RELATING TO TAX COLLECTIONS.
HB1150 would extend the collection period for several Hawaii taxes when a taxpayer’s assessment is being challenged on appeal. Under current law, the Department of Taxation generally has three years to assess certain taxes and, once assessed, up to 15 years to collect them. This bill keeps those general deadlines in place, but adds a new rule that the 15-year collection clock is suspended while an appeal is pending before the taxation board of review or the tax appeal court, starting when the notice of appeal is filed and ending when the case is finally decided, withdrawn, or dismissed.
The bill applies this suspension rule across multiple tax chapters, including income tax, general excise tax, transient accommodations tax, use tax, fuel tax, conveyance tax, and the rental motor vehicle, tour vehicle, and car-sharing vehicle surcharge tax. It also updates the existing tolling language in those statutes to add appeal-related suspension alongside other existing suspension events such as taxpayer consent, court control of assets, compromise offers, and time spent outside the state. The measure is written to apply retroactively to assessments already on appeal before the effective date, and it states an effective date of July 1, 3000, which appears intended to prevent immediate operation while still preserving the statutory change for future use.
HB1150 would amend multiple sections of the Hawaii Revised Statutes governing tax assessment and collection deadlines, most notably sections in chapters 235, 237, 237D, 238, 243, 247, and 251. The practical effect is to stop the running of the post-assessment collection limitation period during the pendency of a taxpayer’s appeal, giving the state additional time to collect assessed taxes after the appeal concludes. It would affect taxpayers with disputed assessments and the Department of Taxation’s collection authority, while leaving the underlying assessment deadlines largely unchanged.
The available legislative history suggests generally favorable treatment of the bill, at least at the House stage. HB1150 passed second reading as amended in HD 1 and was referred onward without any recorded aye votes with reservations or no votes, indicating no visible opposition in the recorded action. No committee transcript excerpts were provided, so there is no direct record here of detailed debate or public testimony sentiment.
The main policy issue is whether the state should pause the collection statute of limitations while a tax assessment is under appeal. Supporters would likely view the change as protecting the state’s ability to collect taxes that are ultimately upheld, especially in cases where appeals take significant time. Potential critics could argue that suspending the collection clock increases uncertainty for taxpayers and extends the period during which liabilities remain collectible. The bill also makes the suspension apply to assessments already on appeal before the effective date, which could raise fairness or retroactivity concerns, although no recorded opposition appears in the provided history.