July 25, 1994


RE:  Adoption of Proposed Amendments to Income Tax and Transient Accommodations Tax Rules
Income Tax Rules

The proposed amendments to sections 18-235-52 through 18-235-66, except section 18-235-61,HAR, the repeal of section 18-235-55.5, HAR, and the adoption of a new section 18-235-55.8, HAR, on the Net Income Tax Law, Chapter 235,HRS, were adopted on July 6, 1994, and became effective on July 23, 1994.

The amendments to the Administrative rules formalize the policies and procedures of the Department of Taxation with regard to the imposition of income tax on individuals, exemptions, and tax credits allowed against tax liability.

In general,the amendments conform the rules to changes made to both the Hawaii Revised Statutes and the Internal Revenue Code. The amendments also reflect Department of Taxation practices which have been implemented in order to comply with the changes in the Hawaii Revised Statutes and the Internal Revenue Code.

Transient Accommodations Tax Rules

The proposed amendments to Chapter 18-237D, Hawaii Administrative Rules, on the Transient Accommodations Tax Law, Chapter 237D, Hawaii Revised Statutes, which conform the rules under the Transient Accommodations Tax Law to the legislative changes made between 1989 and the present were adopted on June 29, 1994, and became effective July 18, 1994.

The legislative changes reflected in the rules include, among other revisions, the following:

- Change in terminology to “gross rental” and “gross rental proceeds” (Act 241, Session Laws of Hawaii (SLH) 1988);

- Clarification of persons authorized to sign tax returns (Act 14, SLH 1989);

- Change of licensing fee from $1 annual to $5/$15 one-time (Act 199, SLH 1989);

- Exclusion for transient accommodations tax visibly passed on (Act 185, SLH 1990);

- Modification of statute of limitations when federal adjustment occurs (Act 257, SLH 1993); and

- Increase of tax rate from 5% to 6% (Act 7, 1st Special Session 1993).

Copies of Rules

Copies of the Rules are available during normal business hours at the Technical Review Office of the Department of Taxation, Room 220, Princess Ke’elikolani Building, 830 Punchbowl Street, Honolulu, Hawaii. To request a copy by telephone, call the Department of Taxation, Technical Review Office at (808) 587-1577.

Director of Taxation