THIRTIETH LEGISLATURE, 2019
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 231-39, Hawaii Revised Statutes, is amended to read as follows:
"§231-39 Additions to taxes for noncompliance or evasion; interest on underpayments and overpayments. (a) Except as otherwise provided, this section shall apply to every tax or revenue law of the State that provides for the filing with the director of taxation of a return or statement of the tax or the amount taxable.
(b) There shall be added to and become a part of the tax imposed by such tax or revenue law, and collected as such:
(1) Failure to file tax return. In case of failure to file any tax return
required to be filed on the date prescribed therefor (determined with regard to
any extension of time for filing), unless it is shown that the failure is due
to reasonable cause and not due to neglect, there shall be added to the amount required
to be shown as tax on the return [
five] one per cent of the
amount of the tax if the failure is for not more than one month, with an
additional five per cent for each additional month or fraction thereof during
which the failure continues, not exceeding [ twenty-five] twenty-one
per cent in the aggregate. For purposes
of this paragraph, the amount of tax required to be shown on the return shall
be reduced by the amount of any part of the tax which is paid on or before the
date prescribed for payment of the tax and by the amount of any credit against
the tax which may be claimed upon the return.
This paragraph shall not apply to any failure to file a declaration of
estimated tax required by section 235-97.
(2) Failure to pay tax.
(A) If any part of any underpayment is due to
negligence or intentional disregard of rules (but without intent to defraud),
there shall be added to the tax an amount up to twenty-five per cent of the
underpayment as determined by the director[
.]; provided that the
taxpayer shall pay, in addition to the underpayment, only ten per cent of the
underpayment, if the taxpayer pays the underpayment and the addition to the
underpayment within thirty days of the notice of the underpayment.
(B) If any part of any underpayment of tax required to be shown on a return is due to fraud, there shall be added to the tax an amount up to fifty per cent of the underpayment as determined by the director.
(C) If any penalty is assessed under subparagraph (B) (relating to fraud) for an underpayment of tax which is required to be shown on a return, no penalty under paragraph (1) (relating to failure to file the return) shall be assessed with respect to the same underpayment.
(3) Failure to pay tax after filing timely
returns. If a return is filed on or
before the date prescribed therefor and the amount shown as tax on the return
is not completely paid within sixty days of the prescribed filing date, there
shall be added to the unpaid tax an amount up to twenty per cent as determined
by the director[
.]; provided that the taxpayer shall pay a total
amount of only the unpaid tax and ten per cent of the unpaid tax, if the
taxpayer pays the total amount within thirty days after the prescribed filing
(4) Interest on underpayment or nonpayment of tax.
(A) If any amount of tax is not paid on or before
the last date prescribed for payment, interest on such amount at the rate of
two-thirds of one per cent a month or fraction of a month shall be paid for the
period beginning with the first calendar day after the date prescribed for
payment, section 231-21 to the contrary notwithstanding, to the date paid[
provided that if payment is made within one month of the notice and demand
under subparagraph (C), the interest paid on the unpaid tax amount shall be at
the rate of one-third of one per cent a month or fraction of a month.
(B) If the amount of any tax is reduced by reason of a carryback of a net operating loss allowed under chapter 235, such reduction in tax shall not affect the computation of interest under this paragraph for the period ending with the last day of the taxable year in which the net operating loss arises.
(C) Interest prescribed under this paragraph on any tax shall be paid upon notice and demand, and shall be assessed, collected, and paid in the same manner as taxes.
(D) No interest under this paragraph shall be imposed on interest provided by this paragraph.
(E) If any portion of a tax is satisfied by credit of any overpayment, then no interest shall be imposed under this paragraph on the portion of the tax so satisfied for any period during which, if the credit had not been made, interest would have been allowable with respect to the overpayment.
(F) Interest prescribed under this paragraph on any tax may be assessed and collected at any time during the period within which the tax to which the interest relates may be collected.
(G) This paragraph shall not apply to any failure to pay estimated tax required by section 235-97.
(c) No taxpayer shall be exempt from any penalty or interest by reason of having contested the tax, but only to the extent that the tax is adjudged to be excessive or contrary to law.
(d) Notwithstanding the above, there shall be no addition to the tax at all if the taxpayer posts bond, with or without sureties, in an amount specified by the director."
SECTION 2. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 3. This Act shall take effect upon its approval.
Taxation; Penalties and Interest for Nonpayment and Underpayment
Reduces taxpayer penalties for nonpayments and underpayments by setting lower penalty amounts and interest rates for earlier rather than later payments of the penalty amounts and interest rates and avoiding penalties and interest if the taxpayer posts a bond.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.