Effective immediately, the Hawaii Department of Taxation (DOT) has updated its voluntary disclosure process, which is an informal DOT practice that allows taxpayers to voluntarily disclose any liability for all Hawaii taxes including general excise tax, transient accommodations tax, corporate net income tax, and individual net income tax. The updated process supersedes Tax Information Release No. 2010-07.
In return for a voluntary disclosure, the taxpayer may avoid criminal tax investigation, as well as a civil audit, assessment, and collection. A voluntary disclosure will be considered by the DOT when a taxpayer fully cooperates with the DOT in determining the taxpayer’s state tax liability. All circumstances relevant to state tax law must be disclosed truthfully, accurately, and completely. Any misrepresentation by the taxpayer will cease further consideration of the disclosure. Final acceptance of any voluntary disclosure is at the DOT’s discretion.
The process does not abrogate the independent authority of the Department of the Attorney General or the Offices of the County Prosecutor to investigate or initiate criminal proceedings related to Hawaii tax crimes. In addition, the treatment of similarly situated taxpayers is not relevant to the voluntary disclosure process.
Among other topics, the updated information discusses what constitutes a voluntary disclosure, who is not eligible for voluntary disclosure, the DOT’s look-back period, penalties and interest, and the process for voluntary disclosure.
Tax Information Release No. 2016-02, Hawaii Department of Taxation, May 25, 2016, ¶201-006