Title 14, Taxation

PART I. GENERAL PROVISIONS §235-1 Definitions. "Biotechnology" means fundamental knowledge regarding the function of biological systems from the macro level to the molecular and subatomic levels that has application to development including the development of novel products, serv…

§235-100 Persons in military service. The collection from any person in the military service of any tax on the income of such person, whether falling due prior to or during the person's period of military service (which term, as used in this section, shall have the same meaning a…

[§235-100.5] Abatement of income taxes of members of armed forces on death. Section 692 (with respect to income taxes of members of armed forces on death) of the Internal Revenue Code shall be operative for the purposes of this chapter and the department shall have the authority …

§235-101 Federal returns and assessments, when copies are required. (a) In prescribing the form of return the department of taxation may require that a person who is required to file a federal income tax return include in the person's return a reconciliation of the return with th…

§235-102 Records and special returns. (a) Records. Every person liable to any tax imposed by this chapter or for the collection or deduction thereof at source, shall keep full, complete, regular, and accurate books of account in which all the person's transactions shall be entere…

§235-102.5 Income check-off authorized. (a) Any individual whose state income tax liability for any taxable year is $3 or more may designate $3 of the liability to be paid over to the Hawaii election campaign fund, any other law to the contrary notwithstanding, when submitting a …

[§235-102.6] Refund splitting. (a) Any individual taxpayer required to make a return under this chapter shall be entitled to direct the deposit of an income tax refund into a maximum of three checking or savings accounts at a financial institution; provided that a taxpayer design…

§235-104 Penalties. Penalties and interest shall be added to and become part of the tax, when and as provided by sections 231-39 and 235-97. The penalties and interest provided by section 231-39 shall apply to employers as well as taxpayers. [L Sp 1957, c 1, pt of §2; Supp, §121-…

§235-105 Failure to keep records, render returns, or make reports by responsible persons. The penalties provided by sections 231-34, 231-35, and 231-36 shall apply to any person, whether acting as principal, agent, officer, or director for oneself, itself, or another person and s…

§235-107 Procedure upon failure to file return. If any taxpayer or employer liable to make and file a return under this chapter fails, neglects, or refuses to make and file a return as required within the time prescribed, or declines to authenticate a return if made, the departme…

§235-108 Audit of return; procedure; additional taxes. (a) Audit. The director of taxation or a responsible person designated by the director to act in the premises for the purpose of verification or audit of a return made by the taxpayer or employer, or for the purpose of making…

§235-109 Jeopardy assessments, security for payment, etc. Section 231-24 shall apply to the taxes imposed by this chapter, both in respect of taxpayers and employers. [L Sp 1957, c 1, pt of §2; Supp, §121-43; HRS §235-109]

§235-110 Credits and refunds. (a) If the taxpayer has paid as an installment of the tax more than the amount determined to be the correct amount of such installment, the overpayment shall be credited against the unpaid installments, if any. If the amount already paid, whether or …

§235-110.2 Credit for school repair and maintenance. (a) There shall be allowed to each taxpayer licensed under chapter 444, 460J, or 464, who is subject to the tax imposed by this chapter, and does not owe the State delinquent taxes, penalties, or interest, a credit for contribu…

[§235-110.25] Healthcare preceptor tax credit. (a) There shall be allowed to each taxpayer subject to the tax imposed by this chapter, a healthcare preceptor tax credit that shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the …

[§235-110.32] Renewable fuels production tax credit. (a) Each year during the credit period, there shall be allowed to each taxpayer subject to the taxes imposed by this chapter a renewable fuels production tax credit that shall be applied to the taxpayer's net income tax liabili…

§235-110.51 Technology infrastructure renovation tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter, an income tax credit which shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for …

§235-110.6 Fuel tax credit for commercial fishers. (a) Each principal operator of a commercial fishing vessel who files an individual or corporate net income tax return for a taxable year may claim an income tax credit under this section against the Hawaii state individual or cor…

[§235-110.65] Ship repair industry tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter a ship repair industry tax credit that shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter. (b) Th…

§235-110.7 Capital goods excise tax credit. (a) There shall be allowed to each taxpayer subject to the tax imposed by this chapter a capital goods excise tax credit, which shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the ta…

§235-110.8 Low-income housing tax credit. [Repeal and reenactment on December 31, 2027. L 2021, c 226, §2.] (a) As modified herein, section 42 (with respect to low-income housing credit) of the Internal Revenue Code shall be operative for the purposes of this chapter as provided …

§235-110.9 High technology business investment tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter a high technology business investment tax credit that shall be deductible from the taxpayer's net income tax liability, if any, impo…

§235-110.91 Tax credit for research activities. [Section repealed January 1, 2030. L 2024, c 139, §2.] (a) Section 41 (with respect to the credit for increasing research activities) and section 280C(c) (with respect to certain expenses for which the credit for increasing research…

§235-110.93 Important agricultural land qualified agricultural cost tax credit. (a) There shall be allowed to each taxpayer an important agricultural land qualified agricultural cost tax credit that may be claimed in taxable years beginning after the taxable year during which the…

§235-111 Limitation period for assessment, levy, collection, or credit; net operating loss carrybacks. (a) General rule. The amount of income taxes imposed by this chapter (also the amount of income taxes imposed by any preceding law of the State) and the liability of any employe…

§235-112 Time for assessment of deficiency attributable to gain upon conversion. (a) If a taxpayer has made the election provided in section 1033(a)(2)(A) of the Internal Revenue Code, the rules stated in this section apply. (b) The statutory period for the assessment of any defi…

