Bill Text: HI SB3176 | 2024 | Regular Session | Amended
Bill Title: Relating To Tax Enforcement.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed - Dead) 2024-04-25 - Conference committee meeting to reconvene on 04-26-24 1:00PM; Conference Room 309. [SB3176 Detail]
Download: Hawaii-2024-SB3176-Amended.html
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THE SENATE |
S.B. NO. |
3176 |
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THIRTY-SECOND LEGISLATURE, 2024 |
S.D. 1 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO TAX ENFORCEMENT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Section 235-108, Hawaii Revised Statutes, is
amended to read as follows:
(b)
Any person liable for any tax imposed under this chapter or for the
collection or deduction thereof at the source shall produce all account books,
bank books, bank statements, records, vouchers, copies of federal tax returns,
and any and all other documents and evidence relevant to the determination of
the income or wages as required to be returned under this chapter within thirty
business days after a written demand is mailed to that person by the
department, or as soon thereafter as the director may deem reasonable under the
circumstances. Any person who fails to
produce documents or evidence as provided in this subsection shall be
prohibited from introducing the documents or matters in evidence, or otherwise relying upon or utilizing said documents or
matters, in any tax appeal or action under section 40-35 arising from the
audit in which the documents or matters were demanded, unless it is shown that
the failure is due to reasonable cause and not neglect or refusal.
[(b)] (c) Additional taxes. If the department of taxation discovers from the
examination of the return or otherwise that income, or the liability of an
employer in respect of wages, or any portion thereof, has not been assessed, it
may assess the same and give notice to the taxpayer or employer of the
assessment, and the taxpayer or employer shall thereupon have an opportunity
within thirty days to confer with the department as to the proposed
assessment. After the expiration of
thirty days from such notification the department shall assess the income of
the taxpayer, or the liability of the employer in respect of wages, or any
portion thereof which it believes has not heretofore been assessed, and shall
give notice to the taxpayer or employer of the amount of the tax and interest
and penalties if any, and the amount thereof shall be paid within twenty days
after the date the notice was mailed, properly addressed to the taxpayer or
employer at the taxpayer's or employer's last known address or place of
business."
SECTION 2. Section 236E-18.5, Hawaii Revised Statutes,
is amended to read as follows:
"[[]§236E-18.5[]] Audit of return; procedure upon failure to
file return; additional taxes; limitation period. (a)
The director of taxation, or the director's designee, is authorized and
empowered to examine all account books, bank books, bank statements, records,
vouchers, copies of federal tax returns, and any and all other documents and
evidence [having any relevance] relevant to the determination of
any amount relevant to the Hawaii transfer tax, as required to be returned
under this chapter, and the director may employ the director's powers under
section 231-7 for these purposes.
(b)
Any person liable for any tax imposed under
this chapter shall produce all account books, bank books, bank
statements, records, vouchers, copies of federal tax returns, and any and all
other documents and evidence relevant to the determination of the income as
required to be returned under this chapter within thirty business days after a
written demand is mailed to that person by the department, or as soon
thereafter as the director may deem reasonable under the circumstances. Any person who fails to produce documents or
evidence as provided in this subsection shall be prohibited from introducing
the documents or matters in evidence, or otherwise relying upon or utilizing
said documents or matters, in any tax appeal or action under section 40-35
arising from the audit in which the documents or matters were demanded, unless
it is shown that the failure is due to reasonable cause and not neglect or
refusal.
[(b)]
(c) If the department discovers
from the examination of the return or otherwise that any amount has not been
assessed or otherwise properly included in determining any amount relevant to
the Hawaii transfer tax, it may assess those amounts.
[(c)]
(d) If the person required to
file the return required under this chapter fails to file the return or
declines to authenticate a return, the department shall make a return for the
person based upon the best information obtainable and shall levy and assess against
the person the tax as shown on the return.
