§231-39 Additions to taxes for
noncompliance or evasion; interest on underpayments and overpayments. (a)
Except as otherwise provided, this section shall apply to every tax or revenue
law of the State that provides for the filing with the director of taxation of
a return or statement of the tax or the amount taxable.
(b) There shall be added to and become a part
of the tax imposed by such tax or revenue law, and collected as such:
(1) Failure to file tax return. In case of failure
to file any tax return required to be filed on the date prescribed therefor
(determined with regard to any extension of time for filing), unless it is
shown that the failure is due to reasonable cause and not due to neglect, there
shall be added to the amount required to be shown as tax on the return five per
cent of the amount of the tax if the failure is for not more than one month,
with an additional five per cent for each additional month or fraction thereof
during which the failure continues, not exceeding twenty-five per cent in the
aggregate. For purposes of this paragraph, the amount of tax required to be
shown on the return shall be reduced by the amount of any part of the tax which
is paid on or before the date prescribed for payment of the tax and by the
amount of any credit against the tax which may be claimed upon the return.
This paragraph shall not apply to any failure to file a declaration of
estimated tax required by section 235-97.
(2) Failure to pay tax.
(A) If any part of any underpayment is due to
negligence or intentional disregard of rules (but without intent to defraud),
there shall be added to the tax an amount up to twenty-five per cent of the
underpayment as determined by the director.
(B) If any part of any underpayment of tax
required to be shown on a return is due to fraud, there shall be added to the
tax an amount up to fifty per cent of the underpayment as determined by the
director.
(C) If any penalty is assessed under
subparagraph (B) (relating to fraud) for an underpayment of tax which is
required to be shown on a return, no penalty under paragraph (1) (relating to
failure to file the return) shall be assessed with respect to the same
underpayment.
(3) Failure to pay tax after filing timely returns.
If a return is filed on or before the date prescribed therefor and the amount
shown as tax on the return is not completely paid within sixty days of the
prescribed filing date, there shall be added to the unpaid tax an amount up to
twenty per cent as determined by the director.
(4) Interest on underpayment or nonpayment of tax.
(A) If any amount of tax is not paid on or
before the last date prescribed for payment, interest on such amount at the
rate of two-thirds of one per cent a month or fraction of a month shall be paid
for the period beginning with the first calendar day after the date prescribed
for payment, section 231-21 to the contrary notwithstanding, to the date paid.
(B) If the amount of any tax is reduced by
reason of a carryback of a net operating loss allowed under chapter 235, such
reduction in tax shall not affect the computation of interest under this
paragraph for the period ending with the last day of the taxable year in which
the net operating loss arises.
(C) Interest prescribed under this paragraph
on any tax shall be paid upon notice and demand, and shall be assessed,
collected, and paid in the same manner as taxes.
(D) No interest under this paragraph shall be
imposed on interest provided by this paragraph.
(E) If any portion of a tax is satisfied by
credit of any overpayment, then no interest shall be imposed under this
paragraph on the portion of the tax so satisfied for any period during which,
if the credit had not been made, interest would have been allowable with
respect to the overpayment.
(F) Interest prescribed under this paragraph
on any tax may be assessed and collected at any time during the period within
which the tax to which the interest relates may be collected.
(G) This paragraph shall not apply to any
failure to pay estimated tax required by section 235-97.
(c) No taxpayer shall be exempt from any
penalty or interest by reason of having contested the tax, but only to the
extent that the tax is adjudged to be excessive or contrary to law. [L 1953, c
125, §4; RL 1955, §115-43; am L 1967, c 134, §1; HRS §231-39; am L 1974, c 138,
§1; am L 1988, c 386, §1; am L 1991, c 136, §2; am L 1992, c 102, §2; am L
1994, c 15, §1]
Cross References
Cost recovery fees for the administration of taxes, see
§231-25.5.
Case Notes
Erroneous belief that no tax liability existed held not "reasonable
cause" within meaning of subsection (b)(1). 57 H. 436, 559 P.2d 264
(1977).
