Act 44 removes a disincentive to taxpayer participation in the electronic funds transfer (EFT) program administered by the Department of Taxation (Department) by repealing the two percent penalty provision for taxpayers who elect to participate in the EFT program.  Act 44 is effective beginning April 26, 2001.

Section 231-9.9, Hawaii Revised Statutes (HRS), provides for the remittance of taxes by means of EFT and applies to (1) taxpayers with tax liabilities exceeding $100,000 who are required by the Department to remit taxes by means of EFT; and (2) taxpayers who (with the approval of the Department) elect to remit taxes by means of EFT (i.e., their tax liability does not exceed $100,000).

Section 231-9.9(c), HRS, imposes a two percent penalty on the amount of taxes owed if a taxpayer in either category identified above fails to remit taxes using an approved EFT method on or before the date the taxes are due.  The two percent penalty is not imposed if failure to remit the taxes using an approved EFT method is due to reasonable cause and not to neglect.  Id.  The two percent penalty is in addition to any penalty set forth in section 231-39, HRS.  Id.

The two percent penalty applied to situations where taxpayers are either required to or elect to remit their taxes by an approved EFT method and: (1) timely file their tax return without EFT payment by the due date; (2) timely file their tax return with cash or check payment by the due date; (3) untimely file their tax return with EFT payment; or (4) untimely file their tax return with cash or check payment.

Act 44 repeals the two percent penalty provision for taxpayers who elect to participate in the EFT program.

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.
 

/s/
MARIE Y. OKAMURA
Director of Taxation

HRS Section Explained:  HRS Section 231-9.9