Bill Text: HI HB1710 | 2010 | Regular Session | Introduced

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Bill Title: Taxation; Amnesty; Burden of Proof; Equitable Relief

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Introduced - Dead) 2009-05-11 - Carried over to 2010 Regular Session. [HB1710 Detail]

Download: Hawaii-2010-HB1710-Introduced.html

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Report Title:

Taxation; Amnesty; Burden of Proof; Equitable Relief

 

Description:

Establishes an amnesty for delinquent income tax obligations, provides equitable relief in certain tax situations, and places the burden of proof on the department of taxation in certain circumstances.

 

HOUSE OF REPRESENTATIVES	H.B. NO.	1710
TWENTY-FIFTH LEGISLATURE, 2009
STATE OF HAWAII

A BILL FOR AN ACT

 

 

RELATING TO TAXATION.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 

Part I.

     SECTION 1.  Chapter 231, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

     "§231-    Designation of period; payments; penalties.  A taxpayer may designate the tax period for any tax payment made by, or any penalty assessed on, the taxpayer; provided that the payment or penalty is paid pursuant to applicable provisions of law.

     §231-    Equitable relief.  (a)  A taxpayer, including a taxpayer applying for spousal relief, shall be relieved of any tax liability, or a portion thereof under title 14, if:

     (1)  By taking into account all the facts and circumstances of the taxpayer's situation, the department of taxation finds that it is inequitable and unjust to hold the taxpayer liable for that liability; and

     (2)  No other relief is available to the taxpayer under title 14."

     SECTION 2.  Section 232-1, Hawaii Revised Statutes, is amended to read as follows:

     "§232-1  Appeals by persons under contractual obligations[.]; burden of proof.  (a)  Whenever any person is under a contractual obligation to pay a tax assessed against another, the person shall have the same rights of appeal to the board of review, the tax appeal court, and the intermediate appellate court, subject to chapter 602, in the person's own name, as if the tax were assessed against the person.  The person against whom the tax is assessed shall also have a right to appear and be heard on any such application or appeal.

     (b)  In any proceeding before the board of review or the tax appeal court, if a taxpayer introduces credible evidence with respect to any factual issue relevant to ascertaining the liability of the taxpayer for any tax, interest, or penalty imposed under title 14, the department of taxation shall have the burden of proof to prove otherwise with respect to the issue; provided that:

     (1)  The taxpayer has complied with the requirements under title 14 to substantiate any disputed item or issue; and

     (2)  The taxpayer has maintained all records required under title 14 and has cooperated with reasonable requests by the department of taxation for witnesses, information, documents, meetings, and interviews.

     (c)  The department of taxation shall have the burden of proof in any proceeding with respect to any item of income that was reconstructed by the department solely through the use of statistical information on unrelated taxpayers.

     (d)  Notwithstanding any other law to the contrary, the department of taxation shall have the burden of production in any proceeding with respect to the liability of any taxpayer for any penalty, additional tax or amount imposed under title 14.

Part II.

     SECTION 3.  Purpose.  The purpose of this part is to establish a state tax amnesty program to induce payments of delinquent taxes.  The program provides a waiver of penalties assessed for outstanding liabilities for taxable periods or transactions on or before December 31, 2008.  The tax amnesty program applies to all taxes collected and administered by the State and does not apply to any real property tax or vehicular tax.

     The legislature finds that a public purpose is served by the waiver of tax penalties and criminal prosecution in return for the immediate reporting and payment of previously underreported, unreported, or unpaid tax liabilities.  The legislature further finds that the benefits gained through this program include:

     (1)  Increased collection of certain currently owed taxes, and

     (2)  Finding system taxpayers who have been evading the payment of taxes and providing an opportunity for them to satisfy their tax obligations before tax enforcement programs take effect.

     It is the intent of the legislature that the tax amnesty program provided under this Act be a one-time occurrence that shall not be offered again because taxpayers' expectations of any future amnesty programs could have a counterproductive effect on compliance under this Act.

     SECTION 4.  Title.  The Act under this part shall be known and may be cited as the "Tax Amnesty Program Act".

     SECTION 5.  Definitions.  As used in this Act:

     "Accounts receivable" means an amount of state tax, penalty, or interest that has been recorded as due and entered in the account records or any ledger maintained in the department or that a taxpayer should reasonably expect to become due as a direct or indirect result of any pending or completed audit or investigation that a taxpayer knows is being conducted by the State.

     "Department" means the department of taxation.

     "Director" means the director of taxation.

     "Final, due, and owing" means an assessment that has become final and is owed to the State, due to either the expiration of a taxpayer's appeal rights or the rendition of the final order by the director or by any court of this State.  Assessments that have been appealed shall be final, due, and owing fifteen days after the last unappealed or unappealable order sustaining the assessment or any part thereof that has become final.  Assessments that have not been appealed shall be final, due, and owing thirty days after service of notice of assessment.

     "Taxpayer" means any individual, partnership, joint venture, association, corporation, receiver, trustee, guardian, executor, administrator, fiduciary, or any other entity of any kind subject to any tax in title 14, Hawaii Revised Statutes, or any person required to collect any tax under title 14, Hawaii Revised Statutes.

