LINDA LINGLEKURT KAWAFUCHIGOVERNORDIRECTOR OF TAXATIONJAMES R. AIONA, JR.

SANDRA L. YAHIRO

LT. 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

March 5, 2008

DEPARTMENT OF TAXATION ANNOUNCEMENT NO. 2008-02
RE: New Electronic Income Tax Form N-317, "Statement By Qualified High Technology
Business"
Act 206 (SLH 2007) requires certain qualified high technology businesses ("QHTB") asdefined by § 235-110.9, Hawaii Revised Statutes ("HRS"), to file an electronic annual surveywith the Department.
In general, for purposes of § 235-110.9, HRS, a QHTB is a business that employs orowns capital or property in Hawaii, or maintains an office in Hawaii, and meets either theActivity Test or the Gross Income Test.
••

To meet the Activity Test, more than 50% of the business's total business activities must
be qualified research as defined in § 235-110.9, HRS and more than 75% of the qualified
research must be conducted in Hawaii.
To meet the Gross Income Test, more than 75% of the business's gross income must bederived from qualified research as defined in § 235-110.9, HRS and the income from thisqualified research must be received from:a.
Products sold from, manufactured, or produced in Hawaii; orb.
Services performed in Hawaii.
WHO MUST FILE NEW ELECTRONIC FORM N-317

A QHTB that accepts a cash investment for which a tax credit may be claimed pursuant
to § 235-110.9, HRS must file the electronic annual survey for the calendar year that the cash
investment was accepted and each of the following four calendar years.
Since this new electronic form only begins with calendar year 2007, a QHTB that
accepted a cash investment in calendar years 2003, 2004, 2005, 2006, or 2007 must file theelectronic Form N-317 for calendar year 2007. If the QHTB accepted cash investments in thoseprevious calendar years and did not file the required paper Form N-317 for the year ofinvestment and the following four calendar years up to calendar 2007, please contact theDepartment for the appropriate paper forms.
FILING DEADLINES FOR NEW FORM N-317
The new electronic income tax Form N-317 must be completed and filed by June 30 ofDepartment of Taxation Announcement No. 2008-02
March 5, 2008
Page 2 of 2
the year following any calendar year for which a taxpayer is required to file.
The new electronic income tax Form N-317 is now available on the Department'swebsite.
WHERE TO FILE NEW FORM N-317
This form is to be filed exclusively by electronic means through the Department of
Taxation's e-filing website. The current address of the Department's e-filing website is
http://ehawaii.gov/efile/.
The new form N-317 must be filed electronically. The Department will not accept paper
copies of income tax Form N-317 for calendar years after 2006. Also, absent special permission
from the Director, the Department will not accept income tax Form N-317 submitted to theDepartment by any means, electronic or otherwise (including email, fax, etc.) other than throughthe Department's e-filing website.
APPLICABLE PENALTIES
If the QHTB accepted a cash investment after June 30, 2007 for which a tax credit may
be claimed under § 235-110.9, HRS, failure to timely file this Form N-317 will result in apenalty of $1,000 per month for each month the annual survey is not filed, not to exceed a total
of $6,000 for every annual survey not filed.
Furthermore, the failure to file, or to provide complete and accurate information, may
result in applicable civil and/or criminal penalties.
PAPER FORM N-317 OBSOLETE
For tax years after 2006, the paper income tax Form N-317 is no longer available. The
current Form N-317 is the annual survey required by Act 206 and must be filed electronically. Inorder to avoid confusion, the Department's website no longer allows taxpayers to download thepaper version of the income tax Form N-317 for previous calendar years. If a taxpayer isrequired to file an income tax Form N-317 for calendar years 2002 through 2006, please contact
the Department for a copy of the relevant paper form.
ADDITIONAL INFORMATION
For more information, please contact the Rules Office at 808-587-1577.

KURT KAWAFUCHI
Director of Taxation