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The Hawaii Department of Taxation is offering a “Tax Fresh Start Program” to taxpayers who owe eligible taxes for any taxable period ending on or before December 31, 2007. The program, effective May 27, 2009 through June 26, 2009, covers all taxes administered by the Department and is available to eligible taxpayers who have failed to file a return for a taxable period, or have underreported tax due on a previously filed return. The program offers a 50% reduction in interest, waived penalties, and potentially avoiding referral for criminal prosecution. Taxpayers are not be eligible for the program if they are currently under audit by the Department or the federal government, currently under criminal investigation or litigation, or if they are currently in the Department’s collection program. Taxpayers who are not eligible for a certain tax types may still be eligible for others. (News Release, Hawaii Department of Taxation, May 27, 2009).


Passed into law on July 13, 2005, Act 247 allows Hawaii counties to levy a local surcharge on excise and use tax of up to one-half percent of all gross proceeds and income beginning January 1, 2007. The surcharge does not apply to charges currently taxable at one-half or 0.15 percent rates, nor the surcharge apply to items that are exempt from state level excise and use tax. Any contract entered into after June 30, 2006 is subject to the surcharge, however if a contract was entered into before June 30, 2006 and the contract does not provide for the pass-through of a tax increase, the surcharge does not apply. (Act 247, Session Laws of Hawaii 2005, Effective June 13, 2005)


As of July 1, 2004, it is no longer required that a taxpayer pay tax on an amount in question prior to filing with the Tax Appeal Court. (HB 851, signed in June 2004.)


In response to Baker & Taylor, Inc. v. Director of Taxation, the Hawaii Legislature has amended the definitions of “import” and “purchaser” to clarify that the .5% use tax applies to the purchase of tangible property from an unlicensed seller, regardless of whether the title passed within or outside of Hawaii. The definition of “use” was also amended to include control over tangible property by a seller who directs the import of property into Hawaii, whether the seller is licensed or not, and even if the property is imported into the state for the purposes of sale or resale. The use tax is effective retroactively for tax years beginning after December 31, 1998. (Act 114 (S.B. 2994), Laws, June 2004)



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