Report Title:

Estimated Income Tax; Underpayment

Description:

Lowers the adjusted gross income threshold for individuals required to make annual payments for underpaying their estimated taxes; reduces the percentages used to determine the required annual payment. (HB1996 CD1)

HOUSE OF REPRESENTATIVES

H.B. NO.

1996

TWENTY-FIRST LEGISLATURE, 2002

S.D. 1

STATE OF HAWAII

C.D. 1


 

A BILL FOR AN ACT

 

RELATING TO THE ADMINISTRATION OF TAXES.

 

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

SECTION 1. Section 235-97, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:

"(f) In the case of any underpayment of estimated tax, except as provided by this subsection, there shall be added to the tax for the taxable year an amount determined at the rate of two-thirds of one per cent a month or fraction of a month upon the amount of the underpayment for the period of the underpayment.

(1) The amount of the underpayment shall be the excess of:

(A) The required installment, over

(B) The amount, if any, of the installment paid on or before the due date for the installment.

(2) The period of the underpayment shall run from the due date for the installment to whichever of the following dates is the earlier:

(A) The twentieth day of the fourth month following the close of the taxable year, or

(B) With respect to any portion of the underpayment, the date on which the portion is paid. For purposes of this paragraph, a payment of estimated tax on any installment date shall be credited against unpaid required installments in the order in which the installments are required to be paid.

(3) For the purposes of this section, the term "tax" means the tax imposed under this chapter reduced by any credits available to the taxpayer other than the credit for amounts withheld from the taxpayer's wages or taxes withheld at the source, if any, for the taxable year.

(4) Sections 6654(d), (e)(2), (e)(3), (h), (i), (j), (k), and (l), (with respect to failure by an individual to pay estimated income tax), and 6655(d), (e), (g)(2), (g)(3), (g)(4), and (i) (with respect to failure by a corporation to pay estimated income tax) of the Internal Revenue Code, as of the date set forth in section 235-2.3(a), shall be operative for the purposes of this section; provided that the due dates contained in any of the preceding Internal Revenue Code sections shall be deemed to be the twentieth day of the applicable month; and provided further that, for purposes of this chapter in applying section 6654(d), if the adjusted gross income shown on the return of the individual for the preceding taxable year exceeds [$150,000,] $50,000, the required annual payment shall be the lesser of [ninety] sixty per cent of the tax shown on the return for the taxable year (or, if no return is filed, [ninety] sixty per cent of the tax for the taxable year) or one hundred ten per cent of the tax shown on the return of the individual for the preceding taxable year."

SECTION 2. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 3. This Act shall take effect on January 1, 2003.