FAQs about our Tax Planning and Controversy Representation
Answers to your questions from accomplished attorneys
If you have a specific question about tax law and how it applies to your business or non-profit organization in Hawaii, schedule an appointment with our law firm. We have decades of experience and have dealt with these questions many times:
- Common legal issues involving income taxes?
- How is Hawaii's General Excise Tax (GET) different from a sales tax?
- When do Hawaii taxes apply to mainland-based business?
- How is Hawaii-source income defined?
- How does multi-state tax apportionment work?
- How does the tax audit process work in Hawaii?
- What are common real property tax issues in Hawaii?
- What are common reasons for tax audits of businesses?
- How can a business appeal a tax assessment?
- What legal issues matter most for tax-exempt organizations?
Common legal issues involving income taxes?
Income tax law covers a vast, complex, constantly changing legal landscape. Complying with all the state and federal income tax laws can be extremely challenging. That's why companies doing business in Hawaii rely on our law firm for advice. We also assist businesses being audited by the Internal Revenue Service and/or the Department of Taxation of the State of Hawaii.
How is Hawaii's General Excise Tax (GET) different from a sales tax?
Unlike most states, Hawaii imposes a General Excise Tax (GET) on virtually all gross receipts. The GET is much broader than a typical retail sales tax - it applies to income from services, rental income, and even interest income. Many non-profit organizations are subject to GET on some of their activities. Our attorneys have extensive experience with the complex rules and regulations created for businesses involving Hawaii's GET. Hawaii tax laws differ from many other states in the country. That's why it is important to consult with an attorney familiar with Hawaii's unique tax statutes and administrative rules.
When do Hawaii taxes apply to mainland-based business?
One of the most complex issues in state tax law is the question of when, and to what extent, an out-of-state business can be subject to Hawaii state taxes. Our attorneys have advised many businesses on these issues and represented companies that challenged Hawaii tax assessments.
How is Hawaii-source income defined?
Taxpayers with multi-state and international activities and residences face potential tax liability from one or more jurisdictions. The determination of Hawaii-source income can have a significant impact on a Taxpayer's overall liability. Our attorneys advise businesses and individuals with possible Hawaii-source income issues.
How does multi-state tax apportionment work?
Hawaii has enacted the Uniform Division of Income for Tax Purposes Act (UDITPA) which codifies the State of Hawaii's rules with respect to allocation and apportionment of income where business activities are taxable inside and outside the State of Hawaii. Our attorneys advise businesses with UDITPA allocation and apportionment of income issues in Hawaii.
How does the tax audit process work in Hawaii?
The Hawaii Department of Taxation has broad authority to conduct audit examinations of Taxpayers. There are many potential pitfalls for businesses and individuals that can arise in the audit process. Our tax attorneys have extensive experience dealing with the Department of Taxation and can advise our clients from start to finish in tax audits. There are specific deadlines for protests and appeals, and potentially severe consequences for failing to meet the deadlines, so it is important for taxpayers to obtain guidance about procedural requirements.
What are common real property tax issues in Hawaii?
Real property tax law is administered at the county level and varies from county to county in Hawaii. We handle cases in all counties in the state. County ordinances cover a wide range of issues, including tax-exemptions, land classification, valuation, and assessment methodology. Our law firm can assist you with all of these aspects of real property tax law, including appealing any assessment on any island in the State.
What are common reasons for tax audits of businesses?
State or federal tax agencies, including the Internal Revenue Service, audit businesses for many different reasons. In Hawaii, a great deal of audit activity relates to the General Excise Tax. Since the GET is imposed on gross receipts rather than net profits, even a business that is barely breaking even can have substantial GET liability. Non-profit entities may also be subject to GET on some of their activities. If you are audited, our tax attorneys can assist you every step of the way.
How can a business appeal a tax assessment?
At the federal level, a business may appeal a tax assessment by filing an appeal with the IRS Appeals Office. Depending on the procedural stage of the case, some taxpayers may need to file a Petition with the U.S. Tax Court before getting a hearing in the Appeals Office. At the State and County levels, taxpayers may have a choice of going to the Board of Review or going to the Tax Appeal Court. Whatever procedural mechanism is applicable to your case, our law firm can guide you through it.
What legal issues matter most for tax-exempt organizations?
Tax-exempt organizations are subject to a complex set of federal laws relating to structure, governance, compensation of employees and contracts with third parties. In addition to this entire structure of federal law, there are unique Hawaii issues, including registration and disclosure issues that may apply to fund-raising, and questions about what activities are, or are not, exempt from the General Excise tax. Our attorneys can help with advice on how to avoid problems, or assist in dealing with problems when they arise.