Hawaii ~ Sales and Use Tax: Change in Mandatory Tax Filing and Payment Frequency Announced

CCH Tax Day Report

The Hawaii Department of Taxation (DOT) has announced changes to certain taxpayers’ mandatory general excise tax; transient accommodations tax; and rental motor vehicle, tour vehicle, and car-sharing vehicle surcharge tax filing and payment frequency to require more frequent filings. Monthly filing and payment of the taxes is the default frequency for all taxpayers subject to these taxes. The Director of Taxation may permit taxpayers to file periodic returns on a quarterly or semiannual basis if doing so will not unduly jeopardize the collection of taxes and the taxpayer’s tax liability does not exceed certain statutory thresholds. Currently, under the statutory thresholds, a taxpayer’s total tax liability cannot exceed $4,000 per calendar or fiscal year for a quarterly filing frequency, and a taxpayer’s total tax liability cannot exceed $2,000 per calendar or fiscal year for a semiannual filing frequency. However, according to the DOT, taxpayers who are filing returns more frequently than required under the thresholds are filing returns that cannot be properly tracked. To address this, the DOT will change the required filing frequency of taxpayers who file returns more frequently than required. Taxpayers who do not want their mandatory filing frequency to be increased to monthly must begin to file properly based on the statutory thresholds. Filing frequency changes will be effective for the month following the filing of the return that triggered the filing and payment frequency change. For example, quarterly and semiannual filers who file a return for the month ending July 31, 2017, must begin to file monthly returns starting with the month ending August 31, 2017. Monthly returns must be filed and the tax due must be paid on or before the 20th day of the calendar month following the month being reported. Failure to comply with the requirements will result in the assessment of penalties and interest. The filing frequency of quarterly and semiannual taxpayers who file properly according to their tax liability thresholds will not be changed. The DOT will begin mandating monthly filings beginning in August 2017, and has also provided a list of initial due dates in the announcement. A taxpayer whose filing frequency has been changed to monthly may request that the filing frequency be changed to quarterly or semiannual filings.

Announcement No. 2017-04, Hawaii Department of Taxation, May 26, 2017, ¶201-020

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