DAVID Y. IGE

LINDA CHU TAKAYAMAGOVERNORDIRECTORDOUGLAS S. CHINDAMIEN A. ELEFANTE

LIEUTENANT GOVERNOR

DEPUTY DIRECTOR

STATE OF HAWAII
DEPARTMENT OF TAXATION
830 PUNCHBOWL STREET, ROOM 221
HONOLULU, HAWAII 96813
http://tax.hawaii.gov/
Phone: (808) 587-1577 / Fax: (808) 587-1584
Email: Tax.Rules.Office@hawaii.gov

April 17, 2018

DEPARTMENT OF TAXATION ANNOUNCEMENT NO. 2018-06
RE:Relief for Taxpayers Affected by Heavy Rains and Flooding beginning April 14,
2018 in the City and County of Kauai

As a result of the heavy rains and flooding from storms on April 14, 2018 that caused
extensive damage in Kauai county, Governor David Y. Ige signed an emergency proclamation
on April 15, 2018, designating the county of Kauai as a disaster area.
This Tax Announcement describes various forms of relief that are available to taxpayers
who were affected by the disaster.
I.

MARK TAX RETURNS "2018 KAUAI FLOOD RELIEF"

The Department of Taxation (Department) recognizes that taxpayers affected by thedisaster may have difficulty meeting their tax obligations. Accordingly, the Department willconsider requests by affected taxpayers for extensions to file and pay Hawaii taxes and forwaivers of penalties and interest on a case-by-case basis. The relief provided by this section
applies to all taxes that the Department administers, including general excise, transient
accommodations, net income, tobacco, and liquor.
All Hawaii tax returns in which relief is requested in connection with the disaster should
be clearly marked "2018 Kauai Flood Relief" on the top center of the return. Do not write "2018Kauai Flood Relief" in the "DO NOT WRITE IN THIS SPACE" area in the upper right corner of
any return. Taxpayers who were affected by the disaster, but whose address on file with theDepartment is not in Kauai county, should also include a brief statement as to how the disasteradversely affected their ability to meet their tax obligations.
II.

CASUALTY LOSSESFor purposes of Hawaii income tax law, taxpayers may claim all of the casualty loss
deductions allowed by section 165 of the Internal Revenue Code of 1986, as amended. Pleaserefer to Internal Revenue Service Publication 547 for more information. Casualty losses onbusiness property are deductible in full. The first $100 of eligible unreimbursed casualty losses
on nonbusiness property are not deductible. The remaining loss is deductible to the extent it

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April 17, 2018
Page 2 of 2

exceeds 10 percent of the taxpayer's Hawaii adjusted gross income. The following options areavailable after determining the amount of losses:
1. In the event that the President of the United States of America issues proclamation of anatural disaster, taxpayers may elect to claim a casualty loss deduction on their 2017
income tax returns, instead of on their 2018 income tax returns, for losses from thefederally declared disaster (an amended return may need to be filed if this option ischosen);
2. Taxpayers may elect to deduct the losses on their 2018 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, resulting in a refund
for taxes already paid. If properly elected, a net operating loss may be used to lowertaxes in a later year. A taxpayer does not have to be a business to claim this benefit; alltaxpayers may claim this carryback or carryover net operating loss.
III.

GENERAL EXCISE TAX EXEMPTION FOR INSURANCE PROCEEDSRECEIVED BECAUSE OF A NATURAL DISASTER

Pursuant to section 237-24.7(6), Hawaii Revised Statutes, amounts received underproperty and casualty insurance policies for damage or loss of inventory used in a trade orbusiness located within an area declared a disaster by the governor are exempt from general
excise tax. Please refer to the instructions for Forms G-45 and G-49 for more information.
Tax forms and information are available on the Department's website at tax.hawaii.gov.
Additional information is available by calling the Technical Section during business hours at(808) 587-1577, or by e-mailing tax.technical.section@hawaii.gov.

LINDA CHU TAKAYAMA
Director of Taxation