“The government has made it very clear they are gonna use your money for the first six months of the year to balance the budget,” explained Lowell Kalapa of the tax Foundation Hawaii.

This has many taxpayers very upset because they need that money with the state the economy is in.

While your Federal Income Tax Refund will be deliverd on time, it is just the state refund that will be delayed. Most state refunds are a lot less than the fed refunds, but it is still money people possibly counted on when spending the christmas.

Lowell Kalapa of the tax Foundation Hawaii offers this suggestion (if it is not too late already and you already received your final paycheck of 2009):

“So what people might want to consider is asking their payroll clerks for this last payroll, is to not withhold maybe any state taxes, right?” said Kalapa.

Just make sure you have met the witholding requirments for your income first so you don’t end up owing the state money.

“Not breaking any rules, just like her, she’s not breaking any rules, because they had 90 days to pay back the refund, you are not breaking any rules because you are just under-withholding this last payroll,” explained Kalapa. “It is juggling the books, if you will, to make it come out in favor of the taxpayer.”

California is also delaying tax refunds and several other states have or are talking about following suit.

Even though e-file doesn’t open until January 15th, if you have your final numbers for your income and witholdings then you can file your taxes now and the tax preparation service you choose will automatically e-file your tax return on Jan 15th when the IRS opens up e-file. The tax services offered on the right of this article (or below) are accepting early tax returns now with auto e-file and are open now ready for you.

Try us for Free!

• failed to file a return for the taxable period, or
• previously filed a return for the taxable period but under reported the amount of Hawaii tax due.

Taxpayers who have undisclosed or unreported Hawaii income are encouraged to make a voluntary disclosure to become compliant, avoid substantial civil penalties and generally eliminate the risk of referral for criminal prosecution. Making a voluntary disclosure also provides the opportunity to calculate with a reasonable degree of certainty the total cost of resolving their Hawaii tax liabilities.

DOTAX is currently aggressively pursuing non-filers and under-reporters and, when appropriate, will refer such taxpayers for criminal prosecution. Hawaii law contains no civil statute of limitations on auditing or assessing non-filers. There is also no civil statute of limitations on auditing or assessing under-reporters where tax fraud is involved. In addition, the legislature has recently passed legislation which greatly enhances the power of DOTAX to audit and assess non-filers or under-reporters, including the adoption of stiffer penalties and a longer civil statute of limitations for cases involving substantial underreporting of income.

The program covers all taxes that are administered by DOTAX, including the general excise tax, use tax, income tax, and transient accommodations tax, among others. The program may not be used for tax liabilities that are already known to DOTAX. Taxpayers already in a payment plan with DOTAX or who have received a tax bill from DOTAX cannot participate in this program for the tax liability that is the subject of that bill. The taxpayer may, however, report additional liability for that tax period as an under-reporter under the Tax Fresh Start Program.

A taxpayer is ineligible for participation in the program if any of following applies:

• The taxpayer is currently under audit by DOTAX;
• The taxpayer is currently under criminal investigation;
• The taxpayer is a party to any civil or criminal litigation that is pending on May 27, 2009 with DOTAX;
• The taxpayer is currently in DOTAX’s collection program;
• The taxpayer has been contacted by DOTAX concerning a return for any reason, including a return that has not been filed or an apparent understatement of income;
• The taxpayer is under audit by the federal government or has been
  notified of such an examination; or
• The taxpayer has been criminally prosecuted by the criminal investigations unit, or who is currently under court jurisdiction.

If a taxpayer is not eligible for the Tax Fresh Start Program for a particular Hawaii tax or for a particular taxable period, the taxpayer may still be eligible to apply for participation in the program for a different Hawaii tax or for a different taxable period.

If you have a question about eligible taxes, visit the website www.hawaii.gov/tax for a comprehensive list.

All participants must file the required tax return(s) for the applicable periods using the appropriate tax form for the period involved in order to participate in the Tax Fresh Start Program. Full payment including interest must also be made at the time the tax returns are filed under this program. Each tax type must be accompanied by a separate check. If payment in full including interest is not submitted with the return on or before June 26, 2009, or if your payment is dishonored for any reason through no fault of DOTAX, your participation in the Tax Fresh Start Program will be denied. If you are denied participation in the Tax Fresh Start Program, all applicable penalties and interest at the statutory rate of 8% per annum will be assessed against you. Interest will continue to accrue at the full statutory rate until payment is received. Payment plans are not available under this program. The notation “Tax Fresh Start Program” must be noted boldly at the top of all pages of the tax return and submitted to:

Tax Fresh Start Program Administrator
PO Box 259
Honolulu, HI 96809-0259

Taxpayers should be aware that payment under this Tax Fresh Start Program constitutes an express and absolute relinquishment of any and all administrative and judicial rights of appeal. If you need more information about the Tax Fresh Start Program, visit www.hawaii.gov/tax, or call the office nearest to you
between the hours of 7:45 a.m. through 4:30 p.m. Monday through Friday, excluding State holidays:

Oahu (808) 587-9200
Maui (808) 984-8511
Hilo (808) 974-6321
Kona (808) 323-4597
Kauai (808) 274-3456

Hearing impaired users only may transmit inquiries calling (808) 587-1418 (Oahu only) or 1-800-887-8974 (Outer islands).