     SECTION 6.  Tax amnesty program; applicable time period.  (a)  The director shall develop and administer a one-time tax amnesty program as provided in this Act.  The director, upon the voluntary return and remission of taxes and interest owed by any taxpayer, shall waive all penalties that are assessed or subject to being assessed for outstanding liabilities for taxable periods ending or transactions occurring on or before December 31, 2008.  The director shall provide by rule, pursuant to chapter 91, Hawaii Revised Statutes, as necessary, for the administration of this amnesty program and shall further provide for necessary forms for the filing of amnesty applications and returns.

     (b)  Notwithstanding any other law to the contrary, the tax amnesty program shall begin by October 31, 2009, and shall be completed no later than December 31, 2009, and shall apply to all taxpayers owing taxes, penalties, or interest administered by the director under title 14, Hawaii Revised Statutes, except that the tax amnesty shall not apply to any real property tax or any tax levied pursuant to chapter 249, Hawaii Revised Statutes.

     The program shall apply to tax liabilities for taxable periods ending or transactions occurring on or before December 31, 2008.  Amnesty tax return forms shall be in a form prescribed by the director.

     SECTION 7.  Eligibility requirements.  (a)  This Act shall apply to any taxpayer who files an application for amnesty within the time prescribed by the director and does the following:

     (1)  Files all returns as may be required by the director for all years or tax reporting periods as stated on the application for which returns have not previously been filed and files all returns as may be required by the director for all years or tax reporting periods for which returns were filed but the tax liability was underreported; and

     (2)  Pays in full the taxes due for the periods and taxes applied for at the time the application or amnesty tax returns are filed within the designated amnesty program period.

In addition to the requirements set forth in paragraphs (1) and (2), the director, may impose, by rule, the further condition that any eligible taxpayer pay in full, within the amnesty period, all taxes previously assessed by the director that are final, due, and owing at the time the application or amnesty tax returns are filed.

     (b)  An eligible taxpayer may participate in the amnesty program regardless of whether the taxpayer is under audit, notwithstanding the fact that the amount due is included in a proposed assessment or an assessment, bill, notice, or demand for payment issued by the director and without regard to whether the amount due is subject to a pending administrative or judicial proceeding.  An eligible taxpayer may participate in the amnesty program to the extent of the uncontested portion of any assessed liability.  However, participation in the program shall be conditioned upon the taxpayer's agreement that the right to protest or initiate an administrative or judicial proceeding or to claim any refund of moneys paid under the program is barred with respect to the amounts paid with the application or amnesty return.

     (c)  The director shall allow installment payment agreements in cases of severe hardship in lieu of the complete payment required under subsection (a).  In those cases, twenty- five per cent of the amount due shall be paid with the application or amnesty return, with the balance to be paid in monthly installments determined by the taxpayer and the director.  Failure of the taxpayer to make timely payments shall void the terms of the amnesty.  All agreements and payments shall not include interest due and accruing during the installment agreement.

     SECTION 8.  Amnesty provisions.  (a)  Amnesty shall be granted for any taxpayer who meets the requirements of section 7 of this Act in accordance with the following:

     (1)  For taxes that are owed as a result of the nonreporting or underreporting of tax liabilities or the nonpayment of any accounts receivable owed by an eligible taxpayer, the State shall waive criminal prosecution and all civil penalties that may be assessed under title 14, Hawaii Revised Statutes, for the taxable years or periods for which the tax amnesty is requested; and

     (2)  With the exception of instances in which the taxpayer and director enter into an installment payment agreement authorized under section 7(c) of this Act, the failure to pay all taxes as shown on the taxpayer's amnesty tax return shall invalidate any amnesty granted pursuant to this Act.

     (b)  This Act shall not apply to any taxpayer who is on notice, written or otherwise, of a criminal investigation being conducted by an agency of the State or any county or the United States, nor shall this Act apply to any taxpayer who is the subject of any criminal litigation that is pending on the date of the taxpayer's application in any court of this State or the United States for nonpayment, delinquency, evasion, or fraud in relation to any federal taxes or to any of the taxes to which this amnesty program is applicable.

     (c)  No refund or credit shall be granted for any interest or penalty paid prior to the time the taxpayer requests amnesty pursuant to section 7 of this Act.

     (d)  Unless the director, in the director's discretion, redetermines the amount of taxes and interest due, no refund or credit shall be granted for any taxes or interest paid under the amnesty program.

     SECTION 9.  Public awareness.  The director shall adopt rules under chapter 91, Hawaii Revised Statutes, as necessary, issue forms and instructions, and take all actions necessary to implement this Act.  The director shall publicize the tax amnesty program in order to maximize the public awareness of, and participation in the program.  The director, for the purpose of publicizing the tax amnesty program, may contract with any advertising agency within or outside this State.

     SECTION 10.  Separate accounting.  For purposes of accounting for the revenues received pursuant to this Act, the director shall maintain an accounting and reporting of funds collected under the amnesty program.  All funds collected shall be remitted to the general fund.

Part III.

     SECTION 11.  This Act shall take effect upon its approval.

 

INTRODUCED BY:	_____________________________