce books, papers, documents, or other objects specificallydesignated;

(2) MaybeservedatanyplacewithintheStatebyaninvestigatorappointedpursuanttosection231-4.3oranyotherrepresentativeofthedirectordulyauthorizedbythedirector;

(3) Shallrequireattendanceofthepersononlyinthecountywhereinthepersonisservedwiththesubpoenaoratanyotherplaceasisagreeduponbythepersonandthedepartment;providedthatifthesubpoenaisserved in a countyother than that inwhich theperson resides, is employed,or transacts theperson’sbusinessinperson,thedepartmentshallbeartheperson’sexpensesfortraveltoandattendanceattheplacenamedinthesubpoenatothesameextentasprovidedbytherulesofcourtotherthantheexpensesofthetaxpayerorthetaxpayer’switnesses,officers,directors,agents,oremployees;and

(4) Shallcontainashort,plainstatementoftheperson’srightsandtheprocedureforenforcingandcontestingthesubpoena.

Ifanypersondisobeysanyprocessor,havingappearedinobediencethereto,refusestoanswerpertinentquestionsput to thepersonby thedirectororotherpersonconducting thecivil audit, investigation,orhearing,or toproduceanybooks,papers,documents,objects,orrecordspursuantthereto,thedirectormayapplytothecircuitcourtofthecircuitwhereinthecivilaudit,investigation,orhearingisbeingconducted,ortoanyjudgeofthecourt,settingforththedisobediencetoprocessorrefusaltoanswer,andthecourtorjudgeshallcitethepersontoappearbeforethecourtorjudgetoanswerthequestionsortoproducethebooks,papers,documents,objects,orrecords;providedthatthecourt,uponamotionpromptlymadebytheperson,mayquashormodifythesubpoenaifcompliancewouldbeunreasonableoroppressiveorwouldviolateanyprivilegethepersonwouldbeentitledtoexerciseinacourtproceeding.Ifthepersonfailsorrefusestoproducethesubpoenaedbooks,papers,documents,objects,orrecord,thecourtshallinstituteacontemptproceedingagainsttheperson,atwhichtimethecourtshalldeterminewhethergoodcauseisshownforthefailuretoobeythesubpoenaortherefusaltotestify;providedthatthecourt,onamotionpromptlymade,mayquashormodifythesubpoenaifcompliancewouldbeunreasonableoroppressiveorwouldviolateanyprivilegethepersonwouldbeentitledtoexerciseinacourtproceeding.Intheeventthatnogoodcauseisshown,thecourtdoesnotquashormodifythesubpoena,andthepersonfailsorrefusestocomplywiththesubpoena,thenthecourtshallcommitthepersontojailuntilthepersontestifies,butnotforalongerperiodthansixtydays.Notwithstandingtheservingofthetermofcommitmentbyanyperson,thedirectormayproceedinallrespectsasifthewitnesshadnotpreviouslybeencalledupontotestify.Witnesses(otherthanthetaxpayerorthetaxpayer’sofficers,directors,agents,andemployees)shallbeallowedtheirfeesandmileageasauthorizedincasesinthecircuitcourts,tobepaidonvouchersofthedepartmentoftaxation,fromanymoneysavailablefortheexpensesofthedepartment.

(d) SubjecttotheprivilegesapplicabletoanywitnessinthisState,thedirectoroftaxationoranyrepresentativeofthedirectordulyauthorizedbythedirector,whenconductingacriminalinvestigation,maysubpoenawitnesses,examinewitnessesunderoath,andrequiretheproductionofanybooks,papers,documents,otherdesignatedobjects,oranyother recordhowevermaintained, including thoseelectronicallystored, thatare relevantormaterial to theinvestigation; provided that the director of taxation or deputy director of taxation shall givewritten approval fortheissuanceofasubpoenaonlyafterareviewoftheappropriatenessoftheissuance.Asubpoenaissuedunderthissubsection:

(1) Shallstatethatthesubpoenaisissuedbythedepartmentandshallcommandeachpersontowhomit isdirectedtoattendandgivetestimonyatthetimeandplacespecified,andmaycommandthepersontowhomitisdirectedtoproducebooks,papers,documents,orotherobjectsspecificallydesignated;

(2) MaybeservedatanyplacewithintheStatebyaninvestigatorappointedpursuanttosection231-4.3oranyotherlawenforcementofficialwiththepowersofapoliceofficer;

(3) Shallrequireattendanceofthepersononlyinthecountywhereinthepersonisservedwiththesubpoenaoratanyotherplaceagreeduponbythepersonandthedepartment;providedthatifthesubpoenaisservedinacountyotherthanthatinwhichthepersonresides,isemployed,ortransactstheperson’sbusinessinperson,thedepartmentshallbeartheperson’sexpensesfortraveltoandattendanceattheplacenamedinthesubpoenatothesameextentasprovidedbytherulesofcourt;and

(4) Shallcontainashort,plainstatementoftheperson’srightsandtheprocedureforenforcingandcontestingthesubpoena.

Uponapplicationbythedirector,acircuitcourtofthecountywhereinthepersonresidesorisfoundmaycompelobediencetothesubpoena;providedthatthecourt,onamotionpromptlymade,mayquashormodifythesubpoena


ADMINISTRATION OF TAXES §231-7.5

ifcompliancewouldbeunreasonableoroppressiveorwouldviolateanyprivilege thewitnessmaybeentitled toexerciseinacourtproceeding.

(e) Anysubpoenaissuedunderthissectionthatdoesnotidentifythepersonwithrespecttowhoseliability,audit,orinvestigationthesubpoenaisissuedmaybeservedontheintendedrecipientonlyafteracourtproceedinginwhichthedirectororanotherpersonestablishesthat:

(1) Thesubpoenarelatestotheliability,audit,orinvestigationofaparticularpersonorascertainablegrouporclassofpersons;

(2) Thereisareasonablebasisforbelievingthatthepersonorgrouporclassofpersonsmayfailormayhavefailedtocomplywithanyprovisionoftitle14;and

(3) Theinformationsoughttobeobtainedfromtheexaminationofrecordsortestimonyandtheidentityofthepersonorpersonswithrespecttowhoseliabilitythesubpoenaisissuedisnotreadilyavailablefromothersources.

(f) Thedepartmentshallpaytoafinancialinstitutionthatisservedasubpoenaissuedunderthissectionafeeforreimbursementoftheinstitution’scostsasarenecessaryandthathavebeendirectlyincurredbyoronbehalfoftheinstitutioninsearchingfor,reproducing,ortransportingbooks,papers,documents,orotherobjectsdesignatedinthesubpoena.Reimbursementshallbepaidattherateof$15perhourforresearchand50centsperpageforreproduction.

(g) A person or entity that is compelled to testify or produce documents, information, or other items by asubpoenaissuedpursuanttoanaudit,investigation,orhearingpertainingtoanotherpersonorentityshallnotbeliablefordamagesarisingfromcompliancewiththesubpoena.

(h) Theprovisionsofthissectionareinadditiontoallotherprovisionsoflaw,andapplytoanytaxwithinthejurisdictionofthedepartment.[L1945,c196,§1;RL1955,§115-11;amLSp19592d,c1,§16;HRS§231-7;amimpL1984,c90,§1;gench1985;amL2009,c166,§17;amL2011,c101,§2]

Note

Applicabilityof2009amendment. L2009,c166,§27.The2011amendmentshallapplytoanysubpoenaissuedonorafterJuly1,2011. L2011,c101,§4.

Cross Reference

TaxInformationReleaseNo.2002-1,“AuditofNetIncome,GeneralExcise,andUseTaxReturns;AppealRights;ClaimsforRefund;andPaymenttoStateUnderProtest”

§231-7.5 Expedited appeals and dispute resolution program. (a) The department shall be authorized toimplement an administrative appeals and dispute resolution program that shall expeditiously resolve all tax, penalty,interest,fine,assessment,andothersuchdisputesbetweenthedepartmentandthetaxpayerorreturnpreparer.Thedirectororthedirector’sdesignee,whoshallreportdirectlyandbeanswerablesolelytothedirector,shallserveasanindependentappealsofficerandshallbeauthorizedtocompromise,settle,orotherwiseresolveanydisputeonanybasis,includinghazardsandcostsoflitigation,consideringequallythepositionofthetaxpayerandthedepartmentonanimpartialbasis.Theindependentappealsofficershallnotbeinfluencedbyanydepartmenttaxcomplianceinitiativesandpolicies,orlossofrevenuetotheState.Decisionsoftheindependentappealsofficershallbeinwritingstatingthefacts,analysis,andconclusionsinsupport,whichshallbeprovidedtothetaxpayerandreturnpreparer.Personswhocurrentlyserveorhaveservedinthepreviousfiveyearsasanauditor,auditsupervisorormanager,collector,collectionsupervisorormanager,districtmanagerorsupervisor,ortaxcomplianceadministrator,shallnotbeeligibletobethedirector’sdesignee.

(b) Notwithstandinganyotherlawtothecontrary,includingtaxappealproceduressetforthunderchapter232,a taxpayershallbeeligible topetition thedepartmentonceforparticipation in theadministrativeappealsanddisputeresolutionprogramafterissuanceofanoticeofproposedassessment;providedthatifataxpayerhasfiledataxappealwiththetaxappealcourtorothercourt,thetaxpayershallfirstberequiredtoobtaintheapprovalofthedirectorandpermissionfromtherespectivecourtpriortopetitioningthedepartmentforparticipation.Thedirectorshallhavetherighttodenyapetitionforcause.

(c) Thedepartmentshalladoptprocedurestocarryoutthepurposesofthissection,includingproceduresrelatingtoexpartecommunicationsbetweenthedirectororthedirector’sdesigneeandotherdepartmentpersonneltoensurethatsuchcommunicationsdonotcompromiseorappeartocompromisetheindependenceoftheadministrativeappealsanddisputeresolutionprogram.

(d) Thedirectoroftaxationmayappointanadministrativeappealsofficerasnecessarytoadministerthissection,andperformotherdutiesasdirectedbythedirector.Theadministrativeappealsofficershallbeexemptfromchapter76andmaybealegaloraccountingprofessional;providedthatnoindividualappointedunderthissectionshallrenderlegalservicesreservedtotheattorneygeneralunderchapter28.[L2009,c166,§15;amL2012,c189,§4]

Note

Applicabilityofsection. L2009,c166,§27.



§231-8 Timely mailing treated as timely filing and paying. (a)Anyreport,claim,taxreturn,statement,orotherdocumentrequiredorauthorizedtobefiledwithoranypaymentmadetotheStatewhichis:

(1) Transmitted through theUnitedStatesmail,shallbedeemedfiledandreceivedby theStateon thedateshown by the post office cancellation mark stamped upon the envelope or other appropriate wrappercontainingit;

(2) MailedbutnotreceivedbytheStateorwherereceivedandthecancellationmarkisillegible,erroneous,oromitted,shallbedeemedfiledandreceivedonthedateitwasmailedifthesenderestablishesbycompetentevidencethatthereport,claim,taxreturn,statement,remittance,orotherdocumentwasdepositedintheUnitedStatesmailonorbeforethedatedueforfiling;andincasesofthenonreceiptofareport,taxreturn,statement,remittance,orotherdocumentrequiredbylawtobefiled,thesenderfileswiththeStateaduplicatewithinthirtydaysafterwrittennotificationisgiventothesenderbytheStateofitsnonreceiptofthereport,taxreturn,statement,remittance,orotherdocument.

(b) Ifanyreport,claim,taxreturn,statement,remittance,orotherdocumentissentbyUnitedStatesregisteredmail,certifiedmail,orcertificateofmailing,arecordauthenticatedbytheUnitedStatesPostOfficeoftheregistration,certification, or certificate shall be considered competent evidence that the report, claim, tax return, statement,remittance,orotherdocumentwasdeliveredtothestateofficerorstateagencytowhichaddressed,andthedateofregistration,certification,orcertificateshallbedeemedthepostmarkeddate.

(c) AnyreferenceinthissectiontotheUnitedStatesmailshallbetreatedasincludingareferencetoadesignateddeliveryservice,andanyreferencetoapostmarkbytheUnitedStatesPostalServiceshallbetreatedasincludingareferencetoanydaterecordedormarkedbythedesignateddeliveryservice.

Asusedinthissection,“designateddeliveryservice”meansanydeliveryservicedesignatedforpurposesofsection7502ofthefederalInternalRevenueCode.[L1967,c271,§1;HRS§231-8;amL1997,c297,§1]

Note

The1997amendmentappliestotaxableyearsbeginningafterDecember31,1996.L1997,c297,§7.

Cross Reference

TaxInformationReleaseNo.97-3,“TheExpansionofthe`TimelyMailingTreatedasTimelyFiling/PayingRule’toDocumentsandPaymentsDeliveredbyaDesignatedPrivateDeliveryService(PDS)”

TaxInformationReleaseNo.99-1,“FilingofTaxReturnsRequiredbyTaxpayersWhoPayTaxesbyElectronicFundsTransfer(EFT)”

[§231-8.5] Electronic filing of tax returns. Thedepartmentmayallowfilingbyelectronic,telephonic,oropticalmeansofanytaxreturn,application,report,orotherdocumentrequiredundertheprovisionsoftitle14administeredbythedepartment.Thedateoffilingshallbethedatethetaxreturn,application,report,orotherdocumentistransmittedtothedepartmentinaformandmannerprescribedbydepartmentalrulesadoptedpursuanttochapter91.Thedepartmentmaydeterminealternativemethodsforthesigning,subscribing,orverifyingofataxreturn,application,report,orotherdocumentthatshallhavethesamevalidityandconsequencesastheactualsigningbythetaxpayer.Afilingunderthissectionshallbetreatedinthesamemannerasafilingsubjecttothepenaltiesundersection231-39.[L1997,c176,§1]

§231-8.6 REPEALED. L2007,c9,§22.

§231-9 Tax collection; general duties, powers of director; dollar rounding. (a)Thedirectoroftaxationshallcollectalltaxesaccordingtotheassessments.Thedirectoroftaxationshalldulyandaccuratelyaccounttothedirectoroffinanceforthecollectionandtheamountoftaxesaccordingtosuchassessmentsandshallbeliableandresponsibleforthefullamountofthetaxesassessed,unlessthedirectoroftaxationshallunderoathaccountforthenoncollectionofthesametothefullsatisfactionofthedirectoroffinance,orshallbereleasedfromaccountabilityasprovidedinsection231-32.Thedirectoroftaxationshall,fromtimetotime,payovertothedirectoroffinancealltaxescollected,atsuchtimesasthedirectoroffinanceshalldirect.Thecountyattorneyofeachcountyshall,underthesupervisionanddirectionoftheattorneygeneral,assistthedirectoroftaxationinthecollectionofalltaxes.

(b) Thedirectoroftaxationmayrequiretheroundingoftaxreturnitems(upwardanddownward)tothenearestwholedollaramount;providedthatamountsof50centsshallberoundedupward.[L19322d,c40,§60;RL1935,§1955;RL1945,§5112;RL1955,§115-13;amLSp19592d,c1,§§14,16;amL1963,c114,§1;HRS§231-9;amimpL1984,c90,§1;gench1985;amL1996,c133,§1]

[§231-9.2] Offers in compromise. (a)Requestsforcompromisesauthorizedundersection231-3shallbesubmittedtothedepartmentandaccompaniedbythefollowing:

(1) Inthecaseofalump-sumofferincompromise,twentypercentoftheamountoftheoffer;or(2) Inthecaseofaperiodicpaymentofferincompromise,paymentintheamountofthefirstproposedinstallment.

Anyfailuretomakeaninstallmentotherthanthefirstinstallmentdueundertheofferincompromise,during



theperiodtheofferisbeingevaluatedbythedepartment,maybetreatedbythedepartmentasawithdrawaloftheofferincompromise.

(b) Where an offer in compromise is not accepted by the department for any reason, paymentsmade undersubsection(a)shallbeappliedtothetaxfirstassessedorotheramountsimposedundertitle14.

(c) Thedepartmentmaywaivethepaymentrequirementsundersubsection(a)forindividualtaxpayerswhomeetthelow-incomecertificationguidelinespublishedbytheInternalRevenueServicefortheperiodinwhichtherequestforcompromisehasbeensubmitted.

(d) Thedirectoroftaxationshallprepareanyformsthatmaybenecessarytomeettherequirementsofthissection.Inaddition toanyotheradministrativerequirements, thedirectorof taxationmayalsorequire the taxpayer tofurnishreasonableinformationtoascertainthevalidityoftherequestforpaymentwaivermadeundersubsection(c).

(e) Thedepartmentmayadoptrulespursuanttochapter91necessarytoeffectuatethepurposesofthissection.(f) Asusedinthissection:“Lump-sumofferincompromise”meansanyofferofpaymentsmadeinfiveorfewerinstallments.“Periodicpaymentofferincompromise”meansanyofferofpaymentsmadeinsixormoreinstallments.[L2013,

c6,§1]Note

The2013amendmentdoesnotaffectrightsanddutiesthatmatured,penaltiesthatwereincurred,andproceedingsthatwerebegunbeforeApril5,2013. L2013,c6,§2.

[§231-9.3] Tax collection; mainland contractors working on federal construction projects. The director oftaxationshalldevelopasystemtodeterminewhencontractorsfromtheUnitedStatesmainlandarepresentinHawaiitoworkonfederalprojects,includingthestartingandanticipatedcompletiondatesforthesecontracts,toenforcethelawsrelatingtothecollectionofgeneralexcisetaxesonthesecontractorsthatmayberequiredunderchapter237.

TheUnitedStatesgovernmentisrequestedtoprovidetheinformationnecessarytoascertainthenamesandworkdatesofUnitedStatesmainlandcontractorsworkingonfederalprojects.ThedirectoroftaxationshallworkwiththeUnitedStatesgovernmenttoestablishthisinformationtoenforceandcollecttaxesowedtotheState.

Thedirectoroftaxationmaycontractwithbondedcollectionagencies,licensedattorneys,accountants,auditors,orotherpersonstopursueandcollectclaimsoftheStatewhenthemainlandcontractor,whoowesdelinquentgeneralexcisetaxesorissubjecttootherprovisionsunderchapter231,hasmovedbacktotheUnitedStatesmainland.

Thedirectoroftaxationmayadoptrulespursuanttochapter91toimplementthissection.[L2001,c206,§2]Revision Note

Subsectiondesignationdeletedpursuantto§23G-15(1).

[§231-9.4] Credit or debit card remittances. Inadditiontosections237-31,237D-6.5,and251-5,aswellasanyotherformofpaymentallowedunderprovisionsoftitle14administeredbythedepartment,thedirector,byrulesadoptedpursuanttochapter91,maypermittheuseofcreditordebitcardsforremittancesmadetothedepartment.Aservicefeeshallnotberequiredbythedepartmentfortheuseofdebitcardsforremittances,butmayberequiredbythedepartmentfortheuseofcreditcardsforremittances.