For more information, contact:
Kurt Kawafuchi, Director
State of Hawaii Department of Taxation
Phone: (808) 587-1510

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To file the Form G-45 electronically, go to www.hawaii.gov/tax and click on
“E-Services.” Unless already registered, users will need to register by clicking on
“Register to E-file”. Some additional benefits gained from filing electronically
include: the G-45 is filed immediately; immediate confirmation that the tax return
was filed; the ability to view filing history; calculation of late penalty and interest
for late filings; 24/7 tax return filing, with live assistance from 7:45 a.m. to 4:15
p.m. Monday thru Friday (excluding State holidays); and the site is secure.
o Taxpayers may also pay their GE taxes using an electronic check at no
cost. Taxpayers using a credit/debit card will be assessed a credit/debit
card processing fee.

To complete the web-fillable Form G-45, go to www.hawaii.gov/tax and click on
“Forms.” Next click on “Alphabetical List.” Next click on “G.” Scroll down to the
Form G-45 entry and click on “General Excise / Use Tax Return (Rev. 2008 –
Calculated).” For instructions on how to use this fillable form, click on the green
“Help” button in the upper right corner of the form. After printing, mail the
completed forms to the State Department of Taxation, P. O. Box 1425, Honolulu,
HI 96806-1425.

Reminder: taxpayers will no longer receive their GE tax booklets in the mail
automatically as in previous years and are encouraged to use the Tax Department’s online
services. However, for those taxpayers who do not have computers or prefer not to
use on-line services, GE tax booklets may still be ordered by calling 808-587-4242 or
toll free at 1-800-222-3229.

####

For more information contact:
Sandi Yahiro
Deputy Director of Taxation
Phone: (808) 587-1540

In light of the heavy winds, rain and flooding this past week that have caused substantial damage to homes and businesses in the counties of Kaua‘i, Maui and the City and County of Honolulu, the state Department of Taxation is taking steps to assist taxpayers – both individuals and businesses – who may have difficulty meeting their state tax obligation as a result of the storm.

The department will consider requests for extensions to file and pay taxes as well as for waivers of penalties and interest on a case-by-case basis for affected taxpayers. In addition, the department will also follow federal casualty loss provisions in the event of a Presidential declaration of a natural disaster.

Taxpayers seeking an extension or waiver of penalties and interest should mark their return with “2008 O‘ahu/Kaua‘i/Maui Heavy Rains & Flood Relief” on the top center of the return.

Taxpayers and tax practitioners seeking an extension or waiver whose addresses (on file with the department) are not within the areas directly affected, should also include a brief statement as to how the disaster adversely affected their ability to meet their tax obligations.

Taxpayers whose Hawai‘i employer’s withholding tax returns are due December 15, 2008, and who, as a result of the rains and flooding cannot meet this due date, may file their returns and pay the tax due by January 15, 2009, without incurring any penalties or interest. No late filing penalty will be imposed for returns that are postmarked on or before January 15, 2009. This also applies to those who are required to file monthly and remit payments on a semi-weekly schedule (tax payments may be made when the return is filed).

Employers who have employees at several locations in the state, including locations affected by the heavy winds, heavy rains and flooding, must file their returns on time, including payments for taxes due. However, if complete information from locations affected by the winds, rains and flooding is not available by the due date of the return, an amended return should be filed when the information becomes available.

The department will also consider requests for extensions to file and pay other taxes and waivers of penalties and interest on a case-by-case basis. Each request should include a statement as to how the 2008 O‘ahu, Kaua‘i, or Maui heavy winds, rains and flooding adversely impacted the taxpayer.

For purposes of the Hawai‘i Income Tax Law, a taxpayer may claim all of the casualty loss deductions as allowed by the Internal Revenue Code. Casualty losses on business property are deductible in full. The first $100 of the eligible unreimbursed casualty losses on non-business property is not deductible. The remaining loss is deductible to the extent it exceeds 10 percent of the taxpayer’s Hawai‘i adjusted gross income. Information on options available to taxpayers is posted on the department’s website (www.hawaii.gov/tax, Announcement No 2008-10).

