SALT Report 2364 – The Hawaii Department of Taxation enacted legislation that establishes payment requirements for all offers in compromise that are submitted to the Department for the payment of any past due taxes. Effective April 5, 2013, House Bill 425 requires that all taxpayer requests for compromise must include one of the following payments:
- 20% of the amount of the offer for a lump-sum offer in compromise, or
- Payment in the amount of the first proposed installment for a periodic payment offer in compromise
If the Department accepts a periodic payment offer, and the taxpayer fails to make additional installment payments during the time in which the offer is being evaluated, the Department has the authority to withdraw or deny the offer in compromise. If an offer in compromise is not accepted by the Department, any payments received from the taxpayer will be applied to the tax first assessed or to other amounts legally imposed under Title 14.
The Department may waive the payment requirements if the taxpayer meets the low-income certification guidelines provided by the Internal Revenue Service for the period in which the request for compromise has been submitted. However, the Director of Taxation will require that the taxpayer provide documentation to verify the validity of the request for a payment waiver.
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