Forpurposesofthissection:“Creditcard”shallhavethesamemeaningasprovidedinsection478-1.“Debitcard”meansanycard,plate,orothersinglecreditdeviceissuedwithorwithoutafeetoacardholderto

purchasegoodsorservicesortoobtaincashthatisdebitedfromthecardholder’scheckingorotherbankaccount.[L1997,c179,§1]

[§231-9.5] Assessment of additional taxes of corporations or partnerships. Additionaltaxesofacorporationorpartnershipshallbeassessedtoitunderitscorporateorfirmname.[L1989,c14,§1(2)]

[§231-9.6] Fiduciaries, liability. Every personal representative, trustee, guardian, or other fiduciary shall beanswerableassuchfortheperformanceofallacts,matters,orthingsasarerequiredtobedoneinrespecttotheassessmentofthetaxesforwhichthefiduciaryisresponsibleinafiduciarycapacity.Thefiduciaryshallbeliableforthepaymentofthosetaxesuptotheamountoftheavailablepropertyheldbythefiduciary,butshallnotbepersonallyliable.Thefiduciarymayretainsomuchpropertyasmaybenecessarytopaythetaxesdue.Thefiduciarymayrecovertheamountoftaxespaidfromthebeneficiarytowhomthepropertyshallhavebeendistributed.[L1989,c14,§1(3)]

[§231-9.7] Informalities not to invalidate assessments, mistakes in names or notices, etc. Noassessmentoractrelatingtotheassessmentorcollectionoftaxesshallbeillegalnorshallsuchassessment,levy,orcollectionbeinvalidonaccountofmereinformalityormistakesinnames,notices,etc.[L1989,c14,§1(6)]



[§231-9.8] Tax bills. Eachstatetaxcollectorshallmail,postageprepaid,ordelivertoallknownpersonsassessedtaxesinthestatetaxcollector’sdistrict,taxbillsdemandingpaymentoftaxesduefromeachofthem,butnopersonshallbeexcusedfromthepaymentofanytaxordelinquentpenaltiesthereonbyreasonoffailureontheperson’sparttoreceivesuchbill.Thebill,ifmailed,shallbeaddressedtothepersonconcernedattheperson’slastknownaddressorplaceofresidence.[L1989,c14,§1(7)]

§231-9.9 Filing and payment of taxes by electronic funds transfer. (a)Thedirectoroftaxationisauthorizedtorequireeverypersonwhosetaxliabilityforanyonetaxableyearexceeds$100,000andwhofilesataxreturnforanytax,includingconsolidatedfilers,toremittaxesbyoneofthemeansofelectronicfundstransferapprovedbythedepartment;providedthatforwithholdingtaxesundersection235-62,electronicfundstransfersshallapplytoannualtaxliabilitiesthatexceed$40,000.Notwithstandingthetaxliabilitythresholdsinthissubsection,thedirectoroftaxationisauthorizedtorequireanypersonwhoisrequiredtoelectronicallyfileafederalreturnorelectronicallyremitanyfederaltaxestothefederalgovernment,toelectronicallyfileastatereturnandelectronicallyremitanystatetaxesundertitle14tothedepartment.Thedirectorisauthorizedtograntanexemptiontotheelectronicfilingandpaymentrequirementsforgoodcause.

(b) Anypersonwhofilesataxreturnforanytaxandisnotrequiredbysubsection(a)toremittaxesbymeansofelectronicfundstransfermayelecttoremittaxesbyoneofthemeansofelectronicfundstransferapprovedbythedepartmentwiththeapprovalofthedirectoroftaxation.

(c) Ifapersonwhoisrequiredundersubsection(a),tofileareturnelectronicallyorremittaxesbyoneofthemeansofelectronicfundstransferapprovedbythedepartmentfailstofileelectronicallyortoremitthetaxesusinganapprovedmethodonorbeforethedateprescribedtherefor,unlessitisshownthatthefailureisduetoreasonablecauseandnottoneglect,thereshallbeaddedtothetaxrequiredtobesoremittedapenaltyoftwopercentoftheamountofthetax.Thepenaltyunderthissubsectionisinadditiontoanypenaltysetforthinsection231-39.

(d) Nolaterthantwentydayspriortotheconveningofeachregularsession,thedepartmentshallsubmitareporttothelegislaturecontaining:

(1) Thenumberoftaxpayerswhowereassessedthetwopercentpenaltypursuanttosubsection(c);(2) Theamountsofeachassessment;and(3) Thetotalamountofassessmentscollectedforthepreviousyear.[L1995,c121,§1;amL1997,c177,§§1,

3;amL2001,c44,§1;amL2004,c113,§2;amL2009,c196,§2]Revision Note

Subsection(d),enactedasanewsection,iscodifiedtothissectionpursuantto§23G-15.

Note

The2009amendmentappliestoreturnsandpaymentsdueafterMay31,2009.L2009,c196,§8.

Cross Reference

TaxInformationReleaseNo.95-6,“QuestionsandAnswersonPayingTaxesbyElectronicFundsTransfer”TaxInformationReleaseNo.99-1,“FilingofTaxReturnsRequiredbyTaxpayersWhoPayTaxesbyElectronicFundsTransfer(EFT)”TaxInformationReleaseNo.2004-1,“Act113,SessionLawsofHawaii2004,RelatingtoIncomeTaxWithholding”TaxAnnouncement 2005-01, “Instructions on Filing Federal Schedule B (Form 941), Report of Tax Liability for Semiweekly Schedule

Depositors,forHawaiiWithholdingTaxPurposes”

§231-10 Department; keep offices where. Thedepartmentoftaxationshallkeepofficesintheseveraldistricts,fortheconvenienceofthepublicbusiness.[L19322d,c40,§59;RL1935,§1956;RL1945,§5113;RL1955,§115-14;amLSp19592d,c1,§16;amL1967,c37,§1;HRS§231-10]

[§231-10.5] Closing audit letters. Attheconclusionofataxaudit, thedepartmentshallprovidetothetaxpayeraclosingauditletterthatshallconfirminwritingthedepartment’spositiononeachissueconsideredintheaudit,andwhichshallprovideguidanceonhowthetaxpayermayreportsuchissuesforpostaudityears.[L2009,c166,ptof§16]

Note


[§231-10.6] Rules or administrative guidance. Rules,includingtemporaryrules,providingexamplesandsafeharborsshallbeimplementedtoexplaininclearandunambiguousterms,thepenaltiesandfinesprovidedunderanyprovisionoftitle14thatmaybeimposedagainstareturnpreparerortaxpayerforunderstatementoftaxliabilities,promotionofabusivetaxshelters,erroneousclaimsforrefundorcredit,orsubstantialunderstatementsormisstatementsoftax.Federallawsandadministrativeguidancemaybeusedtointerpretthissection.Anysuchpenaltiesorfinesshallfirstbeapprovedbythedirectorbeforeassessment.[L2009,c166,ptof§16]

18-231-9.9



Note


[§231-10.7] Temporary rulemaking authority for regulation of tax matters. (a)Notwithstandinganyother lawintitle14,chapter91,orchapter201Mtothecontrary,thedepartmentisauthorizedtoadoptanytemporaryrulesasthedepartmentmaydeemproperasprovidedinthissection.Temporaryrulesmayincludetheadoption,amendment,orrepealofanyrulesconcerninganymatterswhichthedepartmentisauthorizedtoregulate.

(b) Temporaryrulesshalltakeeffectsevendaysafternoticeofthetemporaryrulesisissued.Noticeunderthissubsectionshallrequire:

(1) Makingthetemporaryrulesavailableonthedepartment’sandthelieutenantgovernor’swebsites;(2) Makingcopiesofthetemporaryrulesavailabletothepublicforinspectionatthedepartment’sofficesor

copyingifanyrequiredfeeispaid;and(3) Providingpublicnoticeofthesubstanceofthetemporaryrulesatleastoncestatewide.

(c) Temporaryrulesshallbeapprovedbythegovernor.(d) Anytemporaryrulesissuedbythedepartmentshallalsobeissuedasproposedadministrativerulesthatshallbe

subjecttotheproceduralrequirementsofchapter91.(e) Temporaryrulesshallexpireeighteenmonthsfromthedatethetemporaryrulestakeeffect.(f) Temporaryrulesshallconspicuouslyprovidethefollowinginformationatthebeginningofthetemporaryrules’

text:(1) Noticestatingthetemporarynatureoftherules;(2) Theexpirationdateofthetemporaryrules;and(3) A statement advising that proposed administrative rules subject to chapter 91 are being simultaneously

proposedforformaladoption.(g) Temporaryrulesshallhavethesameforceandeffectasanyotheradministrativerules.[L2009,c166,ptof

§16]Note


[§231-10.8] Tax clearance fees. Thedepartmentmaychargeafeeof$20foreachtaxclearanceapplicationsubmittedand$5foreachcertifiedcopyofataxclearance. [L2012,c180,§2]

Note

SectionappliestorequestsfortaxclearancesandrequestsforcertifiedcopiesoftaxclearancesreceivedonorafterJuly1,2012.L2012,c180,§4.

POLICE; DISTRICT JUDGES

§231-11 Police to aid assessing or collecting officers. Thedirectorof taxationor any assessingor collectingofficerofthedepartmentoftaxation,whenresistedorimpededintheexerciseofthedirector’sorassessingorcollectingofficer’soffice,mayrequireanypoliceofficertoaidthedirectororassessingorcollectingofficerinthedischargeofthedirector’sorassessingorcollectingofficer’sduties,andifanypoliceofficerrefusestorenderaid,thepoliceofficershallbedeemedguiltyofamisdemeanor.[L19322d,c40,§11;RL1935,§1918;RL1945,§5114;amL1945,c79,§6;RL1955,§115-15;amLSp19592d,c1,§16;HRS§231-11;amL2017,c12,§32]

§231-12 REPEALED. L1995,c92,§20.Note

L1995,c66,§5purportstoamendthissection.

Case Notes

Anactiononthejudgmentrecoveredfortaxes,asdistinguishedfromanactionfortaxes,cannotbemaintainedinthedistrictcourtiftheamountofthejudgmentexceedsthelimitofthecourts’jurisdiction.18H.278.

Inhearingcounterclaimoverwhichithadnojurisdiction,districtcourtdidnotloseitsjurisdictionoverthemainclaim.53H.642,500P.2d743.

DELINQUENT TAXES

§231-13 Director; examination, investigation, and collection. [Repeal and reenactment on June 30, 2017. L 2013, c 93, §4.] (a)Thedirectoroftaxationshallberesponsibleforthecollectionandgeneraladministrationofalltaxes,



includingdelinquenttaxes.Notwithstandinganyotherlawtothecontrary,thedirector,bycontract,mayselectandretainbondedcollectionagencies,licensedattorneys,accountants,andauditorsorotherpersonsforthepurposeofassessment,enforcement,orcollectionoftaxesfrompersonssubjecttotheprovisionsoftitle14administeredbythedepartment.

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

auditorsandaccountants.AllcompensationshallbepayableoutofthetaxesrecoveredfortheStateorfromthetaxpayerinaccordancewiththetermsof,anduptotheamountauthorizedbythecontract,unlessotherwisedeterminedbythedirector.[L1933,c135,§2;RL1935,§1966;amL1937,c241,§1;RL1945,§5118;RL1955,§115-18;amLSp19592d,c1,§16;HRS§231-13;amL1982,c88,§2;amimpL1984,c90,§1;gench1985;amL1990,c34,§3;amL1997,c253,§1;amL1999,c68,§1;amL2013,c93,§1]

Note

Reports to legislature on contracts for the assessment, enforcement, or collection of taxes up through June 30, 2017; annual report of allcontractsto2014-2017legislature.L2013,c93,§2.

TheL2013amendmentshalltakeeffectonMay31,2013,providedthatonJune30,2017,c93shallberepealedandsection231-13,HawaiiRevisedStatutesshallbereenactedintheforminwhichitreadonthedayimmediatelypriortoMay31,2013.L2013,c93,§4.

§231-14 Attorney. Theattorneygeneralshallassignoneoftheattorneygeneral’sdeputiesasattorneyandlegaladvisorandrepresentativeofthedirectoroftaxation.Theattorneymayproceedtoenforcepaymentofanydelinquenttaxesbyanymeansprovidedbylaw.Anylegalproceedingmaybeinstitutedinthenameofthedirectororthedirector’sdeputy,thecollectorofthedistrictinwhichthedelinquencyexists,orinthenameofthecollectorofdelinquenttaxes.[L1933,c135,§3;RL1935,§1967;amL1937,c241,§2;RL1945,§5119;RL1955,§115-19;amLSp19592d,c1,§16;amL1967,c37,§1;HRS§231-14;amimpL1984,c90,§1;gench1985]

RETURNS AND RECORDS, GENERALLY; VALIDITY

§231-15 Returns to be signed. Every return statement, or other document required to be made for taxationpurposesshallbesignedinaccordancewithformsorregulationsprescribedbythedepartmentoftaxation.Whereformsorregulationshavenotbeenprescribed,everysuchreturn,statement,orotherdocumentshallbesignedbythepersonrequiredtomakethereturn,statement,orotherdocumentorbysomedulyauthorizedpersonintheperson’sbehalf.

Thedepartmentoftaxationmayrequirethat,ifanypersonorpersonsactuallyprepareorsignareturnforanotherperson, thepersonorpersonssopreparingorsigning the returnshall signastatementshowingsuchfactsandsuchauthoritytosignsuchreturnasmaybeprescribedbythedepartment,andthedepartmentmaybyregulationdefinetheclassesofpersonstowhomthisprovisionshallapply.

Anyotherprovisionoflawtothecontrarynotwithstanding,nooathshallberequireduponanytaxreturn.[L1943,c4,§§1,2,3;RL1945,§5123;RL1955,§115-21;amLSp19592d,c1,§16;HRS§231-15;amL1980,c211,§1]

[§231-15.3] Signature presumed authentic. Thefactthatanindividual’snameissignedonareturn,statement,orotherdocumentshallbeprimafacieevidenceforallpurposesthatthereturn,statement,orotherdocumentwasactuallysignedbytheindividual.[L2009,c166,ptof§16]

Note


§231-15.5 Disclosure by return preparers. (a)Anypersonwhoisengagedinthebusinessofpreparing,orprovidingservicesinconnectionwiththepreparationof,taxreturnsoranypersonwho,forcompensation,preparesanytaxreturnforanyotherpersonand,withoutthewrittenconsentorrequestofthepersonforwhomthereturnisprepared:

(1) Disclosesanyinformationfurnishedtothereturnpreparerorpersonprovidingservicesfororinconnectionwiththepreparationofanyreturn;or

(2) Usestheinformationforanypurposeotherthantoprepareorassistinpreparinganyreturn,shallbeguiltyofamisdemeanorand,uponconvictionthereof,shallbefinednotmorethan$1,000orimprisoned

notmorethanoneyear,orboth.(b) Exceptasotherwiseprovided,thissectionshallnotapplytoadisclosureofinformationifthedisclosureis

madepursuanttosection231-3oranorderofacourt.[L1973,c106,§1;amL1974,c128,§1;amL2017,c12,§33]

§231-15.6 Returns of corporations or partnerships. Thereturns,statements,oranswersrequiredunderchaptersofthelawundertitle14administeredbythedepartment,inthecaseofacorporation,shallbemadebyanyofficerofthe


ADMINISTRATION OF TAXES §231-15.8

corporation,orinthecaseofapartnership,byanyoneofthepartners.[L1989,c14,§1(4);amL1991,c263,§6;amL1994,c16,§1;amL1995,c66,§6]

§231-15.7 Returns by fiduciaries. Thereturns,statements,oranswersrequiredunderchaptersofthelawundertitle14administeredbythedepartmentshallbemadebythepersonalrepresentative,trustee,guardian,orotherfiduciaryinsuchcapacityinanytaxationdistrictinwhichreturnsarerequired.[L1989,c14,§1(5);amL1991,c263,§7;amL1994,c16,§2;amL1995,c66,§7]

§231-15.8 Time for performing certain acts postponed by reason of service in combat zone. (a)Thissectionshallapplytostatetaxlawssetforthinthistitle14thatprovideforthefilingwiththedirectoroftaxationofareturnorstatementofthetaxorpaymentoftheamounttaxable.

(b) ThissectionappliestoanyindividualservinginthearmedforcesoftheUnitedStates,orservinginsupportof thearmed forces, inanareadesignatedby thePresidentof theUnitedStatesbyExecutiveOrderasacombatzoneforpurposesofsection112(withrespecttocertaincombatpayofmembersofthearmedforces)ofthefederalInternalRevenueCodeof1986,asamended,atanytimeduringtheperiodsdesignatedbythePresidentbyExecutiveOrderastheperiodsofcombatantactivitiesinthezoneforthepurposesofsection112,orwhendeployedoutsidetheUnitedStatesawayfromtheindividual’spermanentdutystationwhileparticipatinginanoperationdesignatedbytheSecretaryofDefenseasacontingencyoperation(asdefinedinsection101(a)(13)oftitle10,UnitedStatesCode)orwhichbecamesuchacontingencyoperationbyoperationoflaw,atanytimeduringtheperioddesignatedbythePresidentbyExecutiveOrderastheperiodofcombatantactivitiesinsuchzoneforpurposesofsuchsectionoratanytimeduringtheperiodofsuchcontingencyoperation,orhospitalizedasaresultofinjuryreceivedwhileservinginsuchzoneoroperationduringsuchtime.

Theperiodofserviceinthezoneoroperation,plustheperiodofcontinuousqualifiedhospitalizationattributabletotheinjury,andthenextonehundredeightydaysthereafter,shallbedisregardedindetermininginrespectofanytaxliability(includinganyinterest,penalty,additionalamount,oradditiontothetax)oftheindividual:

(1) Whetheranyofthefollowingactswasperformedwithinthetimeprescribedtherefore:(A) Filinganytaxreturn(exceptincometaxwithheldatsource);(B) Paymentofanytax(exceptincometaxwithheldatsource)oranyinstallmentthereoforanyother

liabilitytotheStateinrespectofsuchtax;(C) Filingataxappealpursuanttochapter232oranactiontorecovermoneyspaidunderprotestpursuant

tosection40-35(b)ifthepaymentwasfortaxliabilityimposedpursuanttothistitle14;(D) Allowanceofacreditorrefundofanytax;(E) Filingaclaimforcreditorrefundofanytax;(F) Bringingsuituponanyclaimforcreditorrefund;(G) Assessmentofanytax;(H) Givingormakinganynoticeordemandforthepaymentofanytaxorwithrespecttoanyliabilityto

theStateinrespectofanytax;(I) Collectionbythedirector,bylevyorotherwise,oftheamountofanyliabilityinrespectofanytax;(J) BringingsuitbytheStateoranyrepresentativeoftheStateonitsbehalfinrespectofanyliabilityin

respectofanytax;and(K) AnyotheractrequiredorpermittedunderthetaxorrevenuelawsoftheStatepursuanttorulesadopted

bythedirector.(2) Theamountofanycreditorrefund.

