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The Honolulu Advertiser
Posted on: Friday, July 10, 2009

State takes in $8.4M in delinquent taxes


BY Greg Wiles
Advertiser Staff Writer

The state collected $8.4 million from taxpayers during its monthlong amnesty program as the Hawai'i Department of Taxation offered people a chance to come clean without having to pay a penalty.

The state said some 870 taxpayers came forward with income owed for prior years under its Tax Fresh Start program. Another $6 million was collected from people who contacted the department, but learned they did not qualify for amnesty.

The tax department offered its first-ever tax amnesty program between May 27 and June 26, offering taxpayers a chance to pay off unreported income at a reduced rate. Hawai'i is one of at least eight states running amnesty programs this year as they look for ways to make up budget shortfalls.

Hawai'i's tax department set certain criteria for taxpayers who wanted amnesty, including excluding people who were already being audited by the state or had litigation pending with the department. They also had to make full payment of the tax deficiency.

Those who qualified were exempt from a penalty of up to 25 percent and were only charged half of the 8 percent interest rate applied to back taxes.

Titin Sakata, special assistant to tax director Kurt Kawafuchi, said the state was able to collect $7.3 million in back levies owed for such things as income, general excise and withholding tax.

Another $1.1 million in interest was paid. Sakata said taxpayers filed returns for a combined 2,693 years, or about three years of returns per participant.

The department also found itself fielding inquiries about amnesty from people who didn't qualify and directed them to its voluntary disclosure program. People using that program are subject to paying the full interest rate for back taxes and penalties.

Sakata said some $6 million was collected in principal, penalties and interest through people going through voluntary disclosure.

The state had not disclosed how much it expected to collect through the amnesty program, only that it thought it would rake in millions of unpaid taxes.

The program lacked an advertising budget and was run within the Tax Department's existing budget. It was promoted through press releases and talks with certified public accountants and attorney groups, Sakata said.