Bill Text: HI SB1198 | 2022 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Relating To Tax Administration.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed - Dead) 2021-12-10 - Carried over to 2022 Regular Session. [SB1198 Detail]

Download: Hawaii-2022-SB1198-Amended.html

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THE SENATE	S.B. NO.	1198
THIRTY-FIRST LEGISLATURE, 2021		S.D. 2
STATE OF HAWAII

A BILL FOR AN ACT

 

 

RELATING TO TAX ADMINISTRATION.

 

 

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

 

     SECTION 1.  Section 231-8.5, Hawaii Revised Statutes, is amended to read as follows:

     "§231-8.5  Electronic filing of tax returns.  (a)  The department may allow filing by electronic, telephonic, or optical means of any tax return, application, report, or other document required under the provisions of title 14 administered by the department.

     (b)  If the requirements of subsection (c) are satisfied, the department may require electronic filing of any tax return, application, report, or other document required under the provisions of title 14 administered by the department for the following taxpayers:

     (1)  For withholding tax filings required under chapter 235, only employers whose total tax liability under sections 235-61 and 235-62 for the calendar or fiscal year exceeds $40,000;

     (2)  For income tax filings required under chapter 235, only taxpayers who are [subject]:

          (A)  Subject to tax under section 235-71, 235-71.5, or 235-72;

          (B)  Required to file partnership returns under section 235-95; provided that the partnership's gross income exceeds $250,000 for the taxable year;

          (C)  Required to file S corporation returns under section 235-128; provided that the S corporation's gross income exceeds $250,000 for the taxable year; or

          (D)  Subject to tax under section 235-51, 235-52, or 235-53; provided that the taxpayer’s federal adjusted gross income, as reported on the taxpayer’s Hawaii income tax return, exceeds $100,000 for the taxable year;

     (3)  For general excise tax filings required under chapter 237, only taxpayers whose total tax liability under chapter 237 for the calendar or fiscal year exceeds $4,000;

     (4)  For transient accommodations tax filings required under chapter 237D, only operators and plan managers whose total tax liability under chapter 237D for the calendar or fiscal year exceeds $4,000; and

     (5)  For filings required under the following chapters, all taxpayers subject to tax under those chapters:

          (A)  236E;

          (B)  239;

          (C)  241;

          (D)  243;

          (E)  244D;

          (F)  245; and

          (G)  251.

     (c)  As a prerequisite to requiring electronic filing under subsection (b), the department shall provide:

     (1)  An electronic filing option to the taxpayer; and

     (2)  No less than ninety days prior written notice to the general public of the department's intention to require electronic filing.

     (d)  Notwithstanding subsection (b), any return that is prepared by a tax return preparer, as defined in section 231‑36.5, shall be filed electronically; provided that this subsection shall only apply if an electronic filing option is available and the tax return preparer reasonably expects to prepare more than ten returns of that same tax type in the calendar year.

     If a return that is required to be filed electronically under this subsection is not filed electronically, the tax return preparer who prepared the return and the taxpayer shall each be subject to a penalty of $50 for every failure to electronically file a return, unless it is shown that the failure is due to reasonable cause and not due to neglect.

     [(d)] (e)  The date of filing shall be the date the tax return, application, report, or other document is transmitted to the department in a form and manner prescribed by departmental rules adopted pursuant to chapter 91.  The department may determine alternative methods for the signing, subscribing, or verifying of a tax return, application, report, or other document that shall have the same validity and consequences as the actual signing by the taxpayer.  A filing under this section shall be treated in the same manner as a filing subject to the penalties under section 231-39.

     [(e)] (f)  If a person who is required by the department under subsection (b) to electronically file any tax return fails to file using an approved method, unless it is shown that the failure is due to reasonable cause and not to neglect, the person shall be liable for a penalty of two per cent of the amount of the tax required to be shown on the return.  If no tax is required to be shown on the return, the department may determine by administrative rule the penalty imposed."

     SECTION 2.  Section 231-9.9, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsection (a) to read:

     "(a)  The director of taxation is authorized to require every person or tax return preparer subject to mandatory electronic filing under section 231-8.5 and every person whose tax liability for any one taxable year exceeds $100,000 and who files a tax return for any tax, including consolidated filers, to remit taxes by one of the means of electronic funds transfer approved by the department; provided that for withholding taxes under section 235-62, electronic funds transfers shall apply to annual tax liabilities that exceed $40,000.  [Notwithstanding the tax liability thresholds in this subsection, the director of taxation is authorized to require any person who is required to electronically file a federal return or electronically remit any federal taxes to the federal government, to electronically file a state return and electronically remit any state taxes under title 14 to the department.  The director is authorized to grant an exemption to the electronic filing and payment requirements for good cause.]"

     2.  By amending subsections (c) and (d) to read:

     "(c)  If a person who is required under subsection (a) to [file a return electronically or] remit taxes by one of the means of electronic funds transfer approved by the department fails [to file electronically or] to remit the taxes using an approved method [on or before the date prescribed therefor], unless it is shown that the failure is due to reasonable cause and not to neglect, there shall be added to the tax required to be so remitted a penalty of two per cent of the amount of the tax.  The penalty under this subsection is in addition to any penalty set forth in section 231-39.

