Act 34 allows the disclosure of general excise/use tax return and tax return information to a person contractually obligated to pay general excise and use taxes assessed against another. Act 34 became effective on April 20, 2000 and applies to discussions after this date regarding the assessment of additional taxes.
A person who is under a contractual obligation to pay a tax assessed against another has the same appeal rights as the person against whom the taxes are assessed but could not under the disclosure laws obtain the other person's tax returns and return information during the audit (prior to the assessment of taxes). All general excise/use tax return and tax return information is confidential except for persons with a "material interest." Under the Attorney General's advice, persons with a "material interest" do not include a person under contractual obligation to pay a tax assessed against another. Thus, a lessee, licensee, franchisee (or anyone else under a contractual obligation to pay taxes) would be at the mercy of the person against whom the taxes are assessed who does not have the financial interest in administratively contesting an assessment.
Act 34 amends the list of persons with a "material interest" under section 237-34(b), Hawaii Revised Statutes (HRS), to include "a person contractually obligated to pay the taxes assessed against another when the latter person is under audit by the department." Act 34 also amends section 238-13, HRS, to clarify that section 237-34, HRS, is applicable in the administration of the use tax law. Act 34 remedies an unfair situation for persons under contractual obligation and allows the Department to resolve audit issues more quickly.
Forms and other tax information are available at the Department's website at: www.state.hi.us/tax.
On Oahu, forms may be ordered by calling the Department's Forms Request Line at: 808-587-7572. Persons who are not calling from Oahu, may call: 1-800-222-7572 (toll-free) to receive forms by mail or 808-678-0522 from a fax machine to receive forms by fax.
RAY K. KAMIKAWA
Director of Taxation
HRS Sections Explained: HRS Section 237-34, 238-13