On Dec. 12, Governor Lingle signed a State Disaster Proclamation for the City and County of Honolulu and counties of Kaua‘i and Maui. Therefore, taxpayers may be eligible for a general excise tax exemption if they receive amounts under property and casualty insurance policies for damage or loss of inventory used in a trade or business located within the City & County of Honolulu or the affected portions of Kaua‘i or Maui.

Tax forms and information are available on the department’s website at www.hawaii.gov/tax (Announcement No. 2008-10). Please call the Department’s Forms Request Line at 808-587-7572, or toll-free from the neighbor islands and continental U.S. at 1-800-222-7572 to request appropriate forms. Additional information is available by calling the Taxpayer Services Branch during business hours at 587-4242, or toll-free at 1-800-222-3229, or by e-mailing them at Taxpayer.Services@hawaii.gov.

All workshops begin at 8:30 a.m. and end at 12:30 p.m. Topics include 2009 possible
tax legislation proposals, case update by Department of the Attorney General, changes
to forms, general excise tax on non-profit organizations and department initiatives in this
current economic climate.

The cost for the workshop is $70 for those who register at least two weeks in advance;
there is a $5 fee for later registrations. The cost includes continental breakfast and all
workshop materials. The course provides four hours of Continuing Professional
Education credit. The workshop materials may be purchased separately for $20 each.

Registration forms are available at www.hawaii.gov/tax. For more information, contact
the Department’s External Training & Outreach Office at 808-587-1786, or by email at
tax.training.outreach@hawaii.gov.

YEAR-END WORKSHOP SCHEDULE

KAUA‘I: Monday, November 24, 8:00 a.m. registration; KCC
Fine Dining Room, 3-1901 Kaumuali`i Highway, Lihu`e
Contact Kaua`i Community college, 808-245-8318

MAUI: Tuesday, December 9, 8:00 a.m. registration; Maui Beach Hotel,
Elleair Rainbow Room, 170 Ka`ahumanu Avenue, Kahului
Contact Maui Community College, 808-984-3231

O‘AHU: Thursday, December 11, 8:00 a.m. registration; Pacific Beach Hotel,
Grand Ballroom, 2490 Kalakaua Avenue, Honolulu
Contact Kapi`olani Community College, 808-734-9211

KONA: Monday, December 8, 8:00 a.m. registration; Royal Kona Resort,
Discovery Room, 75-5852 Ali`i Drive, Kailua-Kona
Contact Hawai`i Community College, 808-974-7531

HILO: Wednesday, December 10, 8:00 a.m. registration; University of Hawai`i
@Hilo, Campus Center, Room 301, 200 W. Kawili Street, Hilo
Contact Hawai`i Community College, 808-974-7531

For more information, contact:
External Training & Outreach Office
Department of Taxation
State of Hawai`i
Phone: (808) 587-1786
Email: tax.training.outreach@hawaii.gov

The deadline for taxpayers to update their addresses is Nov. 28.
Economic stimulus checks must be sent out by Dec. 31 by law.

The IRS said the remaining economic stimulus checks due to Hawaii taxpayers average $633 and that the regular tax refund checks average $1,217.

For those still awaiting their economic stimulus checks, you can check the status online using the “Where’s my economic stimulus?” tool on the IRS Web site which is the quickest and easiest way for a taxpayer to check the status of a stimulus payment and receive instructions on how to update his or her address. Taxpayers without internet access should call 1-866-234-2942.

Taxpayers due a Tax Refund can update their addresses to receive their regular tax refunds online using the “Where’s my refund check?” tool on the IRS Web site. The taxpayer must submit his or her social security number, filing status and amount of refund shown on their 2007 return. The tool will provide the status of their refund and in some cases provide instructions on how to resolve delivery problems.

Taxpayers checking on a refund over the phone will be given instructions on how to update their addresses. Taxpayers can access a telephone version of “Where’s My Refund?” by calling 1-800-829-1954.

The department encourages taxpayers to electronically file and pay the N-13 (income tax short
form), General Excise, Withholding, and Transient Accommodations tax returns for free at
www.hawaii.gov/tax – it’s easy, fast and accurate.

Booklets will still be available via U.S. mail for taxpayers requesting them. Requests should be
submitted no later than August 18, 2008:
• Submit a request on-line by visiting: www.hawaii.gov/tax, or
• Call the Customer Call Center at 587-4242 or toll free at 1-800-222-3229 and press #5
Note: Not receiving or requesting a tax booklet does not relieve taxpayers of the requirement to
file tax returns.