(c) Thissectionshallapplytothespouseofanyindividualentitledtothebenefitsofthissection.Theprecedingsentenceshallnotcausethissectiontoapplyforanyspouseforanytaxableyearbeginningmorethantwoyearsafterthedatedesignatedundersection112(withrespecttocertaincombatpayofmembersofthearmedforces)ofthefederalInternalRevenueCodeof1986,asamended,asthedateofterminationofcombatantactivitiesinacombatzone.

(d) Theperiodofserviceinadesignatedcombatzoneshallincludetheperiodduringwhichanindividualentitledtobenefitsunderthissectionisinamissingstatus,withinthemeaningofsection6013(f)(3)(withrespecttojointreturnwhereanindividualisinmissingstatus)ofthefederalInternalRevenueCodeof1986,asamended.

(e) Notwithstandingsubsection(b),anyactionorproceedingauthorizedbysection231-24(regardlessof thetaxable year forwhich the tax arose) aswell as any other action or proceeding authorized by law in connectiontherewith,maybetaken,begun,orprosecuted.Inanyothercaseinwhichthedirectordeterminesthatcollectionoftheamountofanyassessmentwouldbejeopardizedbydelay,subsection(b)shallnotoperatetostaycollectionoftheamountbylevyorotherwiseasauthorizedbylaw.Thereshallbeexcludedfromanyamountassessedorcollectedpursuanttothissubsectiontheamountofinterest,penalty,additionalamount,andadditiontothetax,ifany,inrespectoftheperioddisregardedundersubsection(b).Inanycasetowhichthissubsectionrelates,ifthedirectorisrequiredtogiveanynoticetoormakeanydemanduponanyperson,therequirementshallbedeemedtobesatisfiedifthenoticeordemandispreparedandsigned,inanycaseinwhichtheaddressofthepersonlastknowntothedirectorisin



anareaforwhichUnitedStatespostofficesunderinstructionsofthePostmasterGeneral,byreasonofthecombatantactivities,arenotacceptingmailfordeliveryatthetimethenoticeordemandissigned.Inthiscasethenoticeordemandshallbedeemedtohavebeengivenormadeuponthedateitissigned.

(f) TheassessmentorcollectionofanytaxorofanyliabilitytotheStateinrespectofanytaxoranyactionorproceedingbyoronbehalfof theState inconnection therewith,maybemade, taken,begun,orprosecuted inaccordancewithlaw,withoutregardtosubsection(b),unlesspriortotheassessment,collection,action,orproceedingitisascertainedthatthepersonconcernedisentitledtothebenefitsofsubsection(b).

(g) TreatmentofindividualsperformingDesertShieldservices:(1) AnyindividualwhoperformedDesertShieldservices(andthespouseoftheindividual)shallbeentitledto

thebenefitsofthissectioninthesamemannerasiftheserviceswereservicesreferredtoinsubsection(b).(2) Forpurposesof this subsection,“DesertShieldservices”meansanyservices in thearmedforcesof the

UnitedStatesorinsupportofthearmedforcesiftheseservicesareperformedintheareadesignatedbythePresidentasthe“PersianGulfDesertShieldarea”andtheservicesareperformedduringtheperiodbeginningonAugust2,1990,andendingonthedateonwhichanyportionofthePersianGulfDesertShieldareaisdesignatedbythePresidentasacombatzonepursuanttosection112(withrespecttocertaincombatpayofmembersofthearmedforces)ofthefederalInternalRevenueCodeof1986,asamended.

(h) Forpurposesofthissection,“qualifiedhospitalization”meansanyhospitalizationoutsidetheUnitedStatesandanyhospitalization inside theUnitedStates,except thatnotmore thanfiveyearsofhospitalization inside theUnitedStatesmaybetakenintoaccountunderthissubsection.Thefive-yearperiodofqualifiedhospitalizationinsidetheUnitedStatesshallnotapplyforpurposesofapplying thissectionwithrespect to thespouseofan individualentitledtothebenefitsofsubsection(b).

(i) Ifanindividualisentitledtothebenefitsofthissectionwithrespecttoanyreturnandthereturnistimelyfiled(determinedaftertheapplicationofsubsection(b))section231-23(d)(1)withrespecttothelimitationsforcomputinginterestshallnotapplyandinterestshallbepaidfromtheduedateofthereturnregardlessofwhenthereturnisfiled.

(j) Ifanindividualisentitledtothebenefitsofsubsection(b),then,withrespecttoclaiminganycreditpursuanttostatetaxlawssetforthinthistitle14andanygeneralcreditenactedpursuanttoArticleVII,section6,oftheStateConstitution,thelimitationperiodprescribedforsuchclaimsshallbedeterminedaftertheapplicationofsubsection(b).[L1991,c208,§2;amL2004,c89,§2]

Note

The2004amendmentappliestotaxableyearsbeginningafterDecember31,2003,exceptasotherwiseprovidedinthisAct.L2004,c89,§6.

Cross References

Civilreliefforstatemilitaryforces,seechapter657D.TaxInformationReleaseNo.2003-2,“ExtensionofDeadlinesandOtherTaxReliefforMembersoftheArmedForces,Reserves,andHawaii

NationalGuard”

§231-16 Copies of returns. Exceptasotherwiseprovidedbylaw,copiesofanytaxreturnfiledwiththedepartmentoftaxationshallbefurnishedtothetaxpayerfilingthereturnortothetaxpayer’srepresentativewhohaswrittenauthorizationtobeprovidedsuchcopiesuponthepaymentof$1perpageand$1foranycertificationthereofbythedepartment.[L1963,c24,§1;Supp,§115-21.5;HRS§231-16;amL1980,c212,§1;amimpL1984,c90,§1;gench1985]

Cross References:

Modificationoffees,see§92-28.

§231-17 Notices, how given. Unlessotherwiseprovided,everynotice,thegivingofwhichbythedepartmentoftaxationisrequiredorauthorized,shallbedeemedtohavebeengivenonthedatewhenthenoticewasmailed,properlyaddressedtotheaddresseeattheaddressee’slastknownaddressorplaceofbusiness.[L1953,c125,§2;RL1955,§115-22;amLSp19592d,c1,§16;HRS§231-17;amimpL1984,c90,§1;gench1985]

§231-18 Tax and other officials permitted to inspect returns; reciprocal provisions. Notwithstanding theprovisionsofanylawmakingitunlawfulforanyperson,officer,oremployeeoftheStatetomakeknowninformationimpartedbyanytaxreturnorpermitanytaxreturntobeseenorexaminedbyanyperson,itshallbelawfulto:

(1) PermitadulyaccreditedtaxofficialoftheUnitedStates,anystateorterritory,anycountyofthisState,ortheMultistateTaxCommissiontoinspectanytaxreturnofanytaxpayer;

(2) Furnishtoanofficial,commission,ortheauthorizedrepresentativethereofanabstractofthereturnorsupplythe official, commission, or the authorized representative thereofwith information concerning any itemcontainedinthereturnordisclosedbythereportofanyinvestigationofthereturnorofthesubjectmatterofthereturnfortaxpurposesonly;or

(3) Providetaxreturninformationtotheauditorpursuanttosection23-5(a).



TheMultistateTaxCommissionmaymaketheinformationavailabletoadulyaccreditedtaxofficialoftheUnitedStates,anystateorterritory,ortheauthorizedrepresentativethereof,fortaxpurposesonly.[L1937,c109,§1;RL1945,§5124;RL1955,§115-23;HRS§231-18;amL1974,c139,§1;amimpL1984,c90,§1;gench1985;amLSp2005,c9,§3;amL2014,c136,§3]

§231-19 REPEALED. L1989,c14,§20.

[§231-19.3] Disclosure of letter rulings, et al. Notwithstandinganylawtothecontrary,anyandalladvicegivenorcommunicationsmadebythedepartment,includingbutnotlimitedtoletterrulingsanddeterminationletters,containingtaxadvice,shallbedisclosed to thepublicunderstandardsandproceduresundersection6110of thefederal InternalRevenueCodeof1986,asamended,theregulationsthereunder,andfederalcourtinterpretations.[L2009,c166,ptof§16]

Note


[§231-19.5] Public inspection and copying of written opinions. (a) Written opinions shall be open to publicinspectionandcopyingasprovidedinthissection,notwithstandingsections235-116,236D-15,237-34,and237D-13andanyotherlawrestrictingdisclosureoftaxreturnsortaxreturninformationtothecontrary.Exceptasprovidedinsubsection(f),regardingthedisclosureofthetextofwrittenopinions,chapter92Fshallnotapplytotaxreturnsandtaxreturninformation.

Awrittenopinionmaynotbeusedorcitedasprecedentunlessotherwiseprovidedbydepartmentrules.(b) Forpurposesofthissection,theterm“writtenopinion”meansawrittenstatementissuedbythedepartment

toataxpayer,ortothetaxpayer’sauthorizedrepresentativeonbehalfofthetaxpayer,thatinterpretsandappliesanyprovisionintitle14administeredbythedepartmenttoaspecificsetofacts.Awrittenopiniongenerallyrecitestherelevantfacts,setsforththeapplicableprovisionsoflaw,andshowstheapplicationofthelawtothefacts.Awrittenopinionshallnotinclude:

(1) Anywrittencommunicationfromthedepartmenttoanypersoninconnectionwiththeexaminationorauditofanyperson’staxreturn,orinconnectionwithcollectionactivitiesrelatingtoanyperson’sdelinquenttaxliability;

(2) Aninformationletter,whichisawrittenstatementissuedbythedepartmentthatprovidesgeneralinformationbycallingattentiontoawell-establishedinterpretationorprincipleoftaxlaw,whetherornotitappliestoaspecificsetoffacts.Aninformationlettermaybeissuedwhenthenatureoftherequestfromthetaxpayersuggests that the taxpayer is seekinggeneral information,orwhere thedepartmentbelieves thatgeneralinformationwillassistthetaxpayer;or

(3) Adeterminationletter,whichisawrittenstatementissuedbythedepartmentthatappliesaninterpretationorprincipleof tax lawclearlyestablishedbystatute, rule,writtenopinion,orpublishedcourtdecision toaparticularsetoffacts.Adeterminationletterincludesthegrantordenialofconsent,permission,exemptionorregistration,oraroutinecorrespondenceinresponsetotaxpayerinquiries.Adeterminationlettershallbedesignatedassuch,andshallindicatetheclearlyestablishedinterpretationorprincipleappliedanditssource.

(c) Before making a written opinion available for public inspection and copying under subsection (a), thedepartmentwhere possible shall segregate from the opinion trade secrets or other confidential, commercial, andfinancial information, and identifying details such as the name, address, and social security or tax identificationnumberofthepersontowhomthewrittenopinionpertainsandofanyotherpersonidentifiedinthewrittenopinion.Segregatedtextshallnotbedisclosedunderthissection.

(d) Uponissuanceofanywrittenopinion,thedepartmentshallmailanoticeofintentiontodisclosetheopiniontogetherwithacopyoftheopinionshowingthetextthedepartmentproposestosegregatetoanypersontowhomthewrittenopinionpertains(oranyknownsuccessorininterest,personalrepresentative,orotherpersonauthorizedbylawtoactfororonbehalfofsuchperson).

(e) Exceptasotherwiseprovidedinsubsection(h),awrittenopinion,assegregatedundersubsection(c),shallbeopentopublicinspectionandcopyingnoearlierthanseventy-fivedays,andnolaterthanninetydays,afterthedepartment’snoticeofintentiontodiscloseismailed.Atthewrittenrequestofapersontowhomthewrittenopinionpertains(orasuccessorininterest,personalrepresentative,orotherpersonauthorizedbylawtoactfororonbehalfoftheperson),theprecedingperiodmaybeextended,butthedepartmentshallmakethewrittenopinionavailablefor inspectionandcopyingno later thanonehundredeightydaysafter thenotice todisclose ismailed, includingextensions.

(f) Thedepartment’sdecisionastowhatconstitutesawrittenopinionisfinal.Adecisionconcerningthedisclosureofthetextofwrittenopinionsmaybecontested,butonlyinthemannerandwithinthetimesetforthinthissubsection.Anypersonwhomeetstherequirementsofparagraph(1)or(2)andwhohasexhaustedtheadministrativeremediesasprescribedbyrulesadoptedbythedepartmentmayappealwithinsixtydaysofthedateofthedepartment’sdecisiontotheofficeofinformationpracticesinaccordancewithproceduresestablishedbytheofficeofinformationpractices

18-231-19.5



undersections92F-15.5and92F-42(1).Theofficeofinformationpracticesmayexaminethewrittenopinionatissue,incamera,toassistindeterminingwhetherit,oranypartofit,maybewithheld.Indeterminingwhetherinformationconstitutes a trade secret or other confidential, commercial, and financial information, the office of informationpracticesmay consider and apply, in addition to any other relevant sources, interpretations of those terms underchapter92F.

Onlythefollowingpersonsmaycontestadecisionofthedepartmentconcerningthedisclosureofwrittenopinions:(1) Anyperson:

(A) Towhomawrittenopinionpertains(orasuccessorininterest,personalrepresentative,orotherpersonauthorizedbylawtoactfororonbehalfoftheperson);

(B) Whohasamaterialinterestinmaintainingtheconfidentialityofanywrittenopinionorportionthereof;and

(C) Who disagreeswith a decision by the department not to segregate information from anywrittenopinion;or

(2) Anypersonwhoisaggrievedbythedepartment’sdenialofarequesttoinspectandcopyanywrittenopinionorportionthereof.

Anypersonaggrievedbyadecisionoftheofficeofinformationpracticesmayappealthedecisiontothecircuitcourtofthefirstjudicialcircuit,orofthejudicialcircuitinwhichtherequestforthewrittenopinionismadeorinwhichacopyofthewrittenopinionismaintainedbythedepartment.Theappealshallbefiledwithinthirtydaysafterthedateofthedecisionoftheofficeofinformationpractices.Thecircuitcourtshallhearthematterdenovo.Opinionsandrulingoftheofficeofinformationpracticesshallbeadmissible.Thecircuitcourtmayexaminethewrittenopinionatissue,incamera,toassistindeterminingwhetherit,oranypartofit,maybewithheld.

Any person advocating nondisclosure or segregation under paragraph (1) shall have the burden of proof andpersuasion,butanypersonunderparagraph(2)needonlyestablishthedenialofarequestandthedepartmentshallhavetheburdenofproofandpersuasiontojustifythedenialoftherequesttoinspectandcopy.

(g) Exceptforcasesthecircuitcourtconsidersofgreaterimportance,proceedingsbeforethecourt,asauthorizedbythissection,andappealstherefrom,shallbeassignedforhearingandtrialorforargumentattheearliestpracticabledateandexpeditedineveryway.

(h) Uponappeal to theofficeof informationpracticesoracourtunder subsection (f), thewrittenopinionatissueshallnotbemadeavailableforpublicinspectionandcopyingpendingthefinaldecisioninthecase.Ifthefinaldecisioninthecasedeterminesthatthewrittenopinionsubjecttotheappealshallbeopenandavailabletopublicinspectionandcopying,orthatconfidentialoridentifyinginformationmustbesegregated,thenthedepartmentshallmake thewrittenopinion available forpublic inspection and copyingnot later than thirtydays after thedecisionbecomesfinal.Theofficeofinformationpracticesorthecourtmayextendthisthirty-dayperiodforsuchtimeastheofficeofinformationpracticesorthecourtfindsnecessarytoallowthedepartmenttocomplywithitsdecision.

(i) The department shall compile yearly an index in such form as the department determines of allwrittenopinionsissuedduringtheprecedingcalendaryear.Copiesoftheindexshallbefurnisheduponthepaymentof50centsapage.Copiesofwrittenopinionsshallbefurnisheduponthepaymentof$1apage.

(j) Exceptasprovidedinthissection,writtenopinionsshallremainsubjecttoalllawsgoverningtaxreturnsandtaxreturninformationandthedepartmentshallnotberequiredbyanycourttodiscloseanywrittenopinionexceptasspecificallyauthorizedbytitle14.

(k) Noofficeroremployeeofthedepartmentshallbeinviolationofanylawprohibitingthedisclosureoftaxreturnsortaxreturninformation,orinviolationofanyotherlawrestrictingthedisclosureofinformation,duetothereleaseofanywrittenopinionpursuanttothissection.

(l) Thedepartmentmayadoptrulespursuanttochapter91toimplementthissection.[L1994,c115,§2]Cross Reference

TaxInformationReleaseNo.2009-01,“ProceduralGuidelinesforRequestingLetterRulings”


2013LawandAdministrativeRulesGoverningAppealProceduresofHawaii’sOfficeofInformationPractices.36UHL.Rev.271(2014).

§231-20 Evidence, tax records as. Inrespectofeverytaxtheadministrationofwhichiswithinthescopeofthedepartmentoftaxation’sdutiesandexceptasotherwisespecificallyprovidedinthelawimposingthetax,thenoticesofassessments,recordsofassessments,andlistsorotherrecordsofpaymentsandamountsunpaid,preparedbyorundertheauthorityofthedepartment,orcopiesthereof,shallbeprimafacieproofoftheassessmentofthepropertyorpersonassessed,theamountdueandunpaid,andthedelinquencyinpayment,andthatallrequirementsoflawinrelationtheretohavebeencompliedwith.[L19322d,c40,§4;RL1935,§1911;RL1945,§5127;amL1953,c125,§3;RL1955,§115-25;amLSp19592d,c1,§16;HRS§231-20]

§231-21 Due date on Saturday, Sunday, or holiday. WhentheduedateforanyremittanceordocumentrequiredbyanylawimposingataxfallsonaSaturday,Sunday,orlegalholiday,theremittanceordocumentshallnotbedueuntil



thenextsucceedingdaywhichisnotaSaturday,Sunday,orlegalholiday.[L1965,c133,§1;Supp,§115-25.5;HRS§231-21]

[§231-21.5] Effect of civil union. AllprovisionsoftheInternalRevenueCodereferredtointhischapterthatapplytoahusbandandwife,spouses,orpersoninalegalmaritalrelationshipshallbedeemedtoapplyinthischaptertopartnersinacivilunionwiththesameforceandeffectasiftheywere“husbandandwife”,“spouses”,orothertermsthatdescribepersonsinalegalmaritalrelationship.[L2011,c1,§3]

Note

SectionappliestotaxableyearsbeginningafterDecember31,2011.L2011,c1,§10.

Attorney General Opinions

Civilunionpartnershaveallthesamerights,benefits,protections,andresponsibilitiesunderthelawasmarriedcoupleswhoareoftheoppositegender;civilunionpartnershave thesame taxfilingstatusoptionsasmarriedcoupleswhoareof theoppositegender forHawaii income taxpurposesfortaxableyearsbeginningafterDecember31,2011.Att.Gen.Op.11-2.