     (d)  No later than twenty days prior to the convening of each regular session, the department shall submit a report to the legislature containing:

     (1)  The number of taxpayers who were assessed the two per cent penalty pursuant to subsection (c); and

    [(2)  The amounts of each assessment; and

     (3)] (2)  The total amount of assessments [collected] for the previous year."

     SECTION 3.  Section 231-10.8, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§231-10.8[]]  Tax clearance fees.  The department may charge a fee of $20 for each tax clearance application submitted [and $5 for each certified copy of a tax clearance]."

     SECTION 4.  Section 231-28, Hawaii Revised Statutes, is amended to read as follows:

     "§231-28  Tax clearance before procuring liquor licenses.  No liquor licenses shall be issued or renewed unless the applicant therefor shall present to the issuing agency, a certificate [signed] issued by the [director of taxation,] department, showing that the applicant does not owe the State any delinquent taxes, penalties, or interest; or that the applicant has entered into and is complying with an installment plan agreement with the department [of taxation] for the payment of delinquent taxes in installments.  Notwithstanding any law to the contrary, the department may disclose tax information relevant to the applicant's state tax compliance to the issuing agency."

     SECTION 5.  Section 232-24, Hawaii Revised Statutes, is amended to read as follows:

     "§232-24  Taxes paid pending appeal.  (a)  The tax paid upon the amount of any assessment, actually in dispute and in excess of that admitted by the taxpayer, and covered by an appeal to the tax appeal court duly taken, shall, pending the final determination of the appeal, be paid by the director of finance into the "litigated claims fund".  If the final determination is in whole or in part in favor of the appealing taxpayer, the director of finance shall repay to the taxpayer out of the fund, or if investment of the fund should result in a deficit therein, out of the general fund of the State, the amount of the tax paid upon the amount held by the court to have been excessive or nontaxable, together with from the date of each payment into the litigated claims fund, the interest to be paid from the general fund of the State.  [For purposes of this section, the rate of interest shall be computed by reference to section 6621(a) (with respect to interest rate determination) of the Internal Revenue Code of 1986, as of January 1, 2010.]  The balance, if any, of the payment made by the appealing taxpayer, or the whole of the payment, in case the decision is wholly in favor of the assessor, shall, upon the final determination become a realization under the tax law concerned.

     (b)  For purposes of this section, the interest shall be computed using the following interest rates:

     (1)  For corporations whose overpayments are $10,000 or less, 3 per cent;

     (2)  For corporations whose overpayments exceed $10,000, 1.5 per cent; and

     (3)  For all other taxpayers, 4 per cent.

     (c)  In a case of an appeal to a board of review, the tax paid, if any, upon the amount of the assessment actually in dispute and in excess of that admitted by the taxpayer, shall during the pendency of the appeal and until and unless an appeal is taken to the tax appeal court, be held by the director of finance in a special deposit.  In the event of final determination of the appeal in the board of review, the director of finance shall repay to the appealing taxpayer out of the deposit the amount of the tax paid upon the amount held by the board to have been excessive or nontaxable, if any, the balance, if any, or the whole of the deposit, in case the decision is wholly in favor of the assessor, to become a realization under the tax law concerned."

     SECTION 6.  Section 235-20.5, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  The moneys in the fund shall be used for the following purposes:

     (1)  Issuing comfort letters, letter rulings, written opinions, and other guidance to taxpayers;

     (2)  Issuing certificates under [section] 235-110.9;

     (3)  Administering the operations of the special enforcement section;

     (4)  Funding support staff positions in the special enforcement section; [and]

     (5)  Developing, implementing, and providing taxpayer education programs, including tax publications[.];

     (6)  Funding information technology and related positions that are exempt from chapter 76;

     (7)  Funding the operations of the criminal investigation section, including support staff positions; and

     (8)  Funding the operations of the administrative rules office."

     SECTION 7.  If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of this Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

     SECTION 8.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 9.  This Act shall take effect on July 1, 2050; provided that section 2 shall take effect on January 1, 2022.

 

 

Report Title:

Tax Administration; Electronic Filing; Electronic Funds Transfer; Tax Clearances; Interest Rate

 

Description:

Allows the Department of Taxation to mandate the electronic filing of partnership and S-corporation returns if the taxpayer's gross receipts exceed $250,000 and individual tax returns if the federal adjusted gross income, as shown on the taxpayer's Hawaii return, exceeds $100,000.  Requires certain tax return preparers to file returns electronically.  Amends the rules for electronic funds transfer to remove the authorization to require electronic funds transfer or electronic filing if the federal government required that person to file or pay electronically.  Requires electronic funds transfers for tax return preparers and any person subject to mandatory electronic filing.  Removes the timeliness requirement from the electronic funds transfer penalty.  Removes the authority of the department to charge for certified copies of tax clearances.  Amends the statute that mandates tax clearances for liquor license holders.  Clarifies the interest rate for payments made to taxpayers out of the litigated claims fund.  Expands the permissible uses of the tax administration special fund.  Effective 7/1/2050.  (SD2)

 

 

 

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