Report Title:

Taxation; Refund Direct Deposit; Paid Preparers



Requires a tax refund to be deposited in the taxpayer's accounts; prohibits deposit into a paid preparer's accounts; requires a paid preparer to sign a return; establishes penalties.



H.B. NO.


















     SECTION 1.  Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§235‑    Direct deposit of refund.  (a)  An individual taxpayer who:

     (1)  Is subject to this chapter;

     (2)  Qualifies for an income tax refund; and

     (3)  Requests a direct deposit of the refund,

shall designate the taxpayer's checking or savings accounts at financial institutions for direct deposit of the taxpayer's income tax refund.

     (b)  A paid preparer shall not designate the paid preparer's personal or business checking or savings account for direct deposit of a client taxpayer's income tax refund.

     A paid preparer who violates this subsection shall be fined $500 for each separate offense and shall return the full amount of the direct deposit to the taxpayer for whom the return was prepared.  All moneys collected for violation of this subsection shall be credited to the department of taxation and shall not lapse to the general fund."

     SECTION 2.  Section 235-98, Hawaii Revised Statutes, is amended to read as follows:

     "§235-98  Returns; form, verification and authentication, time of filing.  (a)  Returns shall be in such form as the department of taxation may prescribe from time to time and shall be verified by written declarations that the statements therein made are subject to the penalties prescribed in section 231‑36.  Corporate returns shall be authenticated by the signature of the president, vice president, treasurer, assistant treasurer, chief accounting officer, or any other officer duly authorized so to act, under the penalties prescribed by section 231-36.  The fact that an individual's name is signed on the corporation return shall be prima facie evidence that the individual is authorized to sign the return on behalf of the corporation.

     (b)  An individual who is a paid preparer with respect to a return of tax or claim for refund of tax shall sign the return or claim for refund after it is completed and before it is presented to the taxpayer for signature.  If the paid preparer is unavailable for signature, another paid preparer shall review the entire preparation of the return or claim for refund, and then shall sign the return or claim for refund.  If more than one paid preparer is involved in the preparation of the return or claim for refund, the individual paid preparer who has the primary responsibility as between or among the preparers for the overall substantive accuracy of the preparation of the return or claim for refund shall be considered to be the paid preparer for the purposes of this subsection.

     A paid preparer of any return or claim for refund who fails to sign a return, unless it is shown that the failure is due to reasonable cause and not due to wilful neglect, shall be fined $50 for each failure to sign, with a maximum of $25,000 per person imposed with respect to each calendar year.

     (c)  The department may grant a reasonable extension of time for filing returns under such rules as it shall prescribe.  Except as otherwise provided by statute for cases in which exceptional circumstances require additional time, including cases of persons who are outside the United States, no extension of time for filing returns shall be for more than six months in order to expedite the timely determination of tax liability and the timely remission of taxes."

     SECTION 3.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2008.