West Maui Taxpayers Association
  • HOME
  • Olowalu Fire Station
  • WMTAPAC22
  • Affordable Housing
  • West Maui Lifesavers
  • Wall of Honor
  • Support WMTA
    • Membership - One Time Payment
    • Membership - Recurring Payment
    • Donations
    • Wills & Trusts
    • Charity Walk
  • Newsletter
  • Emergency Planning
  • News Blog
  • About Us
    • Goals & Objectives
    • Accomplishments
    • Board of Directors
    • WMTA vs WMIF
  • Contact
  • Subscribe

Blockbusters Buried in “Tax Administration”

2/28/2022

0 Comments

 
WMTA Shares these commentaries, without taking a position unless otherwise noted, to bring information to our readers ​to view the archives of the Tax Foundation of Hawaii's commentary click here.
Picture
Blockbusters Buried in “Tax Administration”
 
Every year, our Department of Taxation submits bills to the Legislature for their consideration.  Those bills are included in the Governor’s Package.  Under our laws (section 231-3(7), HRS), the Department is supposed to recommend “any amendments, changes, or modifications of the laws as may seem proper or necessary to remedy injustice or irregularity in taxation or to facilitate the assessment of taxes.”

So the Department of Taxation is sponsoring SB 3145 and HB 2177 (same bill, introduced in both chambers of the legislature) “Relating to Tax Administration.”

That bill contains a few things that do sound like boring administrative stuff.  It expands the Department’s authority to require electronic filings.  It makes professional tax preparers file returns electronically.  It takes away the fee for certified copies of tax clearances (but that doesn’t affect the Department’s ability to charge for tax clearances themselves, even though they don’t charge for them now).

Then we get to penalty enhancement.  This is where the bill starts getting scary.

First, it says that late filing penalties, which are now 5% a month but are capped at 25%, can go to 75%.  That wouldn’t be relevant to most of us who are diligent and file our taxes on time all the time, but if a person falls off the system for one or two years for whatever reason, the penalties can get pretty intense.  Right now, unlike in the federal system, a taxpayer who misses a return can and occasionally does get written up for 70% penalties (25% for failure to file, 25% for negligence, and another 20% for substantial understatement).  Penalties are added to the tax and bear interest at 8% just like tax, so everything adds up quickly.  The bill would change the 70% to 120%, more than the tax owing.

Next, it adds a new penalty for returns that are late but that do not show tax due (including situations where the government owes the taxpayer money).  Those returns aren’t currently penalized.  The bill gives the Department the authority to impose a penalty anyway and determine the amount of that penalty itself without further legislative action.

Next, it takes aim at informational returns where no tax is due.  These would include the Hawaii versions of Form 1099 and Schedule K-1.  If these forms aren’t filed on time, the penalty is $200, times the number of recipients of the forms, times the number of months that the returns are late.  The federal code has a version of this penalty in place and the Department’s saying that it’s high time we adopted it too.

It then makes a grab for interest on money paid on disputed taxes on appeal.  Occasionally folks don’t agree with the Department’s assessment of tax due, and the system allows the taxes to be paid and set aside while the courts or the Board of Review determine who is right.  The bill says that if the taxpayer wins, the State will pay the taxpayer 4% on the money held if the taxpayer is an individual, 3% if the taxpayer is a corporation getting back less than $10,000, and a measly 1.5% if the taxpayer is a corporation getting back more than $10,000.  But if the taxpayer wins, it’s the taxpayer’s money so why is the State allowed to profit by giving the taxpayer a below-market interest rate?  The Hawaii Supreme Court used to have a rule saying that because the money is held in a special account, the actual earnings in the account attributable to the taxpayer’s money would be refunded to the taxpayer if the court ruled in the taxpayer’s favor.  Perhaps we should go back to that rule.

Both the House and Senate bills are alive at this point in the legislative session.  We’ll give you more session updates in the coming weeks.
0 Comments

Your comment will be posted after it is approved.


Leave a Reply.

    Picture

    RSS Feed


    If you wish to further discuss blog posts, please contat our office directly or contact us via Contact page.

    Categories

    All
    Affordable Housing & Homelessness
    Board
    Capital Improvements
    Charity Walk
    Commentaries
    Community Events
    Community Resources
    CON
    COVID 19
    Educational
    Emergency Planning
    Health & Safety
    HHARP
    Housing
    Infrastructure In West Maui
    In The News
    Kapalua Airport Runway Lights
    Kapalua Coastal Trail
    Lahaina Bypass
    Legislature Newsletters
    LLC
    Long Range Transportation Plan 2040
    Long-Range Transportation Plan 2040
    Makila
    MAUI CANCER CENTER
    Maui Cancer Center Llc
    Maui County
    Maui County Budget
    Maui County Dept Of Environmental Management
    Maui County - Dept Of Water
    Maui Destination Management Plan
    Press
    Public Safety In West Maui
    Real Property Tax
    Recycling Info
    TAT
    Tax
    Tourism
    Traffic & Roadways
    Transportation
    Video
    Vote
    Voting
    West Maui Community Plan
    West Maui Hospital
    West Maui Skate Park
    WMTA Annual Meeting
    WMTA Breakfast Events
    WMTA Candidates Night
    WMTA Disaster Preparedness
    WMTA Fundraisers
    WMTA Hot Topics
    Wmta Hot Topics Replay
    WMTA Membership
    WMTA PAC
    WMTA Sunset Sail
    WMTA Whale Watch

Quick Links: 

Home

News

About Us

Wall of Honor

Newsletter

Support WMTA
Emergency Planning

Contact

Copyright © 2021
Photo used under Creative Commons from wolfsavard
  • HOME
  • Olowalu Fire Station
  • WMTAPAC22
  • Affordable Housing
  • West Maui Lifesavers
  • Wall of Honor
  • Support WMTA
    • Membership - One Time Payment
    • Membership - Recurring Payment
    • Donations
    • Wills & Trusts
    • Charity Walk
  • Newsletter
  • Emergency Planning
  • News Blog
  • About Us
    • Goals & Objectives
    • Accomplishments
    • Board of Directors
    • WMTA vs WMIF
  • Contact
  • Subscribe