Opinion ID: 1387085
Heading Depth: 3
Heading Rank: 2

Heading: Department of Taxation's Assessment

Text: The Department of Taxation assessed Fuji an additional $98,437.31 (plus interest) [6] after reclassifying the photoprocessing activity as a service rather than as manufacturing. Consequently, the Department of Taxation took the position that the tax filings submitted by Fuji had: 1) overreported its wholesaling activities, see HRS § 237-13(2)(A) (Supp. 1992) [7] ; 2) failed to report services provided for an intermediaryi.e., gross receipts from photoprocessing activities with stores and supermarkets  see HRS § 237-7 (1985) (defining service business or calling) and HRS § 237-13(6) (Supp.1992) (indicating that such service businesses are taxable at the rate of four percent, or .040) [8] ; 3) underreported its retailing activitiesi.e., sales of color print paper and chemicals to minilabs, which consumed the property in a service business see HRS §§ 237-16(a)(1) & (b) (Supp.1992) [9] ; 4) failed to report services provided through direct dealings with United States government agencies, prepaid mailers, and other customers, see HRS § 237-13(6) (Supp.1992) (indicating that such services are taxable at the rate of one-half of one percent, or .005); and 5) underreported its imports for consumption i.e., its use of color print paper and developing chemicals in a service activity (photoprocessing). See HRS § 238-2(3) (1985). [10] After recalculating the total taxes owed, the Department of Taxation assessed Fuji the following amounts remaining due: FYE 9/30/88 FYE 9/30/89 FYE 9/30/90 Ch. 237: $5,475.49 $6,580.02 $9,985.83 Ch. 238: $20,228.06 $28,082.79 $28,085.12 Interest as of 10/31/91: $5,654.81 $4,852.83 $2,284.26 __________ __________ __________ Total $31,358.36 $39,515.64 $40,355.21 TOTAL = $111,229.21 Adding $5,906.47 in interest accrued after the final notice of assessment and prior to payment, Fuji eventually paid $117,135.68 to the Department of Taxation under protest. See supra note 6.