DAVID Y. IGE

MARIA E. ZIELINSKI

GOVERNORDIRECTOR OF TAXATIONSHAN TSUTSUIJOSEPH K. KIM

LT. GOVERNOR

DEPUTY DIRECTOR

STATE OF HAWAII

DEPARTMENT OF TAXATIONP.O. BOX 259
HONOLULU, HAWAII 96809

PHONE NO: (808) 587-1540
FAX NO: (808) 587-1560

April 4, 2016

DEPARTMENT OF TAXATION ANNOUNCEMENT NO. 2016-04
RE:Adoption of Temporary Hawaii Administrative Rules Relating to: (1) Act 204, Session
Laws of Hawaii 2015; (2) Disclosure of Tax Return Information to Persons with aMaterial Interest in the Return; and (3) Revocation of General Excise Tax Licenses
Because of Abandonment.

The Department of Taxation (Department) announces the adoption of temporary
administrative rules, as described below, which will take effect on April 4, 2016 and expire on
October 4, 2017. Pursuant to section 231-10.7, Hawaii Revised Statutes (HRS), temporary rules
have the same force and effect as any other administrative rules.
Temporary Administrative Rules Relating to Act 204, Session Laws of Hawaii 2015
The temporary rules implement Act 204, Session Laws of Hawaii 2015, which requiresthat operators and plan managers of transient accommodations designate an on-island local
contact and display the contact's name, phone number and email address inside the unit, as wellas in online advertisements or to the guest upon check-in. Act 204 also requires Transient
Accommodations Tax license numbers be displayed both inside the unit and in all online
advertisements, either directly in the advertisement or by a link, and imposes fines on operators,
plan managers, and transient accommodations brokers for failure to comply.
The temporary rules explain how the Department will issue citations and fines forviolations of Act 204, explain instances where the Department will issue a written warning inlieu of a citation, and provide procedures for appeals.
Temporary Administrative Rules Relating to Disclosure of Tax Return Information toPersons with a Material Interest in the Return
The temporary rules clarify the term “persons with a material interest in the return, return
information, or report” in section 237-34, HRS, which provides that tax return information may
be disclosed to such persons. The temporary rules clarify that persons with a material interest ina return include persons whose tax liability is based on the gross income, deductions,exemptions, or tax liability of the taxpayer.
In certain audit situations, to properly review and assess the appropriate tax, theDepartment must examine more than one taxpayer’s return. For example, when a generalcontractor takes a subcontractor deduction pursuant to section 237-13(3), HRS, the Department
will examine the general contractor’s and subcontractor’s returns. If an assessment is madeDepartment of Taxation Announcement No. 2016-04
April 4, 2016
Page 2 of 2against the general contractor, the Department may need to disclose relevant portions of thesubcontractor’s return to the general contractor. The temporary rules clarify that the Department
is authorized to disclose tax return information under these and similar circumstances.
Temporary Administrative Rules Relating to Revocation of General Excise Tax Licenses
Because of Abandonment
The temporary rules allow the Department to revoke abandoned general excise tax
licenses by publishing notice of its intent to revoke the licenses on the Department's website for aperiod of 45 days. Pursuant to section 18-231-3-14.17(c), Hawaii Administrative Rules, alicense is deemed abandoned if the taxpayer has not filed any returns for five years, not includingtime periods when the license is on inactive status.
Copies of the rules are available at the Department’s website at tax.hawaii.gov. For more
information, please contact the Rules Office at 808-587-1530 or by email at
Tax.Rules.Office@hawaii.gov.

MARIA E. ZIELINSKI
Director of Taxation