Act 68 allows a collection agency to recover its collection fee from the taxpayer when it collects delinquent taxes under a contract with the Department of Taxation (Department). The fee collected from the taxpayer will be in accordance with the terms of the contract. Act 68 is effective as of June 10, 1999.
The Department is authorized under Hawaii Revised Statutes (HRS) section 231-13 to contract with collection agencies to collect delinquent taxes. The collection agencies are paid a fee based on a percentage of the amount of delinquent taxes collected. Under prior law, collection agencies were prohibited from recovering collection fees from taxpayers. Thus, collection agencies that contracted with the Department could not collect their fees from the taxpayer at the same time that the agencies collected delinquent taxes. As a result, the Department would have to make efforts to collect the collection agency fee from the taxpayer. Act 68 streamlines the collection process for taxpayers and the Department.
The Department has entered into four contracts with collection agencies since 1995 and intends to enter into additional contracts. These contracts are subject to the competitive bidding requirements under the Public Procurement Code, HRS chapter 103D. Privatizing the collection of delinquent taxes through collection agencies enables the Department to maximize the use of its resources.
Forms and other tax information may be downloaded from the Department's website at: http://www.state.hi.us/tax/tax.html. On Oahu, forms may be ordered by calling the Department's Forms Request Line at: 587-7572. Persons who are not calling from Oahu may call: 1-800-222-7572 to receive forms by mail or 808-678-0522 from a fax machine to receive forms by fax.
RAY K. KAMIKAWA
Director of Taxation