ADJUSTMENTS AND REFUNDS

§231-22 REPEALED. L1989,c14,§21.

§231-23 Adjustments and refunds. (a) This subsection shall apply to all taxes except those collected underchapter247andthosecollectedunderachaptercontainingaprovisionforcreditandrefundoftheamountoftaxpaidinexcessofthetaximposedbysuchchapter.Astoalltaxpaymentsforwhicharefundorcreditisnotauthorizedbythissubsection(includingwithoutprejudicetothegeneralityofthecasesofunconstitutionalityhereinaftermentionedin(1)(C))theremediesprovidedbyappealorundersection40-35areexclusive.

(1) Iftheamountalreadypaidexceedsthatwhichshouldhavebeenpaidunderthechapterimposingaparticulartax,oriftheamountalreadypaidresultsinduplicationofpaymentinwholeorinpart,theexcesssopaidshallberefundedinthemannerprovidedinsubsection(c)subjecthowevertothefollowinglimitations:(A) Norefundshallbemadeunlessanapplicationfortherefundshallhavebeenmadewithinfiveyears

aftertheamounttoberefundedwaspaid;(B) Norecoursemaybehadexceptundersection40-35orbyappealforrefundsoftaxespaidpursuantto

anassessmentbythedirectoroftaxation,providedthatiftheassessmentbythedirectorshallcontainclericalerrors,transpositionoffigures,typographicalerrors,anderrorsincalculationorifthereshallbeanillegalorerroneousassessment,theusualrefundproceduresshallapply;or

(C) Norefundoroverpaymentcreditshallbemadeunlesstheoriginalpaymentofthetaxwasduetothelawhavingbeeninterpretedorappliedinrespectofthetaxpayerconcerneddifferentlythaninrespectoftaxpayersgenerally.

(2) Inanycasewhereataxpayerisentitledtoarefund,thetaxpayer,atthetaxpayer’selection,mayapplytheamountoftherefundasanoverpaymentcredittotaxessubsequentlyaccruingunderthesamechapterasthatunderwhichtherefundableamountwascollected.

(b) Thissubsectionshallapplytothetaxescollectedunderchapter247.Theremayberefundedinthemannerprovidedinsubsection(c)suchconveyancetaxashasbeenerroneouslyor

unjustlypaid.(c) Thissubsectionshallapplytoalltaxes.

(1) Allrefundsshallbepaidonlyuponaformtobeknownasa“refundvoucher”preparedbythecollector.Therefundvouchersshallsetforthallthedetailsofeachtransaction,shallbeapprovedbythedirector,andshallbe forwarded to the comptroller from time to time.The comptroller shall issue awarrant, in the formprescribedbysection40-52, for thepaymentofanysuch refundoutof the tax reserve fundhereinaftercreated; provided that if the person entitled to the refund is delinquent in the payment of any tax, thecomptroller,upondemandofthecollectorandafternoticetothedelinquenttaxpayer,shallwithholdtheamountofthedelinquenttaxes,togetherwithpenaltiesandinterestthereon,fromtheamountoftherefundandpaythesametothecollector.

(2) Thereisherebyappropriated,fromthegeneralrevenuesoftheStatenototherwiseappropriated,thesumof$25,000whichshallbesetasideasatrustfundtobeknownasthetaxreservefund.Allrefundsoftaxescollectedbythedepartmentunderchaptersofthelawundertitle14administeredbythedepartmentshallbemadeoutofthetaxreservefund.Thedirectoroftaxation,fromtimetotime,maydeposittaxescollectedunderchaptersofthelawundertitle14administeredbythedepartmentinthestatetreasurytothecreditofthetaxreservefundsothattheremaybemaintainedatalltimesafundnotexceeding$25,000.Theamountsdepositedshallbemadefromthetaxeswithrespecttowhichaparticularrefundismade.

(d) Thissubsectionshallapplytoarefundforanoverpaymentofatax:



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

theninety-dayperiod,untiltherefundandanyapplicableinterestispaidtothetaxpayer;(2) Ifanyoverpaymentoftaxesresultsorarisesfrom:

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

bythetaxpayer,theamountoverpaidshallberefundedtothetaxpayerwithinninetydaysfromtheduedateoftheoriginalreturnorthedatetheoverpaymentisdiscoveredundersubparagraphs(A)or(B),whicheveroccurredlater;providedthatinterestshallbepaidtothetaxpayeriftheamountoverpaidisnotrefundedwithinninetydaysandattherateofone-thirdofonepercentoftherefundamountforeachmonthorfractionthereofaftertheninety-dayperiod,untiltherefundandanyapplicableinterestispaidtothetaxpayer;

(3) Forpurposesofanetincometaxreturn,ifanyoverpaymentofanytaxesresultsfromacarrybackofanetoperatingloss,theoverpaymentshallbedeemedtohavebeenmadeatthecloseofthetaxableyearinwhichthenetoperatinglossarises.Totheextentthatthecarrybackofnetoperatinglossresultsinreducingtheamountofunderpaymentoftaxesforpriortaxableyearoryears,interestthatwouldbechargeablebecauseoftheunderpaymentshallnotbeapplicablewithrespecttothatamountoramountsthatarecarriedback;and

(4) Inthecaseofcredit,interestshallbepaidinthesamemannerasparagraph(1).[L1939,c213,§1;RL1945,§5130;amL1949,c205,§1;RL1955,§115-28;amL1957,c152,§1;amLSp19592d,c1,§16;amL1963,c45,§1(c);amL1966,c10,§3;amL1967,c134,§2;HRS§231-23;amL1968,c32,§3;amL1971,c10,§1;amL1972,c200,§5;amL1974,c12,§1;amL1983,c217,§6;amimpL1984,c90,§1;gench1985;amL1985,c16,§5;amL1986,c340,§5;amL1989,c14,§4(4);amL1991,c136,§1andc263,§8;amL1992,c102,§1;amL1995,c66,§8;amL2003,c135,§2;amL2009,c40,§1;amL2010,c171,§1]

Note

The2010amendmentappliestotaxableyearsbeginningafterDecember31,2009.L2010,c171,§4.

Cross Reference


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


COLLECTION PROCEEDINGS

§231-25 Payment, enforcement of by assumpsit action or by levy and distraint upon all property and rights to property. (a)Ifanytaxbeunpaidwhendue,thedirectoroftaxationmayproceedtoenforcethepaymentofthesame,withallpenalties,asfollows:

(1) Byactioninassumpsit,inthedirector’sownname,onbehalfoftheState,fortheamountoftaxesandcosts,or, if the tax is delinquent, for the amount of taxes, costs, penalties, and interest, in any district court,irrespectiveoftheamountclaimed.Executionmayissueuponanyjudgmentrenderedinanysuchactionwhichmaybesatisfiedoutofanyrealorpersonalpropertyofthedefendant;and

(2) Bylevyuponallpropertyandrightstoproperty(exceptsuchpropertyasisexemptundersubsection(b)(6))belongingtosuchtaxpayeroronwhichthereisalien,asthedirectormaydeemsufficienttosatisfythepaymentoftaxesdue,penaltiesandinterestifany,andthecostsandexpensesofthelevy.

(b) Thefollowingrulesareapplicabletothelevyasprovidedforinsubsection(a)(2):(1) Seizureandsaleofproperty.Theterm“levy”asusedinthissectionincludesthepowerofdistraintand

seizurebyanymeans.Exceptasprovidedinparagraph(2),alevyshallextendonlytopropertypossessedandobligationsexistingatthetimethereof.Inanycaseinwhichthedirectororthedirector’srepresentativemaylevyuponpropertyorrightstoproperty,thedirectormayseizeandsellthepropertyorrightstoproperty(whetherrealorpersonal,tangibleorintangible);

(2) Theeffectofalevyonsalaryorwagespayabletoorreceivedbyataxpayershallbecontinuousfromthedatethelevyisfirstmadeuntilthelevyisreleased.Thelevyonsalaryorwagesshallattachtotwenty-fivepercentofanysalaryorwagespayableorreceivedbythetaxpayer;

(3) Successiveseizures.WheneveranypropertyorrightstopropertyuponwhichlevyhasbeenmadeisnotsufficienttosatisfytheclaimoftheStateforwhichlevyismade,thedirectororthedirector’srepresentative,thereafter,andasoftenasmaybenecessary,mayproceedtolevyinlikemanneruponanyotherpropertyliabletolevyofthepersonagainstwhomaclaimexists,untiltheamountduefromtheperson,togetherwithallexpenses,isfullypaid;

(4) Surrenderofpropertysubjecttolevy.(A) Requirement.Anypersoninpossessionof(orobligatedwithrespectto)propertyorrightstoproperty

subject to levy uponwhich a levy has beenmade, upon demand of the director or the director’srepresentative,shallsurrenderthepropertyorrights(ordischargetheobligation)tothedirectororthedirector’srepresentative,exceptthatpartofthepropertyorrightsasis,atthetimeofthedemand,subjecttoanattachmentorexecutionunderanyjudicialprocess;

(B) Extentofpersonalliability.Anypersonwhofailsorrefusestosurrenderpropertyorrightstoproperty,subject to levy,upondemandby thedirectoror thedirector’s representative,shallbe liable in theperson’sownpersonandestatetotheStateinasumequaltothevalueofthepropertyorrightsnotsosurrendered,butnotexceedingtheamountoftaxesforthecollectionofwhichthelevyhasbeenmade,togetherwithcostsandinterestonthesumattherateofeightpercentayearfromthedateofthelevy.Anyamount(otherthancosts)recoveredunderthissubparagraphshallbecreditedagainstthetaxliabilityforthecollectionofwhichthelevywasmade;

(C) Penaltyforviolation.Inadditiontothepersonalliabilityimposedbysubparagraph(B),ifanypersonrequiredtosurrenderpropertyorrightstopropertyfailsorrefusestosurrenderthepropertyorrightstopropertywithoutreasonablecause,thepersonshallbeliableforapenaltyequaltofiftypercentoftheamountrecoverableundersubparagraph(B).Nopartofthepenaltyshallbecreditedagainstthetaxliabilityforthecollectionofwhichthelevywasmade;

(D) Effectofhonoringlevy.Anypersoninpossessionof(orobligatedwithrespectto)propertyorrightstopropertysubjecttolevyuponwhichalevyhasbeenmadewho,upondemandbythedirectororthedirector’srepresentative,surrendersthepropertyorrightstoproperty(ordischargestheobligation)tothedirectororthedirector’srepresentative(orwhopaysaliabilityundersubparagraph(B))shallbedischargedfromanyobligationorliabilitytothedelinquenttaxpayerandanyotherpersonwithrespecttothepropertyorrightstopropertyarisingfromthesurrenderorpayment;and

(E) Persondefined.Theterm“person,”asusedinsubparagraph(A),includesanofficeroremployeeofacorporationoramemberoremployeeofapartnership,whoasanofficer,employee,ormemberisunderadutytosurrenderthepropertyorrightstoproperty,ortodischargetheobligation;

(5) Productionofbooks.Ifalevyhasbeenmadeorisabouttobemadeonanyproperty,orrightstoproperty,anypersonhavingcustodyorcontrolofbooksorrecords,containingevidenceorstatementsrelatingtothe

§231-25.5 ADMINISTRATION OF TAXES


propertyorrightstopropertysubjecttolevy,upondemandofthedirectororthedirector’srepresentative,shallexhibitthosebooksorrecordstothedirectororthedirector’srepresentative;

(6) Propertyexemptfromlevy.NotwithstandinganyotherlawoftheState,nopropertyorrightstopropertyshallbeexemptfromlevyotherthanthefollowing:(A) Wearingapparelandschoolbooks.Thoseitemsofwearingapparelandthoseschoolbooksthatare

necessaryforthetaxpayerorformembersofthetaxpayer’sfamily;(B) Fuel,provisions,furniture,andpersonaleffects.Ifthetaxpayeristheheadofafamily,somuchof

thefuel,provisions,furniture,andpersonaleffectsinthetaxpayer’shousehold,andofthearmsforpersonaluse,livestock,andpoultryofthetaxpayer,asdoesnotexceed$500invalue;

(C) Booksandtoolsofatrade,business,orprofession.Somanyofthebooksandtoolsnecessaryforthetrade,business,orprofessionofthetaxpayerasdonotexceedintheaggregate$250invalue;

(D) Unemployment benefits. Any amount payable to an individual with respect to the individual’sunemployment (including any portion thereof payable with respect to dependents) under anunemploymentcompensationlawoftheUnitedStatesortheState;and

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

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

(B) Assistanceinseizureandsale.Thedirectormayrequiretheassistanceofanysherifforauthorizedpoliceofficerofanycountytoaidintheseizureandsaleoftheleviedproperty.Thedirectormayfurtherretaintheservicesofanypersoncompetentandqualifiedtoaidinthesaleoftheleviedproperty,providedthattheconsentofthedelinquenttaxpayerisobtained.Anysherifforthepersonsoretainedbythedirectorshallbepaidafairandreasonablefeebutinnocaseshallthefeeexceedtenpercentofthegrossproceedsofthesale.Anypersonotherthanasheriffsoretainedbythedirectortoassistthedirectormayberequiredtofurnishbondinanamounttobedeterminedbythedirector.Thefeesandthecostofthebondshallconstituteapartofthecostsandexpensesofthelevy;

(C) Timeandplaceofsale.Thesaleshalltakeplaceandbecompletedwithinonehundredeightydaysafterseizure;providedthatthetimeperiodsethereinshallbetolledduringthependencyofanyactioncommencedbyanypersonrelatingtotheseizedpropertyuntilafinalorderisrenderedinthataction,whetherbystipulationwiththepersonorbycourtorder,orupontheexpirationofanyextendedtimeasmaybeagreedupon;

(D) Mannerandconditionsofsale.Sufficientpropertyshallbesoldtopayalltaxes,penalties,interest,costs,andexpenses.Onpaymentofthepricebidforanypropertysold,thedeliverythereofwithabillofsalefromthedirectorshallvestthetitleofthepropertyinthepurchaser.Nochargeshallbemadeforthebillofsale.Allsurplusreceiveduponanysaleafterthepaymentofthetaxes,penalties,interest,costs,andexpenses,shallbereturnedtotheownerofthepropertysold,anduntilclaimedshallbedepositedwiththedepartmentsubjecttotheorderoftheowner.Anyunsoldportionofthepropertyseizedmaybeleftattheplaceofsaleattheriskoftheowner;and

(E) Redemptionofproperty. If theownerof thepropertyseizeddesires to retainor regainpossessionthereof,theownermaygiveasufficientbondwithsuretytoproducethepropertyatthetimeandplaceofsale,orpayalltaxes,penalties,interest,costs,andexpenses.[L19322d,c40,§69;RL1935,§1963;RL1945,§5131;amL1949,c311,§1(b);amL1955,c246,§1;RL1955,§115-30;amLSp19592d,c1,§16;amL1967,c37,§1;HRS§231-25;amL1972,c83,§2;gench1985;amL1989,c211,§10;amL1990,c281,§11;amL1998,c2,§66;amL2002,c153,§3;amL2013,c44,§1]

Rules of court

Applicabilityofrules,seeHRCPrule81(b)(8);DRCPrule81(b)(4).

Case Notes

Distressofgoods.2H.241;2H.259.Enforcingtaxlienbyforeclosureinequity.18H.170.Pre-hearingsummaryconstraintisconstitutional.57H.1,548P.2d246.

COLLECTION PROCEEDINGS

§231-25.5 Cost recovery fees for the administration of taxes. (a)Thedepartmentmaychargeandaddafeetoanyamountdueinaccordancewiththedepartment’sdutiesandpowersundersection231-3for:

18-231-25.5



(1) Anycostorexpenseincurredbythedepartmentasaresultofanyactiontakentoenforcethecollectionoftaxes administered under title 14, including levy, seizure, foreclosure, and other similar acts, after thedepartmenthasmailedwrittennoticedemandingpaymentandadvisingthatcontinuedfailure topaytheamountduemayresultincollectionaction,includingtheimpositionoffeespursuanttothissection.Anysuchfeechargedagainstthetaxpayerforcosts,fees,andothercharges,mayincludeattorneys’fees,collectionagencyfees,courtfilingfees,recordingfees,andsimilarfees,incurredbythedepartmentinconnectionwiththecollectionaction;

(2) Department-sponsoredseminarsorworkshops,includingeducationalmaterialsinvariousmediaformats;(3) Researchandreferencematerialspublishedonmagneticmedia,CD-ROM,orothermachine-readableform;

and(4) There-issuanceofrefundcheckstotaxpayers;providedthatnofeeshallbechargediftheamountofthe

refundcheckislessthanthefee.(b) Thedirectormaywaiveanyfeeimposedbythedepartmentundertitle14incasesofhardshipasdetermined

bythedirector.(c) Interestshallnotaccruewithrespecttoanyfeechargedunderthissection.(d) Notwithstandinganyotherprovisionsprovidedundertitle14,wheneverataxpayermakesapartialpayment

ofaparticulardelinquentamount,theamountreceivedbythedepartmentshallfirstbecreditedtothefeesprovidedbythissection,intheorderthatthefeeswerecharged.

(e) The department shall prescribe the procedures relating to the charging of fees, the waiver of fees, thedocumentsandservicesforwhichthefeesmaybecharged,andtheamountofthefees,increasingordecreasingthefeesasnecessary,pursuanttorulesadoptedunderchapter91.[L1995,c14,§1;amL1996,c131,§1]

§231-26 Extraterritorial enforcement of tax laws. (a)ThecourtsoftheStateshallrecognizeandenforcetheliabilityfortaxeslawfullyimposedbythelawsofanystatewhichextendsalikecomity,whetherbystatuteorcaselaw,inrespectoftheliabilityfortaxeslawfullyimposedbythelawsofthisState.Shouldaclaimbemadeinthestatecourtsfortaxesbyastatewhosehighestcourthasnotyetpasseduponthequestionofenforcingextraterritorialrevenuelaws,thecourtsoftheStateshallenforcesuchclaimsuntilsuchtimeasthehighestcourtofthatstateprohibitstheenforcementofextraterritorialrevenuelaws.

(b) AnyandallauthorizedofficialsofastateentitledtoenforceitstaxclaimswithinthestatecourtsmaybringactioninthecourtsofthisStateforthecollectionofthetaxes.Thecertificateofthesecretaryofstateofsuchstate,orofthenearestequivalentofficial,thatsuchofficialshavetheauthoritytocollectthetaxessoughttobecollectedbytheactionshallbeconclusiveproofofthatauthority.

(c) TheattorneygeneralmaybringactioninthenameoftheState,orauthorizeactiontobebroughtinthenameoftheState,inthecourtsofanystatetocollecttaxeslegallyduetheState.

