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THE SENATE |
S.B. NO. |
3175 |
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THIRTY-SECOND LEGISLATURE, 2024 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO TAX ENFORCEMENT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1.
Section
231-7, Hawaii Revised Statutes, is amended to read as follows:
"§231-7 Audits, investigations, hearings, and subpoenas.
(a) The director of taxation, and any
representative of the director duly authorized by the director, may conduct any
civil audit or criminal investigation, investigation, or hearing, relating to
any tax, assessment, [or the amount of any tax,] or [the]
collection of any delinquent tax, including any audit or investigation into the
financial resources of any delinquent taxpayer or the collectability of any
delinquent tax.
(b) The director of taxation or other person
conducting hearings may administer oaths and take testimony under oath relating
to the matter of audit, investigation, or hearing.
(c) The director of taxation or representative of
the director duly authorized by the director, when conducting a civil
audit, investigation, or hearing may subpoena witnesses and require the
production of books, papers, documents, other designated objects, or any other
record however maintained, including those electronically stored, that are
relevant or material to the civil audit, investigation, or hearing; provided
that the director of taxation or deputy director of taxation shall give written
approval for the issuance of a subpoena only after a review of the
appropriateness of the issuance. A
subpoena issued under this subsection:
(1) Shall
state that the subpoena is issued by the department and shall command each
person to whom it is directed to attend and give testimony at the time and
place specified, and may also command the person to whom the subpoena is
directed to produce books, papers, documents, or other objects specifically
designated;
(2) May be served at any place within or
without the State by an investigator appointed pursuant to section 231-4.3,
or by any [other] representative of the director duly authorized
by the director;
(3) Shall
require attendance of the person only in the county wherein the person is
served with the subpoena or at any other place as is agreed upon by the person
and the department; provided that if the subpoena is served in a county other
than that in which the person resides, is employed, or transacts the person's
business in person, the department shall bear the person's expenses for travel
to and attendance at the place named in the subpoena to the same extent as
provided by the rules of court other than the expenses of the taxpayer or the
taxpayer's witnesses, officers, directors, agents, or employees; and
(4) Shall
contain a short, plain statement of the person's rights and the procedure for
enforcing and contesting the subpoena.
If
any person disobeys any process or, having appeared in obedience thereto,
refuses to answer pertinent questions put to the person by the director or
other person conducting the civil audit, investigation, or hearing, or to
produce any books, papers, documents, objects, or records pursuant thereto, the
director may apply to the circuit court of the circuit wherein the civil audit,
investigation, or hearing is being conducted, or to any judge of the court,
setting forth the disobedience to process or refusal to answer, and the court
or judge shall cite the person to appear before the court or judge to answer
the questions or to produce the books, papers, documents, objects, or records;
provided that the court, upon a motion promptly made by the person, may quash
or modify the subpoena if compliance would be unreasonable or oppressive or
would violate any privilege the person would be entitled to exercise in a court
proceeding. If the person fails or
refuses to produce the subpoenaed books, papers, documents, objects, or record,
the court shall institute a contempt proceeding against the person, at which
time the court shall determine whether good cause is shown for the failure to
obey the subpoena or the refusal to testify; provided that the court, on a
motion promptly made, may quash or modify the subpoena if compliance would be
unreasonable or oppressive or would violate any privilege the person would be
entitled to exercise in a court proceeding.
In the event that no good cause is shown, the court does not quash or
modify the subpoena, and the person fails or refuses to comply with the
subpoena, then the court shall commit the person to jail until the person
testifies, but not for a longer period than sixty days. Notwithstanding the serving of the term of
commitment by any person, the director may proceed in all respects as if the
witness had not previously been called upon to testify. Witnesses (other than the taxpayer or the
taxpayer's officers, directors, agents, and employees) shall be allowed their
fees and mileage as authorized in cases in the circuit courts, to be paid on
vouchers of the department of taxation, from any moneys available for the
expenses of the department.
(d) Subject to the
privileges applicable to any witness in this State, the director
of taxation or any representative of the director duly authorized by the
director, when conducting a criminal investigation, may subpoena witnesses,
examine witnesses under oath, and require the production of any books, papers,
documents, other designated objects, or any other record however maintained,
including those electronically stored, that are relevant or material to the
investigation; provided that the director of taxation or deputy director of
taxation shall give written approval for the issuance of a subpoena only after
a review of the appropriateness of the issuance. A subpoena issued under this subsection:
(1) Shall
state that the subpoena is issued by the department and shall command each
person to whom it is directed to attend and give testimony at the time and
place specified, and may command the person to whom it is directed to produce
books, papers, documents, or other objects specifically designated;
(2) May
be served at any place within or without the State by an investigator
appointed pursuant to section 231-4.3, or by any [other] duly
authorized law enforcement official with the powers of a police officer;
(3) Shall
require attendance of the person only in the county wherein the person is
served with the subpoena or at any other place agreed upon by the person and
the department; provided that if the subpoena is served in a county other than
that in which the person resides, is employed, or transacts the person's
business in person, the department shall bear the person's expenses for travel
to and attendance at the place named in the subpoena to the same extent as
provided by the rules of court; and
(4) Shall
contain a short, plain statement of the person's rights and the procedure for
enforcing and contesting the subpoena.
Upon application by the director, a circuit court of the county
wherein the person resides or is found may compel obedience to the subpoena;
provided that the court, on a motion promptly made, may quash or modify the
subpoena if compliance would be unreasonable or oppressive or would violate any
privilege the witness may be entitled to exercise in a court proceeding.
(e) Any subpoena issued under this section that
does not identify the person with respect to whose liability, audit, or
investigation the subpoena is issued may be served on the intended recipient
only after a court proceeding in which the director or another person
establishes that:
(1) The
subpoena relates to the liability, audit, or investigation of a particular
person or ascertainable group or class of persons;
(2) There
is a reasonable basis for believing that the person or group or class of
persons may fail or may have failed to comply with any provision of title 14;
and
(3) The
information sought to be obtained from the examination of records or testimony
and the identity of the person or persons with respect to whose liability the
subpoena is issued is not readily available from other sources.
(g)
A person or entity that is compelled to testify or produce documents,
information, or other items by a subpoena issued pursuant to an audit, investigation,
or hearing pertaining to another person or entity shall not be liable for
damages arising from compliance with the subpoena.
SECTION 3.
This Act shall take effect upon its approval.
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INTRODUCED BY: |
_____________________________ |
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BY REQUEST |
Report Title:
Tax Enforcement; Subpoena Powers
Description:
Authorizes the Department of Taxation to serve administrative subpoenas outside the State.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.