[(d)]
(e) For the purposes of this
section, the department shall give notice of the assessment to the person
required to file the return required under this chapter. The person put on notice shall have thirty
days to confer with the department as to the proposed assessment. After the expiration of thirty days from the
notification, the department shall finalize the assessment and give notice to
the person of the tax and interest and penalties, if any. The amount shall be paid within twenty days
after the date the notice, properly addressed to the person required to file
the return required to be filed under this chapter, is mailed to the person's
last known address.
[(e)]
(f) In the case of an audit commenced
under this section, the amount of Hawaii transfer tax imposed by this chapter
shall be assessed or levied within three years after the return was filed, or
within three years of the due date prescribed for the filing of that return,
whichever is later. In the case of a
false or fraudulent return with intent to evade tax, or of a failure to file a
return, the tax may be assessed or levied at any time; provided that the burden
of proof with respect to the issues of falsity or intent to evade tax shall be
upon the State. The limitation period
shall be suspended if the person required to file the return agrees to suspend
the period."
SECTION
3. Section 237-39, Hawaii Revised
Statutes, is amended to read as follows:
"§237-39 Audits; procedure, penalties. (a)
For the purpose of verification or audit of a return made by the
taxpayer, or where there is reasonable ground to believe that any return made
is so deficient as not to form the basis of a satisfactory assessment of the
tax, or for the purpose of making an assessment where no return has been made,
the department of taxation or the Multistate Tax Commission pursuant to chapter
255, or the authorized representative thereof, may examine all account books,
bank books, bank statements, records, vouchers, taxpayer's copies of federal
tax returns, and any and all other documents and evidence [having any
relevancy] relevant to the determination of the gross income or
gross proceeds of sales of any taxpayer as required to be returned under this
chapter and may summon or require the attendance of the person by or for whom
the return, if any, has been made or whose tax is being assessed, and any
employee of the person, and may summon or require the attendance of any person
having knowledge in the premises, naming the time and place in the summons, and
may require the production of any books, statements, or other evidence open to
examination, and may take testimony in reference to any matter relevant to the
gross income or gross proceeds of sales of the taxpayer for the period under
consideration, with power to require that the person so called and appearing
shall be interrogated under oath and to administer the oath.
(b)
Any person liable for any tax imposed under this chapter or for the
collection or deduction thereof at the source shall produce all account books,
bank books, bank statements, records, vouchers, taxpayer's copies of federal
tax returns, and any and all other documents and evidence relevant to the
determination of the gross income or gross proceeds of sales as required to be
returned under this chapter within thirty business days
after a written demand is mailed to that person by the department, or as soon
thereafter as the director may deem reasonable under the circumstances. Any person who fails to produce documents or
evidence as provided in this subsection shall be prohibited from introducing
the documents or matters in evidence, or otherwise relying upon or utilizing
said documents or matters, in any tax appeal or action under section 40-35
arising from the audit in which the documents or matters were demanded, unless
it is shown that the failure is due to reasonable cause and not neglect or
refusal.
[(b)]
(c) If the department determines that
any gross income or gross proceeds of sales liable to the tax have not been
assessed, the department may assess the same as provided in sections 237-36 and
237-38.
[(c)] (d) Any individual knowingly giving false
testimony under oath at any hearing before the department shall be guilty of
perjury and shall be punished as provided by law.
[(d)] (e) Any person refusing or neglecting to obey any
summons issued by the department, and any individual appearing and refusing to
testify under oath, shall be fined $50 for the first offense and $100 for each
succeeding offense."
SECTION 4. Statutory material to be repealed is
bracketed and stricken. New statutory
material is underscored.
SECTION 5. This Act shall take effect upon its approval; provided that:
(1) Sections 1 and 3 shall apply to taxable years beginning after December 31, 2023; and
(2) Section 2 shall apply to decedents dying and taxable transfers occurring after December 31, 2023.
Report Title:
Tax Enforcement; Audits; Time to Respond; Failure to Respond; Appeals
Description:
Provides deadlines for taxpayers under audit to comply with demands to produce documents and evidence. Authorizes the tax appeal court to preclude documents or information not produced pursuant to a demand from being introduced in evidence in a tax appeal or action under section 40-35, Hawaii Revised Statutes, unless the failure was due to reasonable cause. (SD1)
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