(d) The term “state” as used hereinmeans any state, territory, or possession of theUnitedStates.The term“taxes”ashereinemployedshallinclude:

(1) Anyandalltaxassessmentslawfullymade,whethertheybebaseduponareturnorotherdisclosureofthetaxpayer,upontheinformationandbeliefofthetaxingauthority,orotherwise;

(2) Anyandallpenaltieslawfullyimposedpursuanttoataxingstatute;and(3) Interestchargeslawfullyaddedtothetaxliabilitywhichconstitutesthesubjectoftheaction.

(e) InanycasewhereapersonowingdelinquenttaxestotheStatehasmovedfromtheStatetoanotherstateorcountry,issituatedinanotherstateorcountry,resides,ormaintainsaplaceofbusinessinanotherstateorcountry,thedirector,notwithstandinganyotherlawtothecontrary,bycontract,mayselectandretainbondedcollectionagencies,licensedattorneys,accountants,andauditorsorotherpersonstopursueandcollecttheclaimsoftheState.

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

auditorsandaccountants.AllcompensationshallbepayableoutofthetaxesrecoveredfortheStateorfromthedebtorinaccordancewiththetermsof,anduptotheamountsauthorizedbythecontract,unlessotherwisedeterminedbythedirector.

(g) Suitsbroughtuponjudgmentsshallbegovernedbythelawrelatingthereto,andnotbythissection.[L1949,c311,§1(a);amL1953,c67,§1;RL1955,§115-31;amLSp19592d,c1,§16;HRS§231-26;amimpL1984,c90,§1;gench1985;amL1997,c253,§2;amL1999,c68,§2]

§231-27 Partial payment of taxes. Wheneverataxpayermakesapartialpaymentofaparticularassessmentoftaxes,theamountreceivedbythedepartmentoftaxationshallfirstbecreditedtointerest,thentopenalties,andthentoprincipal.[L1949,c312,§1;RL1955,§115-32;amLSp19592d,c1,§16;HRS§231-27]



§231-28 Tax clearance before procuring liquor licenses. Noliquorlicensesshallbeissuedorrenewedunlesstheapplicantthereforshallpresenttotheissuingagency,acertificatesignedbythedirectoroftaxation,showingthattheapplicantdoesnotowetheStateanydelinquenttaxes,penalties,orinterest;orthattheapplicanthasenteredintoandiscomplyingwithaninstallmentplanagreementwiththedepartmentoftaxationforthepaymentofdelinquenttaxesininstallments.[L1949,c352,§1;RL1955,§115-33;amL1963,c82,§1;amL1964,c6,§2;HRS§231-28;amL2009,c184,§1]

Attorney General Opinions

Taxpayer’sagreementtopayitsdelinquenttaxes,pursuanttoapaymentschedule,doesnotsatisfytherequirementsforliquorlicenserenewalunderthissectionand§281-45.At.Gen.Op.95-1.

Hawaii Legal Reporter Citations

Automaticstayinbankruptcy.81-1HLR810555.

§231-29 Joinder of party defendant when State claims tax liens. Thedirectoroftaxation(orinthecaseofalienunderchapter383,thedirectoroflaborandindustrialrelations)maybenamedapartydefendantinanycivilactioninanystatecourtofcompetentjurisdictionorinthedistrictcourtoftheUnitedStatesforthedistrictofHawaii,toquiettitletoorfortheforeclosureofamortgageorotherlienuponrealorpersonalpropertyonwhichtheStatehasorclaimsataxlienunderchaptersofthelawundertitle14administeredbythedepartmentorchapter383;providedthatthejurisdictionconferredbythissectionshallbelimitedandshallnotoperateasaconsentbytheStatetobesuedastoitsclaimoftitletoorliensandencumbrancesonrealandpersonalpropertyotherthantheliensaforementioned.Serviceuponthedirectorshallbemadeasprovidedbytherulesofcourt.Inanyactioncontemplatedunderthissection,thedirectormayask,bywayofaffirmativerelief,fortheforeclosureoftheaforementionedstatetaxliens,butintheabsenceofsuchrequestforaffirmativerelief,uponanyforeclosuresalethepropertyshallbesoldsubjecttothetaxliens.Nothinginthissectionshallprecludethedirectorfromaskingforsuchotherandfurtherreliefasmighthavebeenclaimedbyinterventionintheaction.[L1953,c187,§1;RL1955,§115-34;amL1957,c185,§4;amLSp19592d,c1,§16;HRS§231-29;amL1973,c133,§1;amL1985,c16,§6;amL1986,c340,§6;amL1991,c263,§9;amL1995,c66,§9]

Cross References

Servicebymail,see§1-28.

Rules of Court

Service,seeHRCPrule4(d)(5).Astopleading,seeHRCPrules7,8,12.

§231-30 Unknown or nonresident delinquents; procedure to collect taxes from. Notwithstandingsection604-7(c):

(1) Unknownpersons.Inallcaseswheretaxesassessedtopersonsunknownaredelinquentandunpaidwhendue,actionmaybebroughtbythedepartmentoftaxationinthedistrictcourtofthecircuitinwhichtheassessmentwasmadeandthedefendantmaybenamedasunknown.Inanysuchcase,itshallbeagoodandsufficientserviceofsummons,bindingonallpartiesininterest,ifundertheorderofthedistrictcourtthetitleandthesubstanceoftheactionandsummons,includingareturndaynotlessthanthreeweeksfromthedateoftheissuanceofsuchsummons,andcallingonallpartiesininteresttoappearanddefend,shallbepublishedonceaweekfor threeconsecutiveweeks insomenewspaperofgeneralcirculation in theState,and thedistrictcourtsaregivenjurisdictiontoordertheservice.Inthesummonsandinthenoticepublished,abriefdescriptionof thepropertyassessedshallbegiven.Anyjudgmententeredagainst thedefendantshallbeenforcedonlyagainstthepropertyforwhichthetaxwasassessed,unlessthedefendanthasappearedintheactionanddefendedonthemerits,inwhichcasethedefendantshallbeliabletoapersonaljudgmentwithrespecttotheclaimsodefended.

(2) Nonresidentdelinquents.Wheretaxesassessedtononresidentsofthetaxationdistrictaredelinquentandunpaidwhendue,serviceofsummonsmaybemadeinanypartoftheState,orbyexercisebythedistrictcourtofthepowersconferredoncircuitcourtswithrespecttodefendantswhocannotbeservedwithprocesswithintheState,withthesameeffectasiftheactionhadbeenbroughtinthecircuitcourt.[L19322d,c40,§70;RL1935,§1964;RL1945,§5132;RL1955,§115-35;amLSp19592d,c1,§16;amL1967,c37,§1;HRS§231-30;amL1973,c133,§2;amimpL1984,c90,§1;gench1985]

§231-31 Nonresidents engaged in business, etc., service of process on, designation of agent for service of process. Everynonresidentindividualwho,jointly,severally,orjointlyandseverally,issubjecttoataxuponthegrossornetincomefrom,orsalesof,anoccupation,trade,orbusinesscarriedonintheState,inwholeorinpart,oruponthecarryingonofsuchoccupation,trade,orbusiness,orupontheuseorkeepingforuseofpropertytherein,shallfilewiththedepartmentoftaxationinthedistrictinwhichtheoccupation,trade,orbusinessiscarriedon,thenameandaddress



ofapersonresidingwithintheStateuponwhomprocessmaybeserved,andindefaultofsuchdesignation,andifthenonresidentindividualcannotbefoundintheState,serviceofprocessinanyactionforthecollectionofthetaxesmaybemadeonanymanager,superintendent,orotherpersonincharge,employedinthecarryingonoftheoccupation,trade,orbusiness,withlikeeffectasifthepersonsoservedhadbeendesignatedbythenonresidentasthenonresident’sagentforsuchpurpose;providedthatnothingthereinshallprecludetheserviceofprocessinanyothermannerprovidedbylaw.[L1953,c67,§2;RL1955,§115-36;amLSp19592d,c1,§16;amL1967,c37,§1;HRS§231-31;amimpL1984,c90,§1;gench1985]

Rules of Court

Service,seeHRCPrule4(d)(1).

§231-32 Records of delinquent taxes, uncollectible delinquent taxes. Thedepartmentoftaxationshallprepareandmaintain,opentopublicinspection,acompleterecordoftheamountsoftaxesassessedineachdistrictthathavebecomedelinquentwiththenameofthedelinquenttaxpayerineachcase,butitshallnotbenecessarytoperiodicallycomputeontherecordstheamountofpenaltiesandinterestupondelinquenttaxes.

Thedepartment,fromtimetotime,maypreparelistsofalldelinquenttaxesthatinitsjudgmentareuncollectible.Taxesthatthedepartmentfindstobeuncollectibleshallbeenteredinaspecialrecordandbedeletedfromtheotherbookskeptbythedepartment.Thedepartmentshallthenbereleasedfromanyfurtherdutytocollectthesetaxes.Noaccountshallbedeletedunlessthedepartmentfindsthatthereisreasonablecausetodeletetheaccount,consideringfactorssuchasthefinancialconditionofthetaxpayer,inabilitytolocatethetaxpayer,costsofcollectionagainsttheamountoftaxowed,healthofthetaxpayer,andfutureincomeprospectsofthetaxpayer.Anyitemswrittenoffmaybetransferredbacktothedelinquenttaxrollifthedepartmentfindsthattheallegedfactsaspreviouslypresentedtoitwerenottrueorthattheitemsareinfactcollectible.[L19322d,c40,§68;RL1935,§1962;amL1937,c203,§1;amL1939,c182,§1;amL1941,c254,§1;RL1945,§5133;amL1951,c133,§3;RL1955,§115-37;amLSp19592d,c1,§16;amL1967,c37,§1;HRS§231-32;amL2013,c33,§2]

Note

The2013amendmentisretroactivetoJanuary1,2013.L2013,c33,§4.

§231-33 Tax debt due the State; lien. (a)Withinthemeaningofthissection:(1) The terms“mortgagee”, “pledgee”, and“purchaser”donot includeanyperson towhompropertyoran

interestinpropertyisconveyed(A)assecurityfororinsatisfactionofanantecedentorpre-existingdebtofadebtorwhoisinsolventwithinthemeaningoftheBankruptcyAct,or(B)astrustee,assignee,oragentforthebenefitofoneormorecreditors,otherthanmortgagebondholders.

(2) Theterm“motorvehicle”meansanyself-propelledvehicletobeoperatedonthepublichighways.(3) Theinterestofaparty,ifrequiredtoberecordedorenteredofrecordinanypublicofficeinordertobevalid

againstsubsequentpurchasers,doesnotarisepriortothetimeofsuchrecordingorentryofrecord.(4) Anemployerorotherpersonwhoisrequiredbyanytaxlawtowithholdtaxatthesource,ortocollectatax,

andwhoismadeliableforthetaxiftheemployerorotherpersondoesnotfulfilltheemployer’sorotherperson’sdutiesinthatregard,shallbedeemedapersonliableforthetax.

(5) Theterm“realproperty”includesleaseholdorotherinterestinrealpropertyandalsoanypersonalpropertysoldormortgagedwithrealpropertyifaffixedtotherealpropertyanddescribedintheinstrumentofsaleormortgage.

(b) AnystatetaxwhichisdueandunpaidisadebtduetheStateandconstitutesalieninfavoroftheStateuponallpropertyandrightstoproperty,whetherrealorpersonal,belongingtoanypersonliableforthetax.Thelienforthetax,includingpenaltiesandinterestthereon,arisesatthetimethetaxisassessed,oratthetimeareturnthereofisfiled,oratthetimeoffilingbythedepartmentoftaxationofthecertificateprovidedforbysubsection(f)whicheverfirstoccurs.Fromandafterthetimethelienarisesitisaparamountlienuponthepropertyandrightstopropertyagainstallparties,whethertheirinterestarosebeforeorafterthattime,exceptasotherwiseprovidedinthissection.

(c) Thelienimposedbysubsection(b)isnotvalidasagainst:(1) Amortgageeorpurchaserof realproperty,or the lienofa judgmentcreditoruponrealproperty,whose

interestarosepriortotherecordingbythedepartmentofthecertificateprovidedforbysubsection(f);(2) Amortgageeorpurchaserofamotorvehiclewhobecomesthelegalownerorowneratatimewhenthetax

lienandencumbrancerecordprovidedforbysection286-46doesnotshowthelien.(d) Astotangiblepersonalproperty,possessionofwhichisheldbyapersonliablefortaxforthepurposeofsale

tothepublicintheordinarycourseoftheperson’sbusiness,thelienimposedbysubsection(b)isextinguishedastoanysuchpropertysoldintheordinarycourseofthebusinessbyorunderthedirectionofthepersontoanypurchaserforvaluableconsideration.Astosecurities,negotiableinstruments,andmoney,thelienimposedbysubsection(b):

(1) Isextinguishedastosuchpropertyuponpassageoftitletoapersonwithoutnoticeorknowledgeoftheexistenceofthelien,foranadequateandfullconsiderationinmoneyormoney’sworth;



(2) Isnotvalidasagainstamortgageeorpledgeeforanadequateandfullconsiderationinmoneyormoney’sworth,whoislocatedoutsidetheStateandtakespossessionoftheproperty,ifatthetimeoftakingpossessionofthepropertythemortgageeorpledgeeiswithoutnoticeorknowledgeoftheexistenceofthelien.Themererecordingorfilingofthecertificateprovidedforbysubsection(f)doesnotconstitutenoticeforthepurposesofthissubsection.

(e) Subject to theprovisionsof this subsection, the lien imposedby subsection (b) is not valid as against amortgagee,pledgee,orpurchaserwhogivesnotice to thedepartmentona formprescribedby itof themortgage,pledge,orpurchasemadeorabouttobemade,withadescriptionofthepropertyencumberedorconveyedorproposedtobeencumberedorconveyedthereby,andwhoseinterestinthepropertyarisespriortotherecordingorfilingbythedepartmentofthecertificateprovidedforbysubsection(f)orwithintendaysafterthefiling.Ifthenoticeisgiventhelienimposedbysubsection(b)isvalidagainstthepartygivingthenotice,astoanytaxessetforthinacertificatefiledasprovidedinsubsection(f)withintheperiodoffifteendaysafterthenotice.Thedepartmentmaywaivealloranypartoftheperiodhereinallowed.

(f) ThedepartmentmayrecordinthebureauofconveyancesatHonolulu,orinrespectofalienonamotorvehicle,filewiththecountydirectoroffinance,acertificatesettingforththeamountoftaxesdueandunpaid,whichhavebeenreturned,assessed,orastowhichanoticeofproposedassessmenthasissued.Thecertificateshallidentifythetaxpayer,thetaxpayer’slastknownaddress,andthetaxortaxesinvolved.Therecordingorfilingofthecertificatehastheeffectsetforthinthissection,butnothinginthissectionshallbedeemedtorequirethatacertificaterecordedorfiledbythedepartmentmustincludetheamountofanypenaltyorinterest,inordertoprotectthelientherefor.Thecertificate,ifrecordedorfiledwiththecountydirectoroffinance,shallbeenteredofrecordasprovidedbylaw.Recordationofthecertificateinthebureauofconveyancesshallbedeemed,atsuchtime,forallpurposesandwithoutanyfurtheraction,toprocurealienonlandregisteredinthelandcourtunderchapter501.Anycostincurredinthefilingofthecertificateshallbeapartofthelienforthetaxthereinsetforth.

(g) Thedepartmentmayissueacertificateofdischargeofanypartofthepropertysubjecttothelienimposedbythissection,uponpaymentinpartialsatisfactionofsuchlien,ofanamountnotlessthanthevalueasdeterminedbythedepartmentofthelienontheparttobesodischarged,orifthedepartmentdeterminesthatthelienontheparttobedischargedhasnovalue.Anysuchdischargesoissuedshallbeconclusiveevidenceofthedischargeofthelienasthereinprovided.

(h) Thelienimposedbysubsection(b)maybeforeclosedinacourtproceedingorbydistraintundersection231-25.

(i) Thissectionshallnotapplytoataxleviedbyachapterwhichcontainsaspecificprovisionforalienforthetaxleviedbythechapter,anyprovisioninthissectiontothecontrarynotwithstanding.[L1957,c185,§1;amLSp19592d,c1,§16;amL1963,c104,§1;Supp,§115-37.5;amL1966,c33,§2;HRS§231-33;amimpL1984,c90,§1;gench1985;amL1989,c20,§1]

Cross Reference

Tax InformationReleaseNo. 96-6, “Priority of StateTaxLienUnderHRS §231-33;Use of FormD-37 (Notice ofMortgage, Pledge orPurchase)”

Case Notes

Federalcourt’sequitablediscretiontoawardattorney’sfeestotheinterpleaderstakeholderwasnotprecludedbythestatutoryprioritygivenbythestatetaxlienstatute.488F.Supp.2d1084(2007).

Pre-hearingtaxliendoesnotviolatedueprocess.57H.1,548P.2d246.

Hawaii Legal Reporter Citations

Realpropertytaxlienisparamount.79HLR79-0723.

PENALTIES AND INTEREST

Note

PartheadingamendedbyL1995,c92,§3.

Cross Reference

TaxInformationReleaseNo.2010-07,“VoluntaryDisclosurePractice”SupersededbyTIR2016-02.

§231-34 Attempt to evade or defeat tax. Anypersonwhowilfullyattemptsinanymannertoevadeordefeatanytaximposedundertitle14,oritspayment,inadditiontootherpenaltiesprovidedbylaw,shallbeguiltyofaclassCfelonyand,uponconviction,shallbesubjecttooneoranycombinationofthefollowing:

(1) Afineofnotmorethan$100,000;(2) Imprisonmentofnotmorethanfiveyears;or(3) Probation;



providedthatacorporationshallbefinednotmorethan$500,000.[L1943,c4,§4;RL1945,§5134;RL1955,§115-38;amLSp19592d,c1,§16;HRS§231-34;amL1995,c92,§4;amL1999,c303,§1]

Cross Reference

TaxInformationReleaseNo.95-4,“EmployeeWithholdingCertificate”

§231-35 Wilful failure to file return, supply information, or secure a license. Anypersonrequiredtomakeareturn,makeareport,keepanyrecords,supplyanyinformation,orsecureanylicenserequiredundertitle14,whowilfullyfailstomakethereturn,makethereport,keeptherecords,supplytheinformation,orsecurethelicense,atthetimeortimesrequiredbylaw,shallinadditiontootherpenaltiesprovidedbylaw,beguiltyofamisdemeanoranduponconviction,shallbesubjecttooneoranycombinationofthefollowing:

(1) Afineofnotmorethan$25,000;(2) Imprisonmentofnotmorethanoneyear;or(3) Probation;

providedthatacorporationshallbefinednotmorethan$100,000.[L19322d,c40,§13;RL1935,§1912;amimpL1943,c4,§4;RL1945,§5135;RL1955,§115-39;HRS§231-35;amimpL1984,c90,§1;gench1985;amL1995,c92,§5;amL1996,c54,§2;amL1999,c303,§2]

Cross Reference


§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


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


[§231-36.5] Understatement of taxpayer’s liability by tax return preparer. (a)Ataxreturnpreparerwhounderstatesaperson’staxliabilitybaseduponunreasonablepositionsonataxreturnorclaimfortaxrefundshallpayapenaltyof$500withrespecttoeachsuchtaxreturnorclaimfortaxrefund.

