REPORT TITLE:
Taxation Appeals


DESCRIPTION:
Eliminates requirement of paying tax assessed prior to appealing
the assessment to the district board of review.  (CD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2946
THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 2000                                H.D. 1
STATE OF HAWAII                                            C.D. 1
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO TAXATION APPEALS.


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

 1      SECTION 1.  Section 232-24, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "232-24  Taxes paid pending appeal.  The tax paid upon the
 
 4 amount of any assessment, actually in dispute and in excess of
 
 5 that admitted by the taxpayer, and covered by an appeal to the
 
 6 tax appeal court duly taken, shall, pending the final
 
 7 determination of the appeal, be paid by the director of finance
 
 8 into the "litigated claims fund". If the final determination is
 
 9 in whole or in part in favor of the appealing taxpayer, the
 
10 director of finance shall repay to the taxpayer out of the fund,
 
11 or if investment of the fund should result in a deficit therein,
 
12 out of the general fund of the State, the amount of the tax paid
 
13 upon the amount held by the court to have been excessive or
 
14 nontaxable, together with interest at the rate of eight per cent
 
15 a year from the date of each payment into the litigated claims
 
16 fund, the interest to be paid from the general fund of the State.
 
17 The balance, if any, of the payment made by the appealing
 
18 taxpayer, or the whole of the payment, in case the decision is
 
19 wholly in favor of the assessor, shall, upon the final
 
20 determination become a realization under the tax law concerned.
 

 
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 1      In a case of an appeal to a board of review, the tax paid,
 
 2 if any, upon the amount of the assessment actually in dispute and
 
 3 in excess of that admitted by the taxpayer, shall during the
 
 4 pendency of the appeal and until and unless an appeal is taken to
 
 5 the tax appeal court, be held by the director of finance in a
 
 6 special deposit. In the event of final determination of the
 
 7 appeal in the board of review, the director of finance shall
 
 8 repay to the appealing taxpayer out of the deposit the amount of
 
 9 the tax paid upon the amount held by the board to have been
 
10 excessive or nontaxable, if any, the balance, if any, or the
 
11 whole of the deposit, in case the decision is wholly in favor of
 
12 the assessor, to become a realization under the tax law
 
13 concerned."
 
14      SECTION 2.  Section 235-114, Hawaii Revised Statutes, is
 
15 amended to read as follows:
 
16      "235-114  Appeals.  Any person aggrieved by any assessment
 
17 of the tax or liability imposed by this chapter may appeal from
 
18 the assessment in the manner and within the time hereinafter set
 
19 forth[; provided the tax so assessed shall have been paid].
 
20 Appeal may be made either to the district board of review or to
 
21 the tax appeal court[.]; provided that, for appeals other than to
 
22 the board, the tax so assessed shall have been paid.  Either the
 
23 taxpayer or the assessor may appeal to the tax court from a
 

 
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 1 decision by the board upon which the tax so assessed shall have
 
 2 been paid.  If the taxpayer chose not to pay the tax when
 
 3 appealing to the board, and the decision by the board is appealed
 
 4 by the taxpayer or the decision by the board in favor of the
 
 5 department is not appealed, the taxpayer must pay the tax so
 
 6 assessed plus interest as provided in section 231-39(b)(4).
 
 7      If the appeal is first made to the board, the appeal shall
 
 8 either be heard by the board or be transferred to the tax appeal
 
 9 court for hearing at the election of the taxpayer or employer.
 
10 If heard by the board, an appeal shall lie from the decision
 
11 thereof to the tax appeal court and to the supreme court in the
 
12 manner and with the costs provided by chapter 232.  The supreme
 
13 court shall prescribe forms to be used in the appeals.  The forms
 
14 shall show the amount of taxes or liability upon the basis of the
 
15 taxpayer's computation of the taxpayer's taxable income or the
 
16 employer's computation of the employer's liability, the amount
 
17 upon the basis of the assessor's computation, the amount upon the
 
18 basis of the decisions of the board of review and tax appeal
 
19 court, if any, and the amount in dispute.  If or when the appeal
 
20 is filed with or transferred to the tax appeal court, the court
 
21 shall proceed to hear and determine the appeal, subject to appeal
 
22 to the supreme court as is provided in chapter 232.
 
23      Any taxpayer or employer appealing from any assessment of
 

 
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 1 income taxes or liability shall lodge with the assessor or
 
 2 assistant assessor a notice of the appeal in writing, stating the
 
 3 ground of the taxpayer's or employer's objection to the
 
 4 additional assessment or any part thereof.  The taxpayer or
 
 5 employer shall also file the notice of appeal with the board or
 
 6 the tax appeal court at any time within thirty days subsequent to
 
 7 the date when the notice of assessment was mailed properly
 
 8 addressed to the taxpayer or employer at the taxpayer's or
 
 9 employer's last known residence or place of business.  Except as
 
10 otherwise provided, the manner of taking the appeal, the costs
 
11 applicable thereto, and the hearing and disposition thereof,
 
12 including the distribution of costs and of taxes paid by the
 
13 taxpayer pending the appeal, shall be as provided in chapter 232.
 
14      The [board or the] tax appeal court may allow an individual
 
15 taxpayer to file an appeal without payment of the net income tax
 
16 in cases where the total tax liability does not exceed $50,000 in
 
17 the aggregate for all tax years, upon proof that the taxpayer
 
18 would be irreparably injured by payment of the tax."
 
