Act 8 increases the filing thresholds for taxpayers filing withholding, general excise/use, transient accommodations, and rental motor vehicle and tour vehicle surcharge tax (RVST) returns.

Employers are responsible for withholding a portion of their employees' wages as income tax and paying the amounts withheld to the Department on the employees' behalf.  Withholding returns with less than $100,000 annual liability are due monthly on or before the 15th day of the calendar month following the month for which the taxes were withheld.  Under the prior law, returns may be filed quarterly on or before the 15th day of the month after the close of each quarter when the employer's total tax liability is less than $1,000 for the calendar year.  Act 8 increases the threshold for quarterly filing to $5,000 for periods beginning on or after October 1, 2001.

The periodic general excise/use tax return (Form G-45) must be filed on a monthly, quarterly, or semiannual basis on or before the last day of the month following the close of the reporting period.  Under the prior law, the return and tax may be filed on a quarterly basis if the taxpayer's liability for the calendar or fiscal year is $2,000 or less and on a semi-annual basis if the total liability is $1,000 or less.  These same thresholds are applicable to taxpayers filing a transient accommodations tax return and RVST returns.   Act 8 doubles the thresholds for taxpayers filing general excise/use tax returns (applicable to gross income or gross proceeds received on or after October 1, 2001, and all taxes accruing on or after October 1, 2001); transient accommodations tax returns (applicable to gross rental or gross rental proceeds received on or after October 1, 2001, and all taxes accruing on or after October 1, 2001); and RVST tax returns (applicable to the rental of each vehicle and the use of each tour vehicle on or after October 1, 2001).

Act 8 reduces the filing burden of taxpayers, thereby encouraging compliance, and provides greater cash flow for taxpayers.  Based on data in the Department's annual files, Act 8  will allow 38,000 general excise/use taxpayers; 8,000 withholding taxpayers; 2,700 transient accommodations taxpayers; and a relatively small number of taxpayers filing RVST returns to file returns less frequently.

Example 1: A taxpayer with gross income of $25,000 to $50,000 per year that is subject to the general excise/use tax files on a quarterly basis prior to Act 8.  The return for the calendar quarter ending September 30, 2001 is due October 31, 2001.  Act 8 allows that taxpayer to instead file on a semi-annual basis and file on or before January 31, 2002 to report income received from July 1, through December 31, 2001.

Example 2:  A taxpayer with gross income of $50,000 to $100,000 per year that is subject to the general excise/use tax would file quarterly instead of monthly under Act 8.  Although the return for the month of September 2001 still would be due on October 31, 2001, the return for the calendar quarter ending December 31, 2001 would not be due and payable until January 31, 2002.

In order to implement Act 8, the  Department will:

• Send a notice to taxpayers during the third or fourth week of  November notifying taxpayers of their change in filing period (after comparing the amounts reported on the 2000 annual return to the new threshold amounts).
• Include in the notice a form or return portion that will allow taxpayers to change their filing period by filing more frequently.
• Prepare booklets for the 2002 tax year that will be based on taxpayers' 2001 filing period (prior to Act 8).
• Prepare booklets for the 2003 tax year that will be based on taxpayers' 2002 actual filing  period.

/s/
MARIE Y. OKAMURA
Director of Taxation

HRS Sections Explained:  235-62, 237-30, 237D-6, and 251-4 .

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