Report Title:

Taxation; Statutes of Limitations

 

Description:

Establishes a ten-year statute of limitations on tax collections. Clarifies that the three-year statute of limitations on tax assessments for the general excise tax, use tax, and other period taxes begins running from the filing of each periodic return. (SB711 HD1)

 


THE SENATE

S.B. NO.

711

TWENTY-FOURTH LEGISLATURE, 2007

H.D. 1

STATE OF HAWAII

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO TAXATION.

 

 

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

 


SECTION 1. Section 235-111, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) General rule. The amount of income taxes imposed by this chapter (also the amount of income taxes imposed by any preceding law of the State) and the liability of any employer in respect of wages, shall be assessed or levied and the overpayment, if any, shall be credited within three years after filing of the return for the taxable year, or within three years of the due date prescribed for the filing of the return, whichever is later. No proceeding in court without assessment for the collection of the taxes or the enforcement of the liability shall be begun after the expiration of the period. Where the assessment of the tax imposed by this chapter has been made within the period of limitation properly applicable thereto, the tax may be collected by levy or by a proceeding in court; provided that the levy is made or the proceeding was begun within ten years after the assessment of the tax. For any tax that has been assessed prior to July 1, 2008, the levy or proceeding shall be barred after June 30, 2018."

SECTION 2. Section 237-40, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

"(a) General rule. The amount of excise taxes imposed by this chapter shall be assessed or levied within three years after the annual, semiannual, quarterly, or monthly return was filed, whichever is earlier, or within three years of the due date prescribed for the filing of [said] the return, whichever is later, and no proceeding in court without assessment for the collection of any such taxes shall be begun after the expiration of the period. Where the assessment of the tax imposed by this chapter has been made within the period of limitation properly applicable thereto, the tax may be collected by levy or by a proceeding in court; provided that the levy is made or the proceeding was begun within ten years after the assessment of the tax. For any tax that has been assessed prior to July 1, 2008, the levy or proceeding shall be barred after June 30, 2018.

(b) Exceptions. In the case of a false or fraudulent return with intent to evade tax, or of a failure to file the annual, semiannual, quarterly, or monthly return, the tax may be assessed or levied at any time; however, in the case of a return claimed to be false or fraudulent with intent to evade tax, the determination as to the claim shall first be made by a judge of the circuit court as provided in section 235-111(c), which shall apply to the tax imposed by this chapter."

SECTION 3. Section 237D-9, Hawaii Revised Statutes, is amended by amending subsections (c) and (d) to read as follows:

"(c) Except as otherwise provided by this section, the amount of taxes imposed by this chapter shall be assessed or levied within three years after the annual, semiannual, quarterly, or monthly return, whichever is earlier, was filed, or within three years of the due date prescribed for the filing of the return, whichever is later, and no proceeding in court without assessment for the collection of any such taxes shall be begun after the expiration of the period. Where the assessment of the tax imposed by this chapter has been made within the period of limitation properly applicable thereto, the tax may be collected by levy or by a proceeding in court; provided that the levy is made or the proceeding was begun within ten years after the assessment of the tax. For any tax that has been assessed prior to July 1, 2008, the levy or proceeding shall be barred after June 30, 2018.

(d) In the case of a false or fraudulent return with intent to evade tax, or of a failure to file the annual, semiannual, quarterly, or monthly return, the tax may be assessed or levied at any time; however, in the case of a return claimed to be false or fraudulent with intent to evade tax, the determination as to the claim shall first be made by a judge of the circuit court as provided in section 235‑111(c), which shall apply to the tax imposed by this chapter."

SECTION 4. Section 238-7, Hawaii Revised Statutes, is amended to read as follows:

"238-7 Audits; additional assessments; refunds. Sections 237-36 to 237-40 of the general excise tax law are hereby made applicable to the taxes imposed by this chapter, to the refunding of overpayments thereof, and to assessments, investigations, and audits in connection therewith, for which purpose any references therein to "gross income" or "gross proceeds of sale" shall be deemed to refer to the purchase price or value, as the case may be, subject to tax under this chapter[, and any references to the "annual return" shall, if the taxpayer is not required to file an annual return under this chapter, be deemed to refer to the monthly return mentioned in the first paragraph of section 238-5]."

