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

November 3, 2005

DEPARTMENT OF TAXATION ANNOUNCEMENT NO. 2005-19
RE:Adoption of Section 18-235-20.5-01, Hawaii Administrative Rules, Relating to the Imposition of Feesfor (1) the Issuance of High Tech Comfort Rulings and (2) the Certification of (a) the High TechnologyBusiness Investment Tax Credit and (b) the Tax Credit for Research Activities.

The Department of Taxation (Department) is pleased to announce the adoption of section 18-235-20.501, Hawaii Administrative Rules (HAR), which becomes effective on November 3, 2005. The new fees will be
imposed on any comfort rulings or certification forms such as Forms N-318A and N-319A, postmarked afterNovember 4, 2005.
Act 215, Session Laws of Hawaii 2004, has established a new "Tax Administration Special Fund" andhas authorized the Department of Taxation (Department) to charge fees for issuing high tech comfort rulings(comfort rulings) and certifying credit amounts for the high technology business investment tax credit(investment credit) and the tax credit for research activities (research credit).
Section 18-235-20.5-01, HAR, sets forth the following fee structure:
Comfort Ruling Requests/Certification Submissions
Comfort Rulings Requests
Investment Credit Certification Submitted by
Investor (Form N-318A)
Investment Credit Certification Submitted byInvestor (Form N-318A)
Investment Credit Certification Submitted by PassThrough Entities on Behalf of Their Partners,
Shareholders, etc. (Form N-318A)
Investment Credit Certification Submitted by PassThrough Entities on Behalf of Their Partners,Shareholders, etc. (Form N-318A)
Research Credit Certification (Form N-319A)

1

Date of Receipt
AnytimeBefore the third Wednesday in January
following the year in which the investment was
made1
On or after the third Wednesday in January
following the year in which the investment was
made2
Before the third Wednesday in January
following the year in which the investment was
made1
On or after the third Wednesday in January
following the year in which the investment wasmade2
Before the third Wednesday in January
following the year in which the researchexpenses were incurred1

Amount$1,000

$100

$150

$750

$1,000$400

For fiscal year filers, the form must be received before the third Wednesday of the first month following the close of the taxpayer's
fiscal year in which the investment was made.
2For fiscal year filers, the form must be received on or after the third Wednesday of the first month following the close of thetaxpayer's fiscal year in which the investment was made.

Department of Taxation Announcement No. 2005-19
November 3, 2005
Page 2 of 2
Research Credit Certification (Form N-319A)

On or after the third Wednesday in January
following the year in which the researchexpenses were incurred2$750

For purposes of the fee imposition, a comfort ruling is defined as, a ruling concerning the application of
the following high technology tax incentives:
1. The high technology business investment tax credit under section 235-110.9, HRS;
2. The income tax exclusion for royalties and other income derived from patents and copyrights received
by an individual or a qualified high technology business and developed and arising out of a qualified
high technology business under section 235-7.3, HRS;
3. The income tax exclusion for stock options, dividends from stock, the receipt of options, the exercise of
the options, and income from the sale of the options under section 235-9.5, HRS; or
4. The tax credit for research activities under section 235-110.91, HRS.
Section 18-235-20.5-01, HAR, also provides a fee exemption for any person requesting a certificate ofeither the investment or research credit where the represented claim of the applicable credit is less than $25,000.
Notwithstanding this fee exemption, such person is still subject to the certification requirements and required tosubmit the applicable certification form.
Any comfort ruling request, Form N-318A, or Form N-319A postmarked after November 4, 2005 mustbe accompanied by a check for the proper amount made payable to the Director of Finance. Due to the new fee,the Department will no longer accept comfort letter ruling requests submitted by e-mail. All comfort letter
ruling requests and forms should be mailed to:
Department of Taxation
Rules OfficeP.O. Box 259
Honolulu, HI 96809
If you have any questions concerning this announcement, please call Roni Matsuda at 808-587-1570.
Current forms and other tax information may be downloaded from the Department’s website at:www.hawaii.gov/tax. If you know which tax form or publication you need, please call the Department’s
request line at 808-587-7572, or toll-free from the neighbor islands and continental U.S. at 1-800-222-7572.
This service is available 24 hours a day, 7 days a week.

KURT KAWAFUCHI
Director of Taxation
HAR Section Explained: HAR Sections 18-235-20.5-01