NEIL ABERCROMBIE

FREDERICK D. PABLO

GOVERNORDIRECTOR OF TAXATIONBRIAN SCHATZRANDOLF L. M. BALDEMORLT. GOVERNOR

DEPUTY DIRECTOR

STATE OF HAWAII

DEPARTMENT OF TAXATIONP.O. BOX 259
HONOLULU, HAWAII 96809
PHONE NO: (808) 587-1510
FAX NO: (808) 587-1560

April 14, 2011

DEPARTMENT OF TAXATION ANNOUNCEMENT NO. 2011-06
RE:Relief for Taxpayers Affected by the March 11, 2011 Tsunami

In light of the recent earthquake that shook Japan on March 10, 2011, and generated atsunami that reached the State of Hawaii on March 11, 2011, the Department of Taxation (the"Department") recognizes that affected taxpayers may have difficulty meeting their tax obligations.
The Department, therefore, will consider requests for extensions to file and pay other taxes andwaivers of penalties and interest on a case-by-case basis. See Hawaii Revised Statutes (HRS) §§231-3(12) and 235-98. In addition, on April 8, 2011, the President of the United States of America
issued a proclamation of a natural disaster in Hawaii. Therefore, the Department will also follow
federal casualty loss provisions allowed in such event.

I.

Mark Returns "2011 TSUNAMI Relief"

All returns that are filed under the provisions of this Announcement should be clearlymarked "2011 Tsunami Relief" on the top center of the return. Do not place the words "2011
Tsunami Relief" in the "DO NOT WRITE IN THIS SPACE" area in the upper right corner of any
return. The Department recognizes that the tsunami impacted the entire State, whether the impact on
taxpayers was temporary loss of power, property loss, or injury. Taxpayers and tax practitioners
who rely on the provisions of this Announcement should also include a brief statement as to how thedisaster adversely affected their ability to meet their tax obligations.
II.

Hawaii Employer's Withholding Taxes

Taxpayers whose Hawaii employer's withholding taxes were due on March 15, 2011, andwho, as a result of the tsunami could not meet this due date, may file their returns and pay the tax
due by April 15, 2011, without incurring any penalties or interest. No late filing penalty will be
imposed for returns that are postmarked on or before April 15, 2011. This remission of penalties andinterest also applies to those who are required under § 235-62, HRS, to file monthly and remit
payments on a semi-weekly schedule (tax payment may be made when the return is filed).

Department of Taxation Announcement 2011-06
April 14, 2011
Page 2 of 3
Employers who have employees at several locations in the State, including locations notaffected by the tsunami, must file their returns on time. If complete information from locations
affected by the tsunami is not available by the due date of the return, an amended return should befiled when the information becomes available.
III.

Special Consideration

The Department will consider requests for extensions to file and pay other taxes and waiversof penalties and interest on a case-by-case basis. Each request should include a statement as to how
the 2011 statewide tsunami adversely impacted the taxpayer.
IV.

Casualty Losses

For purposes of the Hawaii income tax law, taxpayers may claim all of the casualty loss
deductions allowed by § 165 of the Internal Revenue Code of 1986, as amended, (See IRS
Publication 547 for more information). Casualty losses on business property are deductible in full.
The first $100 of the eligible unreimbursed casualty losses on nonbusiness property is notdeductible. The remaining loss is deductible to the extent it exceeds 10 per cent (10%) of thetaxpayer's Hawaii adjusted gross income. The following options are available after determination of
the amount of losses:
1. The President of the United States of America issued a proclamation of a natural disaster inHawaii. As a result, taxpayers may claim a casualty loss deduction on their 2010 income tax
returns, instead of on their 2011 income tax returns, for losses from the tsunami occurring onMarch 11, 2011 (an amended return must be filed if this option is chosen); or
2. Taxpayers may elect to deduct the losses on their 2011 income tax returns; or
3. If taxpayers’ casualty losses are more than income, a net operating loss may result. A net
operating loss may be used to lower taxes in an earlier year, allowing receipt of a refund fortaxes already paid. If properly elected, a net operating loss may be used to lower taxes in alater year. Taxpayers do not have to be a business to claim this benefit; all taxpayers mayclaim this carryback or carryover net operating loss.
V. General Excise Tax Exemption for Insurance Proceeds Received Because of a
Natural Disaster, § 237-24.7(6), HRS
On March 11, 2011, the Governor signed a State Disaster Proclamation pursuant to § 209-2,
HRS that a disaster occurred in the State of Hawaii. Therefore, taxpayers may be eligible for ageneral excise tax exemption if they receive amounts under property and casualty insurance policies
for damage or loss of inventory used in a trade or business. Please refer to the instructions for Forms
G-45 and G-49 for more information.

Department of Taxation Announcement 2011-06
April 14, 2011
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Tax forms and information are available on the Department's website at www.hawaii.gov/tax.
Tax forms and publications are available through the Department's request line at 808-587-4242, or
toll-free from the neighbor islands and continental United States at 1-800-222-3229. This service isavailable 24 hours a day, 7 days a week. Additional information is available by calling the Taxpayer
Services Branch during business hours at 587-4242, or toll-free at 1-800-222-3229, or by e-mailingTaxpayer.Services@hawaii.gov.

FREDERICK D. PABLO
Director of Taxation