Program collects $14M in back taxes


POSTED: Tuesday, August 18, 2009

The state Department of Taxation collected $14.4 million from 870 delinquent taxpayers in fiscal year 2009 through the Tax Fresh Start Program, more than double the amount officials originally projected.

The collection, which ran from May 27 to June 26, offered amnesty to eligible taxpayers—those who had undisclosed or underreported state taxes owed before Dec. 31, 2007—to encourage them to pay back taxes and avoid penalties and the risk of prosecution. Tax officials had projected $7 million in collections.

This was the first time the program was offered to Hawaii taxpayers.

Participants were offered a reduced rate of interest of 4 percent per year, down from the 8 percent rate set by law.

The list of taxpayers involved in the program is confidential. A total of 870 people came in, and officials estimated there were about three years of returns per person.

Participants gave up administrative and judicial rights of appeal.

Of the $14.4 million collected, $8.4 million was collected from taxpayers who qualified for the program. The $8.4 million included:

» $4.2 million in general excise taxes.

» $3.9 million in income taxes.

» $200,000 in transient accommodation taxes and rental motor vehicle taxes.

» $100,000 in miscellaneous taxes.

The remaining $6 million was collected from taxpayers who did not qualify for the program, but wanted to pay off their back taxes after they heard about the Fresh Start program, said Director Kurt Kawafuchi. They sought a waiver or a compromise offer with the Tax Department.

Even though the tax amnesty program has ended, officials still welcome taxpayers coming forward to reveal undisclosed or underreported Hawaii income. At least $1 million has been collected since June 26.

Kawafuchi said officials will determine on a case-by-case basis whether individuals are eligible for a waiver of penalties.

Officials continue to investigate people who underreport or do not disclose state taxes due. Such taxpayers include some bars, restaurants, construction firms, open-market vendors and mom-and-pop stores.

“;We're trying to do whatever we can to help the state with the revenue situation,”; Kawafuchi said. “;We want to make sure there's fairness in the program.”;