(b) Ataxreturnpreparerwho:(1) Wilfullyunderstatesaperson’staxliability;or(2) Recklesslydisregardsanytaxlaworruleinunderstatingaperson’staxliability,

baseduponunreasonablepositionsonataxreturnorclaimfortaxrefundshallpayapenaltyof$1,000,withrespecttoeachsuchtaxreturnorclaimfortaxrefund.

(c) Forpurposesofsubsections(a)and(b),understatementsofliabilityusingunreasonablepositionsoccurwhen:(1) Anypartofataxreturnorclaimfortaxrefundisbasedonapositionthatdoesnothavesubstantialauthority;(2) Thetaxreturnpreparerwhopreparedthetaxreturnorclaimfortaxrefundkneworreasonablyshouldhave

knownoftheunreasonableposition;and(3) Theunreasonablepositionwasnotadiscloseditemasdefinedinsubsection(h)orwasfrivolous.

(d) Ifwithinthirtydaysafterthenoticeanddemandofanypenaltyundersubsection(a)or(b)ismade,thetaxreturnpreparer:

(1) Paysanamountthatisnotlessthanfifteenpercentofthepenaltyamount;and(2) Filesaclaimforrefundoftheamountsopaid,noactiontolevyorfileaproceedingincourttocollectthe

remainderofthepenaltyshallbecommencedexceptinaccordancewithsubsection(e).(e) Anaction that isstayedpursuant tosubsection(d)maybebroughtthirtydaysaftereitherofthefollowing

events,whicheveroccursfirst:(1) Thetaxreturnpreparerfailstofileanappealtothetaxappealcourtwithinthirtydaysafterthedayonwhich

theclaimforrefundofanypartialpaymentofanypenaltyundersubsection(a)or(b)isdenied;or(2) Thetaxreturnpreparerfailstofileanappealtothetaxappealcourtforthedeterminationofthetaxreturn

preparer’sliabilityforthepenaltyassessedundersubsection(a)or(b)withinsixmonthsafterthedayonwhichtheclaimforrefundwasfiled.

Nothing in this subsection shall be construed to prohibit anycounterclaim for the remainderof thepenalty in anyproceeding.

(f) Ifthereisafinaladministrativedeterminationpursuanttosection231-7.5,orafinaljudicialdecisionthatthepenaltyassessedundersubsection(a)or(b)shouldnotapply,thenthatportionofthepenaltyassessedshallbevoided.Anyportionofthepenaltythathasbeenpaidshallberefundedtothetaxreturnpreparerasanoverpaymentoftaxwithoutregardtoanyperiodoflimitationsthat,butforthissubsection,wouldapplytothemakingoftherefund.

(g) Attherequestofthedirectoroftaxation,acivilactionmaybebroughttoenjoinataxreturnpreparerfromfurtheractingasataxreturnpreparerorfromengaginginconductprohibitedundersubsection(a)or(b)asfollows:

(1) Anyactionunderthissubsectionmaybebroughtinthecircuitcourtofthecircuitinwhichthetaxreturnpreparerresidesorhasaprincipalplaceofbusiness,orinwhichthetaxpayerwithrespecttowhosetaxreturntheactionisbroughtresides;

(2) ThecourtmayexerciseitsjurisdictionovertheactionseparateandapartfromanyotheractionbroughtbytheStateagainstthetaxreturnpreparerortaxpayer;

(3) Ifthecourtfindsthatataxreturnpreparerhasengagedinconductsubjecttopenaltyundersubsection(a)or(b)andthatinjunctivereliefisappropriatetopreventtherecurrenceofthatconduct,thecourtmayenjointheprepareraccordingly;and

(4) Ifthecourtfindsthatataxreturnpreparerhascontinuallyorrepeatedlyengagedinconductprohibitedundersubsection(a)or(b)andthataninjunctionprohibitingthatconductwouldnotbesufficienttopreventthepreparer’sinterferencewiththeproperadministrationofthischapter,thecourtmayenjointhepreparerfromactingasataxreturnpreparer.

(h) Forpurposesofthissection:“Discloseditem”meansanyitemwhere:(1) Therelevantfactsaffectingtheitem’staxtreatmentareadequatelydisclosedinataxreturnorinastatement

attachedtoataxreturn;and(2) Thereisareasonablebasisforthetaxtreatmentoftheitembythetaxpayer.

“Substantialauthority”means,inadditiontoanydefinitionofsubstantialauthorityincorporatedbysubsection(j),thatthefollowingauthoritysupportsthetaxtreatmentofanitem:



(1) Statutoryprovisions;(2) Proposedorfinaladministrativerules;(3) Taxinformationreleasesorprocedures;(4) Departmentoftaxationannouncementsorofficialexplanations;(5) Courtcases;(6) Legislativeintentreflectedincommitteereportsandfloorstatements;(7) Privateletterrulings,comfortletters,technicaloradviceletters,andwrittendeterminationstotheextentthey

arevalidandnotoverruledbyotherauthority;or(8) Noticesorotherofficialpronouncementsofthedepartmentoftaxation.

“Taxreturnpreparer”meansanypersonwhopreparesforcompensation,orwhoemploysoneormorepersonstoprepareforcompensation,anyreturnoftaximposedundertitle14oranyclaimforrefundoftaximposedundertitle14.Forpurposesofthisdefinition,thepreparationofasubstantialportionofareturnorclaimforrefundshallbetreatedasifitwerethepreparationofthereturnorclaimforrefund.

Apersonshallnotbeataxreturnpreparermerelybecausetheperson:(1) Furnishestyping,reproducing,orothermechanicalassistance;(2) Preparesareturnorclaimforrefundoftheemployer(orofanofficeroremployeeoftheemployer)bywhom

thepersonisregularlyandcontinuouslyemployed;(3) Preparesasafiduciaryareturnorclaimforrefundforanyotherperson;or(4) Preparesaclaimforrefundforataxpayerinresponsetoanynoticeofdeficiencyissuedtothetaxpayerorin

response to anywaiver of restriction after the commencement of an audit of the taxpayer, or of anothertaxpayerifadeterminationintheauditoftheothertaxpayerdirectlyorindirectlyaffectsthetaxliabilityofthetaxpayer.

“Understatement of liability” shall have the samemeaning as stated in section 231-36.6(b).The determinationofwhetherthereisanunderstatementofliabilitymaybemadewithoutregardtoanyadministrativeorjudicialactioninvolvingthetaxpayer.

(i) Thepenaltyimposedbythissectionshallbeinadditiontoanyotherpenaltyprovidedbylaw.(j) ThissectionshallbeconstruedinaccordancewithregulationsandjudicialinterpretationsforSection6694of

theInternalRevenueCode.[L2009,c166,§1]Note


[§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


[§231-36.7] Promoting abusive tax shelters. (a)Apersonpromotesanabusivetaxshelterby:

§231-36.8 ADMINISTRATION OF TAXES


(1) Organizingorassistingintheorganizationof,orparticipatingdirectlyorindirectlyinthesaleof,aninterestin:(A) Apartnershiporotherentity;(B) Anyinvestmentplanorarrangement;or(C) Anyotherplanorarrangement;and

(2) Inconnectionwithanyactivitydescribedunderparagraph(1),making,furnishing,orcausinganotherpersontomakeorfurnishastatementwithrespectto:(A) Whetheranydeductionorcreditisallowed;(B) Whetheranyincomemaybeexcluded;or(C) Thesecuringofanyothertaxbenefitbyreasonofholdinganinterestintheentityorparticipatinginthe

planorarrangement, whichthepersonknowsorhasreasontoknowisfalseorfraudulentorisagrossvaluationoverstatementas

toanymaterialmatter.(b) Apersonfoundpromotinganabusivetaxsheltershallpay,withrespecttoeachactivitydescribedinsubsection

(a),apenaltyof$1,000or,ifthepersonestablishesthattheabusivetaxsheltergeneratedlessthan$1,000ofgrossincome,thenonehundredpercentofthegrossincomederivedortobederivedbythepersonfromtheactivity.Forpurposesofthissection,anyactivitydescribedinsubsection(a)(1)shallbetreatedasaseparateactivityforeachentityorarrangement.Participationineachsaledescribedinsubsection(a)(1)shallbetreatedasaseparateactivityforeachentityorarrangement.

(c) At the requestof thedirectorof taxation, a civilactionmaybebrought toenjoinanypersondescribed insubsection(a)fromengaginginanyconductdescribedinsubsection(a).Anyactionunderthissectionshallbebroughtinthecircuitcourtofthecircuitwherethepersoninsubsection(a)residesorwheretheperson’sprincipalplaceofbusinessislocated.ThecourtmayexerciseitsjurisdictionovertheactionseparateandapartfromanyotheractionbroughtbytheStateagainstthosepersonsdescribedinsubsection(a).Ifthecourtfindsthatapersondescribedinsubsection(a)hasengagedinanyconductsubjecttopenaltyundersubsection(b)andthatinjunctivereliefisappropriatetopreventtherecurrenceofthatconduct,thecourtmayenjointhepersonaccordingly.

(d) Thedirectormaywaivealloranypartof thepenaltyprovidedbysubsection(b)withrespecttoanygrossvaluationoverstatementonashowingthattherewasareasonablebasisforthevaluationandthatthevaluationwasmadeingoodfaith.

(e) Forpurposesofthissection,“grossvaluationoverstatement”meansanystatementofvalueforanypropertyorservicesif:

(1) Thevaluesostatedexceedstwohundredpercentoftheamountdeterminedtobethecorrectvaluation;and(2) Thevalueofthepropertyorservicesisdirectlyrelatedtotheamountofanydeductionorcreditallowableto

anyparticipant.(f) Thepenaltyimposedbythissectionshallbeinadditiontoanyotherpenaltyprovidedbylaw.(g) Thissectionshallbeconstruedinaccordancewithregulationsandjudicialinterpretationsgiventosection6700

oftheInternalRevenueCode.[L2009,c166,§2]Note

Applicabilityof2009amendment.L2009,c166,§27.

§231-36.8 Erroneous claim for refund or credit. (a)Ifaclaimforrefundorcreditwithrespecttotaxismadeforanexcessiveamount,thepersonmakingtheclaimshallbeliableforapenaltyinanamountequaltotwentypercentoftheexcessiveamount;providedthatthereshallbenopenaltyassessedwherethepenaltycalculationunderthissectionresultsinanamountoflessthan$400.

(b) Itshallbeadefensetothepenaltyunderthissectionthattheclaimforrefundorcredithadareasonablebasis.Apersonclaimingthereasonablebasisdefenseshallhavetheburdenofprooftodemonstratethereasonablenessoftheclaim.

(c) Thissectionshallbeconstruedinaccordancewithregulationsandjudicialinterpretationsgiventosection6676oftheInternalRevenueCode.

(d) Forpurposesofthissection:“Excessiveamount”meanstheamountbywhichtheamountoftheclaimforrefundorcreditforanytaxableyear

exceedstheamountoftheclaimallowableforsuchtaxableyear.“Reasonablebasis”meansastandardofcareused in taxreporting that issignificantlyhigher thannotfrivolous

or not patently improper.A reasonable basis positionwill bemore than arguable andbased on at least one ormoreauthoritiesofeitherstateorfederaltaxadministration.Apositionisconsideredtohaveareasonablebasisifareasonableandwell-informedanalysisbyapersonknowledgeableintaxlawwouldleadthatpersontoconcludethatthepositionhasapproximatelyaone-in-four,orgreater,likelihoodofbeingsustainedonthemerits.Areasonablebasisincludesinnocentmistakeswhere theexcessiveamount is theresultof inadvertence,mathematicalerror,orwhereotherwisedefinedasinnocentbythedirectorpursuanttoaformalpronouncementissuedwithoutregardtochapter91.

(e) Thissectionshallnotapplytoanyportionofanunderpaymentonwhichapenaltyisimposedundersection231-36.6.[L2009,c166,§3;amL2012,c185,§1]



Note

Applicabilityofsection.L2009,c166,§27.The2012amendmentappliestotaxableyearsbeginningafterDecember31,2011. L2012,c185,§4.

§231-37 Neglect of duty, etc., misdemeanor. Any officer of the department of taxation, the state director offinance,anypersondulyauthorizedbythedirectoroftaxation,oranypoliceofficer,onwhomdutiesareimposedunderthischapter,whowilfullyfailsorrefusesorneglectstoperformfaithfullyanydutyordutiesasrequiredbythischapter,shallbedeemedguiltyofamisdemeanor.[L19322d,c40,§12;RL1935,§1915;RL1945,§5137;amL1945,c79,§7;RL1955,§115-41;amLSp19592d,c1,§§14,16;amL1963,c114,§1;HRS§231-37;amL1974,c139,§2;amL2017,c12,§34]

§231-38 REPEALED. L1995,c92,§21.

§231-39 Additions to taxes for noncompliance or evasion; interest on underpayments and overpayments. (a)Exceptasotherwiseprovided,thissectionshallapplytoeverytaxorrevenuelawoftheStatethatprovidesforthefilingwiththedirectoroftaxationofareturnorstatementofthetaxortheamounttaxable.

(b) Thereshallbeaddedtoandbecomeapartofthetaximposedbysuchtaxorrevenuelaw,andcollectedassuch:

(1) Failuretofiletaxreturn.Incaseoffailuretofileanytaxreturnrequiredtobefiledonthedateprescribedtherefor(determinedwithregardtoanyextensionoftimeforfiling),unlessitisshownthatthefailureisduetoreasonablecauseandnotduetoneglect,thereshallbeaddedtotheamountrequiredtobeshownastaxonthe returnfiveper centof the amountof the tax if the failure is fornotmore thanonemonth,with anadditionalfivepercentforeachadditionalmonthorfractionthereofduringwhichthefailurecontinues,notexceedingtwenty-fivepercentintheaggregate.Forpurposesofthisparagraph,theamountoftaxrequiredtobeshownonthereturnshallbereducedbytheamountofanypartofthetaxwhichispaidonorbeforethedateprescribedforpaymentofthetaxandbytheamountofanycreditagainstthetaxwhichmaybeclaimeduponthereturn.Thisparagraphshallnotapplytoanyfailuretofileadeclarationofestimatedtaxrequiredbysection235-97.

(2) Failuretopaytax.(A) Ifanypartofanyunderpaymentisduetonegligenceorintentionaldisregardofrules(butwithoutintent

todefraud),thereshallbeaddedtothetaxanamountuptotwenty-fivepercentoftheunderpaymentasdeterminedbythedirector.

(B) Ifanypartofanyunderpaymentoftaxrequiredtobeshownonareturnisduetofraud,thereshallbeaddedtothetaxanamountuptofiftypercentoftheunderpaymentasdeterminedbythedirector.

(C) Ifanypenaltyisassessedundersubparagraph(B)(relatingtofraud)foranunderpaymentoftaxwhichisrequiredtobeshownonareturn,nopenaltyunderparagraph(1)(relatingtofailuretofilethereturn)shallbeassessedwithrespecttothesameunderpayment.

(3) Failuretopaytaxafterfilingtimelyreturns.Ifareturnisfiledonorbeforethedateprescribedthereforandtheamountshownastaxonthereturnisnotcompletelypaidwithinsixtydaysoftheprescribedfilingdate,thereshallbeaddedtotheunpaidtaxanamountuptotwentypercentasdeterminedbythedirector.

(4) Interestonunderpaymentornonpaymentoftax.(A) Ifanyamountoftaxisnotpaidonorbeforethelastdateprescribedforpayment,interestonsuch

amountattherateoftwo-thirdsofonepercentamonthorfractionofamonthshallbepaidfortheperiodbeginningwiththefirstcalendardayafterthedateprescribedforpayment,section231-21tothecontrarynotwithstanding,tothedatepaid.

(B) Iftheamountofanytaxisreducedbyreasonofacarrybackofanetoperatinglossallowedunderchapter235,suchreductionintaxshallnotaffectthecomputationofinterestunderthisparagraphfortheperiodendingwiththelastdayofthetaxableyearinwhichthenetoperatinglossarises.

(C) Interestprescribedunderthisparagraphonanytaxshallbepaiduponnoticeanddemand,andshallbeassessed,collected,andpaidinthesamemannerastaxes.

(D) Nointerestunderthisparagraphshallbeimposedoninterestprovidedbythisparagraph.(E) Ifanyportionofataxissatisfiedbycreditofanyoverpayment,thennointerestshallbeimposedunder

thisparagraphontheportionofthetaxsosatisfiedforanyperiodduringwhich,ifthecredithadnotbeenmade,interestwouldhavebeenallowablewithrespecttotheoverpayment.

(F) Interestprescribedunderthisparagraphonanytaxmaybeassessedandcollectedatanytimeduringtheperiodwithinwhichthetaxtowhichtheinterestrelatesmaybecollected.

(G) Thisparagraphshallnotapplytoanyfailuretopayestimatedtaxrequiredbysection235-97.(c) Notaxpayershallbeexemptfromanypenaltyorinterestbyreasonofhavingcontestedthetax,butonlyto

theextentthatthetaxisadjudgedtobeexcessiveorcontrarytolaw.[L1953,c125,§4;RL1955,§115-43;amL1967,



c134,§1;HRS§231-39;amL1974,c138,§1;amL1988,c386,§1;amL1991,c136,§2;amL1992,c102,§2;amL1994,c15,§1]

Cross References

Costrecoveryfeesfortheadministrationoftaxes,see§231-25.5.TaxInformationReleaseNo.92-2,“TheAdministrationandApplicationoftheConveyanceTaxLaw”Tax Information Release No. 2008-03, “Deposits in the Nature of Cash Bond Made to Suspend the Running of Interest on Potential

Underpayments”

Case Notes

Erroneousbeliefthatnotaxliabilityexistedheldnot“reasonablecause”withinmeaningofsubsection(b)(1).57H.436,559P.2d264.