§235-113 Time for assessment of deficiency attributable to gain upon sale of a residence. (a) If after December 31, 1957, a taxpayer during a taxable year sells at a gain property used by the taxpayer as the taxpayer's principal residence, the rules stated in this section apply. …

APPEAL §235-114 Appeals. (a) Any person aggrieved by any assessment of the tax or liability imposed by this chapter may appeal from the assessment in the manner and within the time hereinafter set forth. Appeal may be made either to the taxation board of review or to the tax appe…

GENERAL PROVISIONS §235-115 Assessments, etc., prima facie proof. The effect of the notices of assessments and records prepared by or under the authority of the department of taxation shall be as set forth in sections 231-20 and 235-107. [L Sp 1957, c 1, pt of §2; am L Sp 1959 2d…

§235-116 Disclosure of returns unlawful; penalty. All tax returns and return information required to be filed under this chapter shall be confidential, including any copy of any portion of a federal return that may be attached to a state tax return, or any information reflected i…

§235-117 Reciprocal supplying of tax information. Notwithstanding section 235-116, the department may permit the Secretary of the Treasury of the United States, the Commissioner of Internal Revenue, the Multistate Tax Commission, or the proper officer of any state or territory im…

§235-118 Rules and regulations. Except as otherwise provided in this chapter, the department of taxation shall prescribe and have printed all needful rules and regulations for the enforcement of this chapter and such rules and regulations so made shall have the force and effect o…

§235-119 Taxes, state realizations. All income taxes shall be for the use of the State and shall be paid into the state treasury at such times as the director of finance shall direct. [L Sp 1957, c 1, pt of §2; am L Sp 1959 2d, c 1, §14; am L 1963, c 114, §1; Supp, §121-52; HRS §…

§235-12.5 Renewable energy technologies; income tax credit. (a) Each individual or corporate taxpayer that files an individual or corporate net income tax return for a taxable year may claim a tax credit under this section against the Hawaii state individual or corporate net inco…

PART VII. HAWAII S CORPORATION INCOME TAX ACT [§235-121] Title; definitions; federal conformity; construction. (a) The title of this part shall be the Hawaii S corporation income tax act. (b) For purposes of this part, the following terms shall have the following meanings: "C cor…

§235-122 Taxation of an S corporation and its shareholders. (a) An election under section 1361(b)(3) and (e), or 1362(a) of the Internal Revenue Code shall be effective for the purposes of this chapter. Evidence of a valid election for federal purposes shall be submitted to the d…

[§235-123] Modification and characterization of income. (a) The pro rata share of each resident and nonresident shareholder in the income attributable to the State of an S corporation, for the purposes of section 235-122(c), shall be subject to the modifications to corporate inco…

[§235-124] Basis and adjustments. (a) The initial basis of a resident shareholder in the stock of an S corporation and in any indebtedness of the corporation owed to the shareholder shall be determined in the manner provided under the Internal Revenue Code. The initial basis shal…

[§235-125] Carryforwards and carrybacks; loss limitation. (a) Carryforwards and carrybacks to and from taxable periods of an S corporation shall be restricted in the manner provided in section 1371(b) of the Internal Revenue Code. (b) The aggregate amount of losses or deductions …

[§235-125.5] Transition rule. (a) A corporation for which an S election was in effect for federal purposes but not for Hawaii purposes for the taxable period immediately preceding the taxable period beginning after December 31, 1989, may elect before December 31, 1992, not to hav…

[§235-126] Part-year residence. For purposes of this part if a shareholder of an S corporation is both a resident and nonresident of this State during any taxable period, the shareholder's pro rata share of the S corporation's income attributable to the State and income not attri…

[§235-127] Distributions. (a) Subject to subsection (c), a distribution made by an S corporation with respect to its stock to a resident shareholder shall be taken into account by the shareholder for purposes of section 235-4 and shall be taxable under section 235-51 to the exten…

[§235-128] Returns; shareholder agreements; mandatory payments. (a) An S corporation which engages in activities in this State which would subject a C corporation to the requirement to file a return under section 235-92 shall file with the department an annual return, in the form…

§235-129 Tax credits. (a) For purposes of section 235‑55, each resident shareholder shall be considered to have paid a tax imposed on the shareholder in an amount equal to the shareholder's pro rata share of any net income tax paid by the S corporation to a state that does not me…

[§235-13] Sales of residential land to lessees; involuntary conversion. (a) A sale by an organization exempt under section 501(c)(3), or treated as an estate or trust under Subchapter J of the Internal Revenue Code to a lessee of the entire interest in the land of the lessor orga…

[§235-130] LIFO recapture. If an S corporation is subject to last in first out (LIFO) recapture pursuant to section 1363 of the Internal Revenue Code, then:

[§235-15] Tax credits to promote the purchase of child passenger restraint systems. (a) Any taxpayer who files an individual income tax return for a taxable year may claim an income tax credit under this section against the Hawaii state individual net income tax. (b) The tax cred…

§235-17 Motion picture, digital media, and film production income tax credit. [Repeal and reenactment on January 1, 2033. L 2022, c 217, §4.] (a) Any law to the contrary notwithstanding, there shall be allowed to each taxpayer subject to the taxes imposed by this chapter, an inco…

[§235-18] Deposit beverage container deposit exemption. This chapter shall not apply to amounts received as a deposit beverage container deposit collected under part VIII of chapter 342G. [L 2004, c 241, §1]

[§235-19] Exceptional trees; tax deduction. (a) Subject to subsection (b), there shall be allowed as a deduction from gross income the amount, not to exceed $3,000 per exceptional tree, for amounts paid, excluding interest paid or accrued thereon, during the taxable year by an in…