SECTION 5. Section 243-14, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The amount of license taxes imposed by this chapter shall be assessed or levied, or the overpayment, if any, shall be credited within three years after filing of the monthly statement, or within three years of the due date prescribed for the filing of the statement, whichever is later. No proceeding in court without assessment for the collection of the taxes or the enforcement of the liability shall begin after the expiration of the three-year period. Where the assessment of the tax imposed by this chapter has been made within the period of limitation properly applicable thereto, the tax may be collected by levy or by a proceeding in court; provided that the levy is made or the proceeding was begun within ten years after the assessment of the tax. For any tax that has been assessed prior to July 1, 2008, the levy or proceeding shall be barred after June 30, 2018. As to all tax payments for which a refund or credit is not authorized by this section (including, without prejudice to the generality of the foregoing, cases of unconstitutionality), the remedies provided by appeal or by section 40-35 are exclusive."

SECTION 6. Section 247-6.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]247-6.5[]] Limitation period for assessment, levy, collection, or credit. The amount of conveyance taxes imposed by this chapter shall be assessed or levied, and the overpayment, if any, shall be credited within three years after filing of the certificate prescribed by section 247-6. No proceeding in court without assessment for the collection of the taxes shall be begun after the expiration of the three-year period. Where the assessment of the tax imposed by this chapter has been made within the period of limitation properly applicable thereto, the tax may be collected by levy or by a proceeding in court; provided that the levy is made or the proceeding was begun within ten years after the assessment of the tax. For any tax that has been assessed prior to July 1, 2008, the levy or proceeding shall be barred after June 30, 2018.

In the case of a false or fraudulent certificate filed with the intent to evade tax, or of a failure to file a certificate, the tax may be assessed or levied at any time."

SECTION 7. Section 251-8, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) Except as otherwise provided by this section, the amount of surcharge taxes imposed by this chapter shall be assessed or levied within three years after the annual return was filed, or within three years of the due date prescribed for the filing of the return, whichever is later, and no proceeding in court without assessment for the collection of any such surcharge taxes shall begin after the expiration of the period. Where the assessment of the tax imposed by this chapter has been made within the period of limitation properly applicable thereto, the tax may be collected by levy or by a proceeding in court; provided that the levy is made or the proceeding was begun within ten years after the assessment of the tax. For any tax that has been assessed prior to July 1, 2008, the levy or proceeding shall be barred after June 30, 2018."

SECTION 8. Section 346E-6, Hawaii Revised Statutes, is amended by amending subsections (c) and (d) to read as follows:

"(c) Except as otherwise provided by this section, the amount of taxes imposed by this chapter shall be assessed or levied within three years after the annual, quarterly, or semiannual return, whichever is earlier, was filed, or within three years of the due date prescribed for the filing of the return, whichever is later. No proceeding in court without assessment for the collection of any such taxes shall be begun after the expiration of the period. Where the assessment of the tax imposed by this chapter has been made within the period of limitation properly applicable thereto, the tax may be collected by levy or by a proceeding in court; provided that the levy is made or the proceeding was begun within ten years after the assessment of the tax. For any tax that has been assessed prior to July 1, 2008, the levy or proceeding shall be barred after June 30, 2018.

(d) In the case of a false or fraudulent return with intent to evade tax, or a failure to file the annual, quarterly or semiannual return, the tax may be assessed or levied at any time."

SECTION 9. Section 431:7-204.6, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The amount of insurance taxes imposed by this chapter shall be assessed or levied within three years after the annual return was filed, or within three years of the due date prescribed for the filing of the return, whichever is later, and no proceeding in court without assessment for the collection of any [such] taxes shall be begun after the expiration of the period. Where the assessment of the tax imposed by this chapter has been made within the period of limitation properly applicable thereto, the tax may be collected by levy or by a proceeding in court; provided that the levy is made or the proceeding was begun within ten years after the assessment of the tax. For any tax that has been assessed prior to July 1, 2008, the levy or proceeding shall be barred after June 30, 2018."

SECTION 10. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 11. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 12. This Act shall take effect on July 1, 2008; provided that sections 2, 3, and 8, relating to provisions therein for statutes of limitations on assessments of tax for periodic tax returns, upon approval, shall apply to tax returns filed after June 30, 2008.