19      SECTION 3.  Section 237-42, Hawaii Revised Statutes, is
 
20 amended to read as follows:
 
21      "237-42  Appeals.  Any person aggrieved by any assessment
 
22 of the tax for any month or any year may appeal from the
 
23 assessment in the manner and within the time and in all other
 

 
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 1 respects as provided in the case of income tax appeals by section
 
 2 235-114, provided that, for appeals other than to the district
 
 3 board of review, the tax so assessed shall have been paid."
 
 4      SECTION 4.  Section 237D-11, Hawaii Revised Statutes, is
 
 5 amended to read as follows:
 
 6      "[[]237D-11[]]  Appeals.  Any person aggrieved by any
 
 7 assessment of the tax for any month or any year may appeal from
 
 8 the assessment in the manner and within the time and in all other
 
 9 respects as provided in the case of income tax appeals by section
 
10 235-114; provided that, for appeals other than to the district
 
11 board of review, the tax so assessed shall have been paid."
 
12      SECTION 5.  Section 238-8, Hawaii Revised Statutes, is
 
13 amended to read as follows:
 
14      "238-8  Appeal, correction of assessment.  If any person
 
15 having made the return and paid the tax as provided by this
 
16 chapter feels aggrieved by the assessment so made upon the person
 
17 by the director of taxation, the person may, provided that, for
 
18 appeals other than to the district board of review, the tax so
 
19 assessed shall have been paid, appeal the assessment in the
 
20 manner and within the time and in all other respects as provided
 
21 in section 235-114, for which purpose the word "income" shall be
 
22 deemed to refer to purchase price or value, as the case may be.
 
23 The hearing and disposition of the appeal, including the
 

 
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 1 distribution of costs and of taxes paid pending the appeal, shall
 
 2 be as provided in chapter 232."
 
 3      SECTION 6.  Section 243-14.5, Hawaii Revised Statutes, is
 
 4 amended to read as follows:
 
 5      "[[]243-14.5[]]  Appeals.  Any person aggrieved by any
 
 6 assessment of the tax imposed by this chapter may appeal from the
 
 7 assessment in the manner and within the time and in all other
 
 8 respects as provided in the case of income tax appeals by section
 
 9 235-114; provided that, for appeals other than to the district
 
10 board of review, the tax so assessed shall have been paid.  The
 
11 hearing and disposition of the appeal, including the distribution
 
12 of costs and of taxes paid pending the appeal, shall be as
 
13 provided in chapter 232."
 
14      SECTION 7.  Section 244D-12, Hawaii Revised Statutes, is
 
15 amended to read as follows:
 
16      "[[]244D-12[]]  Appeals.  Any person aggrieved by any
 
17 assessment of the tax imposed by this chapter may appeal from the
 
18 assessment in the manner and within the time and in all other
 
19 respects as provided in the case of income tax appeals by section
 
20 235-114, provided that, for appeals other than to the district
 
21 board of review, the taxes so assessed shall have been paid.  The
 
22 hearing and disposition of the appeal, including the distribution
 
23 of costs and of taxes paid pending the appeal, shall be as
 

 
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 1 provided in chapter 232."
 
 2      SECTION 8.  Section 245-10, Hawaii Revised Statutes, is
 
 3 amended to read as follows:
 
 4      "245-10  Appeals.  Any person aggrieved by any assessment
 
 5 of the taxes imposed by this chapter may appeal from the
 
 6 assessment in the manner and within the time and in all other
 
 7 respects as provided in the case of income tax appeals by section
 
 8 235-114; provided that, for appeals other than to the district
 
 9 board of review, the taxes so assessed shall have been paid.  The
 
10 hearing and disposition of the appeal, including the distribution
 
11 of costs and of taxes paid pending the appeal, shall be as
 
12 provided in chapter 232."
 
13      SECTION 9.  Section 247-4.5, Hawaii Revised Statutes, is
 
14 amended to read as follows:
 
15      "[[]247-4.5[]]  Appeals.  Any person aggrieved by any
 
16 assessment of the tax imposed by this chapter may appeal from the
 
17 assessment in the manner and within the time and in all other
 
18 respects as provided in the case of income tax appeals by section
 
19 235-114; provided that, for appeals other than to the district
 
20 board of review, the tax so assessed shall have been paid.  The
 
21 hearing and disposition of the appeal, including the distribution
 
22 of costs and of taxes paid pending the appeal, shall be as
 
23 provided in chapter 232."
 

 
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 1      SECTION 10.  Section 251-10, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "[[]251-10[]]  Appeals.  Any person aggrieved by any
 
 4 assessment of the surcharge tax for any month or any year may
 
 5 appeal from the assessment in the manner and within the time and
 
 6 in all other respects as provided in the case of income tax
 
 7 appeals by section 235-114; provided that, for appeals other than
 
 8 to the district board of review, the surcharge tax so assessed
 
 9 shall have been paid."
 
10      SECTION 11.  This Act does not affect rights and duties that
 
11 matured, penalties that were incurred, and proceedings that were
 
12 begun before its effective date.
 
13      SECTION 12.  Statutory material to be repealed is bracketed.
 
14 New statutory material is underscored.
 
15      SECTION 13.  This Act shall take effect upon its approval.