Act 45 extends the confidentiality privileges for certain taxpayer communications to all taxes administered under title 14, Hawaii Revised Statutes (HRS).

The Internal Revenue Service (IRS) Restructuring and Reform Act of 1998 extended the attorney-client privilege to a communication between a taxpayer and any "federally authorized tax practitioner" (which includes attorneys, certified public accountants, enrolled agents, and enrolled actuaries) with respect to "tax advice," to the extent the communication would be considered a privileged communication if it were between a taxpayer and an attorney under Internal Revenue Code (IRC) section 7525.

Act 174, Session Laws of Hawaii 2000 (Act 174), which was codified in section 235-2.45(m), HRS, adopted IRC section 7525.  Act 174, however, only applied the confidentiality privilege to communications relating to the State income tax law (chapter 235, HRS).  Section 235-2.45(m), HRS, is repealed under Act 45 which adopts IRC section 7525 in chapter 231, HRS.

Act 45 amends chapter 231, HRS, by adopting IRC section 7525 to apply to all State taxes administered by the Department of Taxation under title 14, HRS, for taxable years beginning after December 31, 2000.

The State privilege may be asserted:

1.  In any noncriminal tax matter before the Department; and
2.  In any noncriminal tax proceeding in State court brought by or against the State.

Forms and other tax information may be downloaded from the Department's website at:  http://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 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-__