§231-40 Interpretation. Sections231-34,231-35,231-36,and231-36.4shallbeconstrued inaccordancewithjudicialinterpretationsgiventosimilarprovisionsofTitle26oftheUnitedStateCode;consistenttherewith,theterm“wilfully”shallmeanavoluntary,intentionalviolationofaknownlegalduty.[L1995,c92,ptof§2;amL2009,c166,§22;amL2011,c43,§3]

Case Notes

Where,pursuanttothissection,theCheekinterpretationofthewilfulnessrequirement--thatajurymustbepermittedtoconsiderevidenceofadefendant’sgoodfaithbeliefthatdefendant’sconductdidnotviolatethetaxlaws,evenifthatbeliefwasnotobjectivelyreasonable,indeterminingwhetherdefendantactedwilfully--wasadoptedandappliedinconstruing§231-36(a),thetrialcourterredinexcludingdefendant’sexhibitpursuanttoHRErules401and403onthegroundsthatdefendant’sanalysisofthetaxlawswasirrelevantandthatevidenceofdefendant’slegaltheorieswouldconfusethejury.119H.60(App.),193P.3d1260.

[§231-40.5] Statute of limitations; extension for substantial omissions. (a)Notwithstandinganyotherlawtothecontrarylimitingthetimeforassessmentofanytax,ifataxpayeromitsanamountof:

(1) Grossincomeorgrossproceedsofsale;(2) Grossrentalorgrossrentalproceeds;(3) Price,value,orconsiderationpaidorreceivedforanyproperty;(4) Grossreceipts;or(5) Gallonage,tonnage,cigarettecount,day,orotherweightormeasureapplicabletoanytax,

properlyincludablethereinthatisinexcessoftwenty-fivepercentoftheamountstatedinthereturn,thetaxmaybeassessedoraproceedingincourtwithrespecttothetaxwithoutassessmentmaybebegunwithoutassessment,atanytimewithinsixyearsafterthereturnwasfiled.

(b) Indetermininganyamountomitted, there shall notbe taken intoaccountanyamount that is stated in thereturnifsuchamountisdisclosedinthereturnorinastatementattachedtothereturninamanneradequatetoapprisethedepartmentoftaxationofthenatureandamountofsuchitem.

(c) ThissectionshallbeconstruedinaccordancewithregulationsandjudicialinterpretationsgiventoSection6501oftheInternalRevenueCode.[L2009,c166,§5]

Note

Applicabilityofsection.L2009,c166,§27.

§231-41 Statute of limitation for criminal penalties. Notwithstanding any laws to the contrary, prosecutionsundersections231-34,231-35,231-36,and231-36.4shallbecommencedwithinsevenyearsafterthecommissionoftheoffense.[L1995,c92,ptof§2;amL2009,c166,§23;amL2011,c43,§4]

RECOVERY OF MONEY OWED TO THE STATE

§231-51 Purpose. Thepurposeofsections231-52to231-59istopermittheretentionofstateincometaxrefundsofthosepersonswhooweadebttotheState,whoaredelinquentinthepaymentofchildsupportpursuanttosection576D-1,whohavedefaultedonaneducationloannoteheldbytheUnitedStudentAidFunds,Inc.,whoowefederalincometaxestotheUnitedStatesTreasurer,orwhoreceiveamedicaidoverpaymentsubjecttorecoveryundersection346-59.6.[L1982,c199,ptof§1;amL1985,c256,§1;amL1986,c87,§1;amL1988,c199,§1;amL1998,c153,§1andc293,§3]

Cross References

Civilreliefforstatemilitaryforces,seechapter657D.

§231-52 Definitions. Asusedinsections231-51to231-59,unlessthecontextotherwiserequires:“Claimantagency”includesanystateagency,board,commission,department,institution,thejudiciary,orotherstate

organization,oranysubdivisionthereof.Inthecaseofdelinquentchildsupportpursuanttosection576D-1,“claimantagency”meansthechildsupportenforcementagencyoranagencyundercooperativeagreementwiththedepartment


ADMINISTRATION OF TAXES [§231-58]

wheneverthedepartmentisrequiredbylawtoenforceasupportorderonbehalfofanindividual.“Claimantagency”includesthedepartmentofbudgetandfinancewhenactingonbehalfandattherequestoftheUnitedStudentAidFunds,Inc.tocollectdefaultededucationloannotesincurredunderthefederalHigherEducationActof1965(PublicLaw89-329,79Stat.1219),asamended;providedthatthedepartmenthasacontractwiththeUnitedStudentAidFunds,Inc.underchapter309whenactingasaclaimantagency.“Claimantagency”includesthedepartmentoftaxationwhenactingonbehalfandattherequestoftheInternalRevenueServiceundertheUnitedStatesDepartmentoftheTreasury,andwhentheInternalRevenueServiceisauthorizedbyfederallawtoadministrativelyimposealevyuponarefundofadebtorinsatisfactionofthefederalincometaxesassessedunderInternalRevenueCodeof1986,asamended.

“Debt”includes:(1) Anydelinquencyinperiodiccourt-orderedoradministrative-orderedpaymentsforchildsupportpursuantto

section576D-1,inanamountequaltoorexceedingthesumofpaymentswhichwouldbecomedueoveraone-monthperiod;

(2) Anyliquidatedsumexceeding$25whichisdueandowinganyclaimantagency,regardlessofwhetherthereisanoutstandingjudgmentforthatsum,andwhetherthesumhasaccruedthroughcontract,subrogation,tort,operationoflaw,orjudicialoradministrativejudgmentororder;

(3) AnydefaultededucationloannoteheldbytheUnitedStudentAidFunds,Inc.incurredunderthefederalHigherEducationActof1965(PublicLaw89-329,79Stat.1219),asamended;

(4) AnyfederalincometaxesdueandowingtotheUnitedStatesTreasurer;(5) Anymedicaidoverpaymentundersection346-59.6;or(6) Anyunpaidcourt-orderedrestitutionenforceableasaciviljudgmentpursuanttosection706-647.

“Debtor”includesanypersonwhoowesadebttoanyclaimantagency,whoisdelinquentinpaymentofcourt-orderedoradministrative-orderedchildsupportpayments,pursuanttosection576D-1,whohasdefaultedonaneducationloannoteheldbytheUnitedStudentAidFunds,Inc.incurredunderthefederalHigherEducationActof1965(PublicLaw89-329,79Stat.1219),asamended,orwhoowesfederalincometaxestotheUnitedStatesTreasurer.

“Refund”includesanystateincometaxrefundwhichisorwillbedueanydebtor,oranyothersumsduetoadebtorfromtheState.[L1982,c199,ptof§1;amL1985,c256,§2;amL1986,c87,§2andc332,§5;amL1987,c112,§1;amL1988,c199,§2;amL1998,c66,§1,c153,§2,andc293,§4;amL2017,c77,§3]

[§231-53] Setoff against refund. TheState,throughthedepartmentofaccountingandgeneralservices,uponrequestofaclaimantagency,shallsetoffanyvaliddebtdueandowingaclaimantagencybythedebtoragainstanydebtor’srefund.Anyamountoftherefundinexcessoftheamountretainedtosatisfythedebtshallberefundedtothedebtor.[L1982,c199,ptof§1]

[§231-54] Hearings; appeals. At the time a setoff is identified, the debtor shall be notified by the comptroller,departmentofaccountingandgeneralservices,oftheState’sintentiontoapplythedebtor’sdebtagainsttherefund.Thenoticeshallstatethatthedebtorwithinthirtydaysmayrequestahearingbeforetheclaimantagencytocontestthesetoff.Noissuesthathavebeenpreviouslylitigatedshallbeconsideredatthehearing.Appealsfromthehearingallowedunderthissectionshallbeinaccordancewithchapter91.[L1982,c199,ptof§1]

[§231-55] Finalization of setoff; credit on debt. Uponcompletionof thehearingandappealprocesssetout insection231-54,oruponthedebtor’sfailuretotimelyrequestahearingpursuanttothatsection,thesetoffshallbecomefinal.Theamountofthesetoffafterdeductionofanychargeauthorizedbysection231-56shallbecreditedbytheclaimantagencyagainstthedebtor’sdebt.[L1982,c199,ptof§1]

[§231-56] Charges for setoff; credit to agency. TheStatemaychargetheclaimantagencyforthecostofthesetoff;providedthatthechargesshallnotexceedtheproceedsofthecollection.TheStatemaydesignateasinglepercentagetoberetainedfromtheproceedsofthesetoffasachargeforcostofassistance.Thenetproceedsofasetoff,afterdeductionofanycharge,shallbecreditedtotheclaimantagency’saccountorfund.[L1982,c199,ptof§1]

[§231-57] Apportionment of joint refunds. Inthecaseofasetoffagainstajointincometaxrefund,theStatemaymakeseparaterefundsofwithheldtaxesuponrequestbyahusbandorwifewhohasfiledthejointreturn.TherefundpayabletoeachspouseshallbeproportionedtothegrossearningsofeachshownbytheinformationreturnsfiledbytheemployerorotherwiseshowntothesatisfactionoftheState.[L1982,c199,ptof§1]

§231-57.5 Notification of address and social security number of debtor parent. Thedepartmentofaccountingandgeneralservicesshallnotifythechildsupportenforcementagencyoftheaddressandsocialsecuritynumberofeachdebtorwhohasbeensubjecttoasetoffbecauseofachildsupportdebt.[L1986,c332,§3]

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



§231-59 Procedure additional. Thesetoffprocedureauthorizedbysections231-53to231-57.5isinadditiontoandnotinsubstitutionofanyotherremedyavailablebylaw.[L1982,c199,ptof§1;amL2017,c12,§35]

LIENS, FORECLOSURE

[§231-61] Tax liens; co-owners’ rights. (a)Ifacotenancyexistsandwithintheperiodofataxlien,allofthetaxes,interest,penalties,andotheradditionstothetax,dueanddelinquentatthetimeofpayment,arepaidbyacotenant,thecotenantshallhavealieninanamountequaltotheamountpaidbythecotenantontheinterestofanynoncontributingcotenantuponrecordinginthebureauofconveyances,withinninetydaysafterthecotenant’spayment,aswornnoticesettingforththeamountclaimed,abriefdescriptionofthelandaffectedbytaxkeyorotherwise,sufficienttoidentifytheland,thetaxespaidandthenameofthecotenantuponwhoseinterestthelienisasserted.Whenanoticeofthetaxlienisrecordedbyacotenant,theregistrarshallcausethetaxlientobeindexedinthegeneralindexesofthebureauofconveyances.Ifthelandaffectedisregisteredinthelandcourtthenoticeshallalsocontainareferencetothenumberofthecertificateoftitleofthelandandshallbefiledandregisteredintheofficeoftheassistantregistrarofthelandcourt,andtheregistrar,intheregistrar’scapacityasassistantregistrarofthelandcourt,shallmakeanotationofthefilingthereofoneachlandcourtcertificateoftitlesospecified.

Thecotenant’slienshallhavethesamepriorityasthelienorliensoftheStateforthetaxespaidbythecotenant,andmaybeenforcedbyanactioninthenatureofasuitinequity.Thelienshallcontinueforthreeyearsafterrecordingorregistering,oruntilterminationoftheproceedingsforenforcementthereofifsuchproceedingsarebegunandnoticeofthependencythereofisrecordedorfiledandregisteredasprovidedbylaw,withintheperiod.

(b) Thedirectororthedirector’ssubordinate,incaseofastatetaxlien,andthecreditorcotenant,incaseofacotenant’slien,attheexpenseofthedebtor,uponpaymentoftheamountofthelien,shallexecuteanddelivertothedebtoraswornsatisfactionthereof,includingareferencetothenameofthepersonassessedorcotenantaffectedasshownintheoriginalnotice,thedateoffilingoftheoriginalnotice,adescriptionofthelandinvolved,andthenumberofthecertificateoftitleofthelandifregisteredinthelandcourt.Whenrecordedinthebureauofconveyancesorfiledandregisteredintheofficeoftheassistantregistrarofthelandcourt,inthecaseofacotenant’slien,whichcontainsthereferencetothebookandpageoftheoriginallien,theswornsatisfactionshallbeenteredinthegeneralindexesofthebureauofconveyances,andifanotationoftheoriginalnoticewasmadeonanylandcourtcertificateoftitlethefilingofthesatisfactionshallalsobenotedonthecertificate.

Thissectionastocotenancyshallapply,aswell,inanycaseofownershipbymorethanoneassessableperson.[L1989,c14,ptof§1(1)]

Cross References

Recordation,see§502-31.5.

§231-62 Tax liens; foreclosure; property. (a) Upon enforcement or foreclosure by the State, in anymannerwhatsoever,ofanystatetaxlienonrealproperty,allstatetaxesofwhatsoevernatureandhowsoeveraccruinganddueatthetimeoftheforeclosuresalefromthetaxpayeragainstwhosepropertythetaxlienissoenforcedorforeclosedshallbesatisfiedasfaraspossibleoutoftheproceedsofthesaleremainingafterpaymentofthe:

(1) Costsandexpensesoftheenforcementandforeclosure,includingatitlesearch,ifany;(2) Amountofsubsistingstatetaxliensonrealproperty;and(3) Amountofanyrecordedliensagainsttheproperty,intheorderoftheirpriority.

(b) Theliensmaybeenforcedbyactionofthestatetaxcollectorinthecircuitcourtofthejudicialcircuitinwhichthepropertyissituated.Jurisdictionisconferreduponthecircuitcourtstohearanddetermineallproceedingsbroughtorinstitutedtoenforceandforeclosesuchstatetaxliens,andtheproceedingshadbeforethecircuitcourtsshallbeconductedinthesamemannerandformasordinaryforeclosureproceedings.

(c) IftheownersorclaimantsofthepropertyagainstwhichastatetaxlienissoughttobeforeclosedareatthetimewithouttheStateorcannotbeservedwithintheState,oriftheownersareunknown,andthefactshallbemadetoappearbyaffidavittothesatisfactionofthecourt,anditshallinlikemannerappearprimafaciethatacauseofactionexistsagainstsuchownersorclaimantsoragainstthepropertydescribedinthecomplaintorthatsuchownersorclaimantsarenecessaryorproperpartiestotheaction,thecourtmaygrantanorderthattheservicemaybemadeinthemannerprovidedbysections634-23to634-27.Inanysuchcaseitshallnotbenecessarytoobtainjudgmentandhaveexecutionissuedandreturnedunsatisfied,beforeproceedingtoforeclosethelienfortaxesinthemannerprovided.[L1989,c14,ptof§1(1);amL2017,c12,§36]

[§231-63] Tax liens; foreclosure without suit, notice. Allrealpropertyonwhichalienforstatetaxesexistsmaybesoldbywayofforeclosurewithoutsuitbythestatetaxcollector,andincaseanylien,oranypartthereof,hasexisted


ADMINISTRATION OF TAXES [§231-68]

thereonforthreeyears,shallbesoldbythestatetaxcollectoratpublicauctiontothehighestbidder,forcash,tosatisfythelien,togetherwithallinterest,penalties,costs,andexpensesdueorincurredonaccountofthetax,lien,andsale,thesurplus,ifany,toberenderedtothepersontheretoentitled.Thesaleshallbeheldatanypublicplaceproperforsalesonexecution,afternoticepublishedatleastonceaweekforatleastfoursuccessiveweeksimmediatelypriortheretoinanynewspaperwithageneralcirculationofatleastsixtythousandpublishedintheStateandanynewspaperofgeneralcirculationpublishedanddistributedinthetaxationdistrictwhereinthepropertytobesoldissituated,ifthereisanewspaperpublishedinthetaxationdistrict.

Iftheaddressoftheownerisknownorcanbeascertainedbyduediligence,includinganabstractoftitleortitlesearch,thestatetaxcollectorshallsendtoeachownernoticeoftheproposedsalebyregisteredmail,withrequestforreturnreceipt.If theaddressof theownerisunknown, thestate taxcollectorshallsendanoticeto theownerat theowner’slastknownaddressasshownontherecordsofthedepartmentoftaxation.Thenoticeshallbedepositedinthemailatleastforty-fivedayspriortothedatesetforthesale.Thenoticeshallalsobepostedforalikeperiodinatleastthreeconspicuouspublicplaceswithinsuchtaxationdistrict,andifthelandisimprovedoneofthethreepostingsshallbeontheland.[L1989,c14,ptof§1(1)]

[§231-64] Tax liens; registered land. Ifthelandhasbeenregisteredinthelandcourt,thestatetaxcollectorshallalsosendbyregisteredmailanoticeoftheproposedsaletoanypersonholdingamortgageorotherlienregisteredintheofficeoftheassistantregistrarofthelandcourt.Thenoticeshallbesenttoanysuchpersonattheperson’slastaddressasshownbytherecordsintheofficeoftheregistrar,andshallbedepositedinthemailatleastforty-fivedayspriortothedatesetforthesale.[L1989,c14,ptof§1(1)]

[§231-65] Tax liens; notice, form of. Thenoticeofsaleshallcontainthenamesofthepersonsassessed,thenamesofthepresentowners(sofarasshownbytherecordsofthetaxofficeandtherecords,ifany,intheofficeoftheassistantregistrarofthelandcourt),thecharacterandamountofthetax,andthetaxyearoryears,withinterest,penalties,costs,expenses,andchargesaccruedortoaccruetothedateappointedforthesale,abriefdescriptionofthepropertytobesold,andthetimeandplaceofsale,andshallwarnthepersonsassessed,andallpersonshavingorclaimingtohaveanymortgageorotherlienthereonoranylegalorequitableright,title,orotherinterestintheproperty,thatunlessthetax,withallinterest,penalties,costs,expenses,andchargesaccruedtothedateofpayment,ispaidbeforethetimeofsaleappointed,thepropertyadvertisedforsalewillbesoldasadvertised.Thestatetaxcollectormayincludeinoneadvertisementofnoticeofsalenoticeofforeclosureuponmorethanoneparcelofrealproperty,whetherornotownedbythesamepersonandwhetherornottheliensareforthesametaxyearoryears.[L1989,c14,ptof§1(1)]

[§231-66] Tax liens; postponement of sale, etc. Ifatthetimeappointedforthesalethestatetaxcollectordeemsitexpedientandfortheinterestofallpersonsconcernedthereintopostponethesaleofanypropertyorpropertiesforwantofpurchasers,orforothersufficientcause,thestatetaxcollectormaypostponethesalefromtimetotime,untilthesaleiscompleted,givingnoticeofeveryadjournmentbyapublicdeclarationthereofatthetimeandplacelastappointedforthesale;providedthatthesaleofanypropertymaybeabandonedatthetimefirstappointedoranyadjourneddate,ifnoproperbidisreceivedsufficienttosatisfythelien,togetherwithallinterest,penalties,costs,expenses,andcharges.[L1989,c14,ptof§1(1)]

