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

November 18, 2011

DEPARTMENT OF TAXATION ANNOUNCEMENT NO. 2011-28
RE:IRS Notice 2011-70 and Statute of Limitations for Innocent Spouse Relief

Internal Revenue Service Notice 2011-70, effective July 25, 2011, and operational forpurposes of Hawaii income tax law, expands the period within which individuals may request
equitable relief from joint and several liability under section 6015(f) of the Internal Revenue
Code (IRC).
BACKGROUND
Hawaii Revised Statutes (HRS) section 235-2.45(k) makes IRC § 6015 operative forpurposes of Hawaii income tax law. In the case of married individuals who file joint income tax
returns, each spouse is jointly and severally liable under HRS § 235-93. IRC § 6015 provides forrelief from joint and several liability in certain circumstances (known as "Innocent Spouse
Relief"). IRC § 6015(f) provides for equitable relief from understatements and underpayments
when relief is not available under IRC § 6015(b) or (c). By regulation, the Department ofTreasury established a two-year deadline to request equitable relief under subsection (f). This
two-year deadline was incorporated into Hawaii Tax Law.
The Department of Treasury and the IRS have concluded that the regulations issued
under IRC § 6015 should be revised so that individuals who request equitable relief under IRC §6015(f) will no longer be required to submit a request for equitable relief within two years of thefirst collection activity against the requesting spouse. In its Notice 2011-70, the IRS has created
new, transitional rules for the period of time within which a requesting spouse must request
equitable relief under IRC § 6015(f). The Department of Taxation will follow the transitionalrules laid out in Notice 2011-70.
TRANSITIONAL RULES
Pending modification of the Treasury regulations under IRC § 6015(f) to formally
remove the two-year deadline for requests for equitable relief, the following transitional rules
apply:
Future Requests: Individuals may request equitable relief under IRC § 6015(f) afterJuly 25, 2011 without regard to when the first collection activity was taken. Requests

Department of Taxation Announcement No. 2011-28
November 18, 2011
Page 2 of 2
must be filed within the period of limitation on collection for requests relating to
unpaid tax liabilities under HRS § 235-111(a)1 or, for any credit or refund of tax,
within the period of limitation under HRS § 235-111(b).2
Requests Pending with the Department: For individuals who have already submitted
requests for relief under IRC § 6015(f) that the Department has under consideration
or in suspense, the Department will consider the request for equitable relief even if
the request was submitted more than two years after the first collection activity was
taken, so long as the applicable period of limitation under HRS § 235-111(a) or (b)was open when the request for equitable relief was filed with the Department.
Individuals with cases under consideration or in suspense should not reapply for relief
under IRC § 6015(f).

Requests that Were Denied Solely for Untimeliness and Not Litigated: Individuals
whose requests for equitable relief under IRC § 6015(f) were denied by theDepartment solely for untimeliness and were not litigated may reapply for relief
under IRC § 6015(f) after the effective date of this Announcement by filing a newForm N-379: Request for Innocent Spouse Relief. In considering this request forrelief, the Department will treat the original Form N-379 as a claim for refund for
purposes of the period of limitation on refunds provided by HRS § 235-111(b). Thismeans that any amount for which a refund was available as of the date the originalForm N-379 was filed and any amount subsequently collected may be eligible forrefund if warranted by the Department's reconsideration of equitable relief. TheDepartment can only grant relief with respect to unpaid liabilities if the period oflimitation on collection, under HRS § 235-111(a), remains open as of the date of thereapplication for relief.

These transitional rules are effective as of July 25, 2011. They may be relied upon until
final regulations modifying the two-year rule are published in the Federal Register. See IRS
Notice 2011-70 for more information. For more information related to this Announcement,
please contact the Rules Office at 808-587-1577.

FREDERICK D. PABLO
Director of Taxation
1

For any tax assessed prior to July 1, 2009, the statue of limitations on collection is June 30, 2024. Therefore, thedeadline for Innocent Spouse Relief requests relating to tax assessed prior to July 1, 2009 is June 30, 2024. For anytax assessed July 1, 2009 or later, the deadline for Innocent Spouse Relief requests is fifteen years from the date of
the final assessment.
2Generally, three years from the time the return was filed or the due date of the return, or two years from the time
the tax was paid, whichever is later.