Determination of the tax court that online travel companies
failed to meet their burden to demonstrate their honest belief that they were
not responsible for filing general excise tax returns was not clearly
erroneous, where the court determined the companies failed to demonstrate a
fact that indicated a dispute as to whether they were required to file general
excise tax returns and the companies failed to demonstrate that they were aware
of any department of taxation or attorney general letter, opinion, or
communication to the contrary. 135 H. 88, 346 P.3d 157 (2015).
In light of §232-13, department of taxation assessments,
including penalties for failure to pay general excise tax due to negligence or
intentional disregard of the rules, are prima facie correct and the burden is
on the taxpayer to prove otherwise. 135 H. 88, 346 P.3d 157 (2015).
Tax court's determination that "there are no genuine
issues of material facts on the question of penalties for failure to pay
general excise taxes" was not clearly erroneous, where appellant online
travel companies did not argue that they presented any evidence rebutting the
presumption of negligence or establishing a genuine issue of material fact that
would preclude summary judgement and the companies did not point to any such
evidence in the record. 135 H. 88, 346 P.3d 157 (2015).
Notes of Decisions
In Re the Tax Appeal of Grayco Land Escrow, Ltd., 559 P.2d 264 (Haw. 1977).
· cites it 8× “DID GRAYCO ESTABLISH REASONABLE CAUSE FOR ITS FAILURE TO FILE A GENERAL EXCISE TAX RETURN WITHIN THE PURVIEW OF HRS § 231-39(1X11)? In addition to the assessment of the general excise tax.”
In re Tax Appeal of Priceline.com, Inc. v. Dir. of Taxation., 436 P.3d 1155 (Haw. 2019).
· cites it 4× “Specifically, the Director argued that "the income-reducing provision in HRS § 237-18(f) 15 that applies to 'tourism related services' simply does not encompass" the merchant rental car transactions based on legislative history and principles of statutory construction.”
Tax Appeal of Lewis v. Kawafuchi, 116 P.3d 711 (Haw. App. 2005).
· cites it 3× “If the taxpayer chose not to pay the tax when appealing to the board, and the decision by the board is appealed by the taxpayer or the decision by the board in favor of the department is not appealed, the taxpayer must pay the tax so assessed plus interest as provided in section…”
Tax Appeal of Grace Bus. Dev. Corp. v. Kamikawa, 994 P.2d 591 (Haw. App. 1999).
· cites it 2× “See HRS § 231-39. In any event, the State’s dictionary argument founders near capsize when it is revealed that the definition quoted conveniently elides further defining material, such as, “[r]ight to payment, whether or not such right is reduced to judgment, liquidated,…”
In re the Tax Appeal of E-Z Serve, Inc., 651 P.2d 469 (Haw. 1982).
“Appellant also contends that it was improper under the law to assess penalties against it since the authority in favor of its legal position is so clear that it has shown that its failure to file a tax return was due to reasonable cause and not due to neglect under §…”
Comm'r, 2009 T.C. Memo. 130 (1970).
“(a) As soon as practicable after each return shall have been filed, the department of taxation shall cause it to be examined and shall compute and determine the amount of the tax payable thereon.”
In re: Tax Appeal of PM & AM Rsch., Inc. v. State (Haw. App. 2025).
“y appeal to the tax appeal court from a decision by the board or to the intermediate appellate court from a decision by the tax appeal court; provided that if the decision by the board or the tax appeal court is appealed by the taxpayer, or the decision by the board in favor of…”
In re: Tax Appeal of Whale Watchers, LLC v. State (Haw. App. 2025).
“y appeal to the tax appeal court from a decision by the board or to the intermediate appellate court from a decision by the tax appeal court; provided that if the decision by the board or the tax appeal court is appealed by the taxpayer, or the decision by the board in favor of…”
In re: Tax Appeal of PM & AM Rsch., Inc. v. State (Haw. App. 2025).