[§231-67] Tax liens; tax deed; redemption. Thestatetaxcollectororthestatetaxcollector’sassistant,onpaymentofthepurchaseprice,shallmake,execute,anddeliverallproperconveyancesnecessaryinthepremisesandthedeliveryoftheconveyancesshallvestinthepurchaserthetitletothepropertysold;providedthatthedeedtothepremisesshallberecordedwithinsixtydaysafterthesale;providedfurtherthatthetaxpayermayredeemthepropertysoldbypaymenttothepurchaseratthesale,withinoneyearfromthedatethereof,orifthedeedshallnothavebeenrecordedwithinsixtydaysafterthesale,thenwithinoneyearfromthedateofrecordingofthedeed,oftheamountpaidbythepurchaser,togetherwithallcostsandexpenseswhichthepurchaserwasrequiredtopay,includingthefeeforrecordingthedeed,andinadditionthereto,interestonsuchamountattherateoftwelvepercentayear,butinacaseofredemptionmorethanoneyearafterthedateofsalebyreasonofextensionoftheredemptionperiodonaccountoflaterecordingofthetaxdeed,interestshallnotbeaddedfortheextendedredemptionperiod.[L1989,c14,ptof§1(1)]

[§231-68] Tax liens; costs. Thedirectoroftaxationbyrulemayprescribeascheduleofcosts,expenses,andchargesandthemannerinwhichtheyshallbeapportionedbetweenthevariouspropertiesofferedforsaleandthetimeatwhicheachcost,expense,orchargeisdeemedtoaccrue.Thecosts,expenses,andchargesshallbeaddedtoandbecomeapartofthetaxlienonthepropertyforthelastyearinvolvedinthesaleorproposedsale,thetaxforwhichisdelinquent.Thecosts,expenses,andchargesmayincludeprovisionforthemakingofandthesecuringofcertificatesofsearchesofanyrecordstofurnishinformationtobeusedinorinconnectionwiththenoticeofsaleortaxdeed,orinanycasewherethedirectordeemsitadvisable;providedthatthestatetaxcollectorshallnotberequiredtomakesuchsearchesortocausethemtobemadeexceptasprovidedbysection231-64withrespecttomortgagesorotherliensregisteredintheofficeoftheassistantregistrarofthelandcourt.[L1989,c14,ptof§1(1)]

[§231-69] ADMINISTRATION OF TAXES


[§231-69] Tax deed as evidence. Thetaxdeedreferredtoinsection231-67isprimafacieevidencethat:(1) Thepropertydescribedby thedeedon thedateof thesalewassubject toa lienor liensforstate taxes,

penalties,andinterestintheamountstatedinthedeed,forthetaxyearsthereinstated,andthatthestatetaxes,penalties,andinterestweredueandunpaidonthedateofsale;

(2) Costs,expenses,andchargesdueorincurredonaccountofthestatetaxes,liens,andsalehadaccruedatthedateofthesaleintheamountstatedinthedeed;

(3) Thepersonwhoexecutedthedeedwastheproperofficer;(4) Atapropertimeandplacethepropertywassoldatpublicauctionasprescribedbylaw,andbytheproper

officer;(5) Thesalewasmadeuponfullcompliancewithsections231-63to231-68andalllawsrelatingthereto,and

aftergivingnoticeasrequiredbylaw;and(6) Thegranteenamedinthedeedwasthepersonentitledtoreceivetheconveyance.[L1989,c14,ptof§1(1)]

[§231-70] Disposition of surplus moneys. (a)Theofficerchargedwiththedutyofdistributingthesurplusarisingfromataxsaleundersections231-63to231-68shallpayfromthesurplusallstatetaxes,includinginterestandpenalties,ofwhatsoevernatureandhowsoeveraccruing,asprovidedinsection231-62,andtheofficermaypayfromthesurplusthecostofasearchofanyrecordswheresuchsearchisdeemedadvisablebytheofficertoascertainthepersonorpersonsentitledtothesurplus;providedthatnothinginthissectionshallbeconstruedtorequirethestatetaxcollectortomakeorcauseanysuchsearchtobemade.Iftheofficerisindoubtastothepersonorpersonsentitledtothebalanceofthefundtheofficermayrefusetodistributethesurplusandanyclaimantmaysuetheofficerortheofficer’ssuccessorinofficeinthecircuitcourtinthecircuitwithinwhichthepropertysoldwassituated.Theofficermayrequiretheclaimantstointerplead,inwhicheventtheofficershallstatethenamesofallclaimantsknowntotheofficer,andshallcausethemtobemadepartiestotheaction.Ifintheofficer’sopiniontheremaybeotherclaimantswhoareunknown,theofficermayapplyforanorderorordersjoiningallpersonsunknownhavingorclaimingtohaveanylegalorequitableright,title,orinterestinthemoneysoranypartthereoforanylienorotherclaimwithrespectthereto.

(b) Anyordersofthecourtorsummonsinthemattermaybeservedasprovidedbylawortherulesofcourt,andallpersonshavinganyinterestinthemoneyswhoareknown,includingtheguardiansofsuchofthemasareunderlegalageorunderanyotherlegaldisability(andifanyoneormoreofthemisunderlegalageorunderotherlegaldisabilityandwithoutaguardianthecourtshallappointaguardianadlitemtorepresent themtherein)shallhavenoticeoftheactionbypersonalserviceuponthem.AllpersonshavinganyinterestinthemoneyswhosenamesareunknownorwhoifknowndonotresidewithintheState,orforanyreasoncannotbeservedwithprocesswithintheStateshallhavenoticeoftheactionasprovidedbysections634-23to634-27,exceptthatanypublicationofsummonsshallbeinatleastonenewspaperpublishedintheStateandhavingageneralcirculationinthecircuitwithinwhichthepropertysoldwassituated,andtheformofnoticetobepublishedshallprovideabriefdescriptionofthepropertywhichwassold.

(c) Allexpensesincurredbytheofficershallbemetoutofthesurplusmoneysrealizedfromthesale.[L1989,c14,ptof§1(1)]

CIVIL COMPLIANCE; SPECIAL ENFORCEMENT SECTION

Note

PartrepealedonJune30,2014.L2009,c134,§13(3).The2013 amendment repealsSection13(3)ofAct 134,SLH2009 effectiveApril 30, 2013.Deletes the sunset provisions for the special

enforcementsectionofthedepartmentoftaxation.L2013,c58,§3.

§231-81 Special enforcement section; created. [(a)]Thereiscreatedwithinthedepartmentoftaxationthespecialenforcementsectiontocarryoutcivilenforcementeffortsasdirectedbythedirectoroftaxation.Thedirectormaystaffthesectionastheexigenciesofthepublicservicemayrequire.

[(b)]Thedepartmentoftaxationshallreporttothelegislaturenolaterthanthirtydayspriortotheconveningofeachregularsessionthestateresourcescommittedtoimplementing[Act134,SessionLawsofHawaii2009]andtheadditionalrevenuesraisedtherefor.[L2009,c134,ptof§2,§9;amL2013,c58,§1]

Revision Note

L2009,c134,§9iscodifiedtothissectionpursuantto§23G-15.

§231-82 Special enforcement section; functions, powers, and duties. Thespecialenforcementsectionshallhavethefollowingfunctions,powers,andduties:

(1) Investigatereportedorsuspectedviolationsoftaxlawsforcivilenforcementpurposes,includingthroughcovertmeans,withastatedpriorityofinvestigatingcash-basedbusinessesasdefinedinsection231-93;



(2) Enforcethetaxlawsbyissuing,enforcing,orexecutingcitations,fines,infractions,assessments,liens,levies,writs,warrants,injunctions,orotherprocess;

(3) Serveas fraud referral specialists toassist in thedevelopmentand reviewof fraudcases forappropriatedispositionofpotentiallyfraudulentactivities,includingreferraltocriminalinvestigatorsandassessmentofcivilfraudpenalties;providedthatpersonnelassignedtothespecialenforcementsectionmaynotparticipateinanycriminalinvestigation;

(4) Organizeandholdpublicinformationalmeetingsonissuesoftaxlaws,includingcompliancedeficienciesinsegmentsoftheeconomy,andundertakeanyotheractivitiestoencouragetaxpayers,practitioners,orotherstomaintainresponsibilityandcompliancewiththeirtaxobligations;

(5) Coordinatewithothersectionsordivisionswithinthedepartmentoftaxation,otherdepartmentsorbranchesofthestategovernment,anybranchesofthecountygovernment,orthefederalgovernmentonmattersrelatingtocivilenforcementofthetaxlaws,includingjointinvestigations,information-sharing,arrangements, orconcurrentcollectionefforts;providedthatpersonnelassignedtothespecialenforcementsectionmaynotparticipateinanycriminalinvestigation;

(6) Compile information received by third parties, including taxpayers, competitors, government agencies,confidentialsources,orpublicsourcesanddelegatethisinformationwithinthedepartmentforproperhandling.Properhandlingmayincludereferralinternallytoothercivilorcriminalenforcementsections;

(7) Conductinvestigations,research,andstudiesofmattersrelevanttothecomplexorsensitivecivilenforcementofthetaxlaws;and

(8) Performsuchotheractsasmaybeincidentaltotheexerciseofthefunctions,powers,anddutiessetforthinthissectionorasotherwisedirectedbythedirectoroftaxation.[L2009,c134,ptof§2;amL2013,c58,§1]

§231-83 Investigators and personnel, appointment and power. (a) The director of taxation may appoint,commission,ordetail to thespecialenforcementsectiononeormorepersonsas investigators, investigatorassistants,andothersupportstaffas theexigenciesof thepublicservicemayrequire. Investigatorsmaybe legaloraccountingprofessionals; provided that their primary duty is to conduct investigations pursuant to the authorities of the specialenforcementsectionandtheyshallnotconductorparticipateincriminalinvestigationsofthetaxlawsorrenderlegaladvice.Investigatorsmayserveprocessandapplyforandexecutesearchwarrantsorwritsofentrypursuanttosection231-84butshallnototherwisehavethepowersofapoliceofficerordeputysheriff.

(b) Notwithstandinganyother law to thecontrary relating toemployment,bargaining, labor,orcompensationrightsorduties,anypersonappointed,commissioned,ordetailedtothespecialenforcementsection:

(1) Maybeanemployeeofthedepartmentinanycapacity,includingexemptfromorsubjecttochapters76and89asanemployeeofthedepartment;

(2) Shallbeexemptfromchapters76and89forpurposesoftheirappointment,commission,ordetailcapacityasinvestigator,whetherfull-time,part-time,ortemporary;

(3) Maybeappointed,commissioned,ordetailedinanycapacity,andwhoseappointment,commission,ordetailmaybedismissedatthepleasureofthedirectoroftaxation;

(4) Ifappointed,commissioned,ordetailedonatemporarybasis,shallhavetherighttoreturntotheperson’ssamepositionortoarelatedpositioninthesameclassordivisionwithinthedepartmentwhentheperson’sappointmentexpires.Thereturnrightsprovidedunder thissectionshallapply topersonsexemptfromorsubjecttochapters76and89;and

(5) Maybepaidovertimeasprescribedbyanapplicablecollectivebargainingagreementorexistingpolicyforexcludedemployees.Thecompensationrightsunderthissectionshallapplytopersonsexemptfromorsubjecttochapters76and89.[L2009,c134,ptof§2;amL2013,c58,§1]

§231-84 Right to inspection of books, records, and premises; warrants and writs; levy and seizure. (a)Uponpresentingcredentials,thespecialenforcementsectionmayexamineanybooks,papers,records,andanyarticleoritemof businesstransactedofanypersonengagedinbusinessinthisStatetoverifytheaccuracyofthereportingandpaymentofthetaxesimposedbylaw.Everypersoninpossessionofanybooks,papers,records,orarticlesoritemsofbusinesstransacted,andtheperson’sagentsandemployees,shallprovidethespecialenforcementsectionthemeans,facilities,andopportunitiesfortheexaminationsuponrequest,totheextentreasonablypossibleunderthecircumstances.

(b) Thespecialenforcementsectionmayinspecttheoperations,premises,andstorageareasofanypersonengagedinbusinessinthisStateduringregularbusinesshours.

(c) Thespecialenforcementsectionmayinspecttheoperations,premises,andstorageareasofanypersonengagedinbusinessinthisStateatanytime,withoutnotice,upontheissuanceofawarrantorwritofentrybaseduponprobablecauseofaviolationundertitle14.Thedeterminationofprobablecauseforpurposesofthissectionshallbemadebaseduponthestandardofprobablecauseforanadministrativeorcivilsearchorseizure.Applicationforasearchwarrantorwritofentryunderthissectionshallbemadebymakingadeclaration,underoath,whichincludesthefollowing:

(1) Thetaxpayer’sformofbusiness;(2) Thetaxpayer’sinterestinandaddressofthepremisessoughttobesearched;



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

and(5) Theallegedviolationreasonablybelievedtohaveoccurred,includingnonpaymentoftaxes;and,ifsearching

orseizinginfurtheranceofcollection,identificationoftheassetsreasonablybelievedtobeonthepremises.Thespecialenforcementsectionmayapplytothecircuitcourtwherethepersonislocatedforissuanceofsuch

warrantorwrit.Thespecialenforcementsectionmayexecutewarrantsorwritsofentry.Anypoliceofficer,criminalinvestigator,ordeputysheriffofthisStateoranycountyshallberequiredtorenderassistanceandaidtothespecialenforcementsectioninexecutingwarrantsandwrits,uponrequest.Criminallawenforcementagenciesthatassistthespecialenforcementsectionmaybecompensated,asdeterminedbythedirector;providedthatnopersonoragencyshallbecompensatedonthebasisofaspecificpercentageorfractionofthemoneycollectedfromtaxpayers.

(d) Thespecialenforcementsection’sabilitytoinspectshallincludeinspectionofallstatements,books,papers,andrecordsinwhateverformat,includingelectronicformat,articlesoritemsofbusinesstransacted,includinginventory,supplies,stock,andcashonhand,pertainingtothesalesorotherbusinessactivitiesofanypersontoverifytheaccuracyofthereportingandpaymentoftaxesimposedbylaw.

(e) Thespecialenforcementsectionmayseizeandlevyanyassetsinthecustodyorcontrolofanypersonpursuanttothischapter,andsubjecttoallrightsofappealsetforthherein.[L2009,c134,ptof§2;amL2013,c58,§1]

§231-85 Identification of cash-economy cases; retention of funds. Notwithstanding any law to the contrary,eachfiscalyear,thespecialenforcementsectionmayidentifyanytaxpayer,assessment,investigation,orcollectionmatterasamatterofthespecialenforcementsection.Allrevenuescollectedfromspecialenforcementsectionmattersshallbedepositedintothetaxadministrationspecialfund.[L2009,c134,ptof§2;amL2013,c58,§1]

§231-86 Violent interference with a tax official. Any personwho interferes, hinders, obstructs, prevents, orimpedesanyinvestigatororemployeeofthedepartmentwithviolenceorthreatofviolence,shallbeguiltyofaclassCfelonyand,uponconviction,shallbesubjecttooneoranycombinationofthefollowing:

(1) Afineofnotmorethan$4,000;(2) Imprisonmentfornotmorethanthreeyears;or(3) Probation;

providedthatacorporationshallbefinednotlessthan$10,000.Thissectionshallbeconstruedinaccordancewithregulationsandjudicialinterpretationsgiventosimilarprovisions

oftheInternalRevenueCode.[L2009,c134,ptof§2;amL2013,c58,§1]

CASH ECONOMY ENFORCEMENT; CITATIONS

Note

PartrepealedonJune30,2014.L2009,c134,§13(3).The2013 amendment repealsSection13(3)ofAct 134,SLH2009 effectiveApril 30, 2013.Deletes the sunset provisions for the special

enforcementsectionofthedepartmentoftaxation.L2013,c58,§3.

§231-91 Citations for violations; deposits. (a) The special enforcement section may issue cease and desistcitationstoanypersonifthespecialenforcementsectionhascausetobelievethepersonhasviolated,isviolating,orisabouttoviolateanyprovisionoftitle14oradministrativeruleadoptedthereunder.Aceaseanddesistcitationmayincludeamonetaryfineforanyunlawfulact.

(b) Thedepartmentmayrecommendlegislationdefiningthecircumstancesandthecivilmonetaryfinescitableforunlawfulactionsundertitle14.

(c) Anyfineassessedunderthissectionshallbeamatterofthespecialenforcementsectionundersection231-85andshallberetainedanddepositedintothetaxadministrationspecialfund.

(d) Anyfineassessedshallbedueandpayablethirtydaysafterissuance,subjecttoappealrightsprovidedundersubsection(e);providedthatifpaymentofthefineisdeterminedtobeinjeopardy,suchfineshallbepayableimmediatelyandshallbeimmediatelycollected.Afindingofjeopardyshallbemadeinwriting,settingforththespecificreasonsforthefinding.Thefindingofjeopardyshallbesubjecttoimmediateappealundersubsection(e),andatthetaxpayer’srequesttheappealshallbeexpeditedandheardassoonasreasonablypracticable.Anyamountoffinecollectedunderjeopardyshallonlybereturneduponafindingbythedirectoroftaxationorthecircuitcourtthattherewasnoviolationoftitle14pursuanttoappealrightsprovidedundersubsection(e).

(e) Cease and desist citations may be appealed to the director of taxation or the director’s designee, and thedeterminationofthedirectormaybeappealedtothecircuitcourt,pursuanttochapter91.[L2009,c134,ptof§2;amL2013,c58,§1]

18-231-91



Cross Reference

TaxInformationReleaseNo.2013-01,“AdvancedNoticeofProposedAdministrativeRulesRelatingtoCashEconomyEnforcement”

§231-92 Cash-based businesses; injunction. The special enforcement section, with the director of taxation’sapproval,maybringcivilactionsinthecircuitcourtwherethecash-basedbusinessislocatedtoenjoinanyunlawfulactundertitle14,includinganyadministrativeruleadoptedthereunder,byacash-basedbusiness.Totheextentprovidedbystatute,thespecialenforcementsectionmayincludeinanyactionanassessmentofamonetaryfine.[L2009,c134,ptof§2;amL2013,c58,§1]

Cross Reference


§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


§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


§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


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18-231-95



§231-96 Failure to record transaction. (a) Itshallbeunlawfulforanypersondoingbusinessunderchapter237,otherthancasualsales,toconductanytransactionincashandfailto:

(1) Offerareceiptorotherrecordofthetransaction;and(2) Maintainacontemporaneouslygeneratedrecordofallbusinesstransactionsconductedeachday,

whetherhandwrittenorgeneratedbyamanuallyoperatedorelectroniccashregister.Eachdayapersonisinviolationofthissectionshallbetreatedasaseparateviolation.

(b) Exceptasprovidedinsubsection(c),anypersonwhoviolatesthissectionshallbesubjecttoafinenottoexceed$1,000;providedthatifthepersonisacash-basedbusiness,thefineshallnotexceed$2,000.

(c) Iftheperson,includingacash-basedbusiness,isotherwiseincompliancewithtitle14atthetimeofviolationofthissection,thefineforaviolationofthissectionshallbecommensuratewiththeviolation,asdeterminedbythedepartmentinaccordancewithrulesadoptedpursuanttochapter91.[L2009,c134,ptof§2;amL2011,c102,§1;amL2013,c58,§1andc162,§1]

Cross Reference


[§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


§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


§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


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