“y appeal to the tax appeal court from a decision by the board or to the intermediate appellate court from a decision by the tax appeal court; provided that if the decision by the board or the tax appeal court is appealed by the taxpayer, or the decision by the board in favor of…”
In re: Tax Appeal of Big Island Sci. Ctr., LLC v. State (Haw. App. 2025).
“y appeal to the tax appeal court from a decision by the board or to the intermediate appellate court from a decision by the tax appeal court; provided that if the decision by the board or the tax appeal court is appealed by the taxpayer, or the decision by the board in favor of…”
— Haw. Rev. Stat. § 231-39(1X11) — 1 case
In Re the Tax Appeal of Grayco Land Escrow, Ltd., 559 P.2d 264 (Haw. 1977).
“DID GRAYCO ESTABLISH REASONABLE CAUSE FOR ITS FAILURE TO FILE A GENERAL EXCISE TAX RETURN WITHIN THE PURVIEW OF HRS § 231-39(1X11)? In addition to the assessment of the general excise tax.”
— Haw. Rev. Stat. § 231-39(b) — 3 cases
In re Tax Appeal of Priceline.com, Inc. v. Dir. of Taxation., 436 P.3d 1155 (Haw. 2019).
“Specifically, the Director argued that "the income-reducing provision in HRS § 237-18(f) 15 that applies to 'tourism related services' simply does not encompass" the merchant rental car transactions based on legislative history and principles of statutory construction.”
In Re the Tax Appeal of Grayco Land Escrow, Ltd., 559 P.2d 264 (Haw. 1977).
“DID GRAYCO ESTABLISH REASONABLE CAUSE FOR ITS FAILURE TO FILE A GENERAL EXCISE TAX RETURN WITHIN THE PURVIEW OF HRS § 231-39(1X11)? In addition to the assessment of the general excise tax.”
— Haw. Rev. Stat. § 231-39(b)(1) — 1 case
In re the Tax Appeal of E-Z Serve, Inc., 651 P.2d 469 (Haw. 1982).
“Appellant also contends that it was improper under the law to assess penalties against it since the authority in favor of its legal position is so clear that it has shown that its failure to file a tax return was due to reasonable cause and not due to neglect under §…”
— Haw. Rev. Stat. § 231-39(b)(2) — 1 case
— Haw. Rev. Stat. § 231-39(b)(2)(A) — 1 case
— Haw. Rev. Stat. § 231-39(b)(4) — 5 cases
Tax Appeal of Lewis v. Kawafuchi, 116 P.3d 711 (Haw. App. 2005).
“If the taxpayer chose not to pay the tax when appealing to the board, and the decision by the board is appealed by the taxpayer or the decision by the board in favor of the department is not appealed, the taxpayer must pay the tax so assessed plus interest as provided in section…”
In re: Tax Appeal of PM & AM Rsch., Inc. v. State (Haw. App. 2025).
“y appeal to the tax appeal court from a decision by the board or to the intermediate appellate court from a decision by the tax appeal court; provided that if the decision by the board or the tax appeal court is appealed by the taxpayer, or the decision by the board in favor of…”
In re: Tax Appeal of Whale Watchers, LLC v. State (Haw. App. 2025).
“y appeal to the tax appeal court from a decision by the board or to the intermediate appellate court from a decision by the tax appeal court; provided that if the decision by the board or the tax appeal court is appealed by the taxpayer, or the decision by the board in favor of…”
In re: Tax Appeal of PM & AM Rsch., Inc. v. State (Haw. App. 2025).
“y appeal to the tax appeal court from a decision by the board or to the intermediate appellate court from a decision by the tax appeal court; provided that if the decision by the board or the tax appeal court is appealed by the taxpayer, or the decision by the board in favor of…”
In re: Tax Appeal of Big Island Sci. Ctr., LLC v. State (Haw. App. 2025).
“y appeal to the tax appeal court from a decision by the board or to the intermediate appellate court from a decision by the tax appeal court; provided that if the decision by the board or the tax appeal court is appealed by the taxpayer, or the decision by the board in favor of…”
— Haw. Rev. Stat. § 231-39(b)(l) — 1 case
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