Tax Expectations For Web Based Platforms (June 10, 2020)

DLIR determinations for employees of Uber, Lyft, Bite Squad, Door Dash, Rover, Instacart, Delivery Drivers, and Grub Hub relating to Unemployment Insurance and PUA benefits are independent from DOTAX tax requirements and classifications.

For the purpose of GET only, until a final determination that the drivers are employees has been made (i.e., all avenues of appeal have been exhausted), DOTAX is treating you as an Independent Contractor (1099) since the platforms are not paying tax. Thus, you are subject to GET at the wholesale rate of 0.5%. Please continue to pay GET until a final determination on this issue has been made.

IRS Economic Impact Payment Update (April 21, 2020)

If you have not filed your 2018 or 2019 federal tax returns and have dependents, you must take action by WEDNESDAY, APRIL 22, 6:00AM, Hawaii Time, to ensure you receive the full amount of your Economic Impact Payment.

Please visit the IRS Non-Filer tool to register to have the $500 per eligible child added to your $1,200 Economic Impact Payment. If you do not meet this deadline, the $500 per qualifying child will be paid with your tax year 2020 return filing.

IRS Economic Impact Payment Details (April 6, 2020)

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is a $2 trillion stimulus package, which includes one-time cash payments of up to $1,200 to Americans who qualify.

$1,200 for eligible individuals w/ federal Adjusted Gross Income (AGI) up to $75,000

$2,400 for eligible married couples filing a joint return w/ federal AGI up to $150,000

Parents will receive $500 for each eligible child under 17

Most taxpayers don’t need to take any extra steps to receive a payment. The IRS will use information from a taxpayer’s 2019 tax return if they’ve filed it, or their 2018 tax return, if they haven’t.

Social Security recipients not typically required to file tax returns will automatically receive economic impact payments.

The IRS is urging taxpayers to be on the lookout for an increase of calls and email phishing attempts about the Coronavirus, or COVID-19. The IRS will not ask that you pay a fee or confirm personal information before issuing an economic impact payment. The official term is economic impact payment, NOT “Stimulus Check” or “Stimulus Payment.”

For more information, please visit https://www.irs.gov/coronavirus or https://www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know.

Operational Status (updated March 27, 2020)

Offices are CLOSED to walk-ins to protect your health and our staff. Payments and returns can be made on Hawaii Tax Online (HTO). Most widely used return forms are available for e-filing on HTO. E-filed returns are easier to complete, more accurate, and processed more quickly than paper returns. Although not all returns and payments require you to have an HTO account, we encourage you to sign up for one. Please see the FAQs on HTO for more information on available services and how to use HTO.

Additionally, returns or payments can be dropped off in the drop box outside the building or mailed to your district tax office. If you are dropping your returns or payments into the drop box, please include the appropriate form or voucher in a sealed envelope.

If you have questions, please contact us using the following methods:

Phone 808-587-4242

The call center is open Monday through Friday 7:45am – 4:30pm, excluding state holidays. Please be patient as we are experiencing high call volumes

The call center is open Monday through Friday 7:45am – 4:30pm, excluding state holidays. Please be patient as we are experiencing high call volumes Secure Web Message through HTO

Login to your HTO account to send a secure web message. Do not use regular email to send your tax information because the security of the transmission cannot be assured.

Login to your HTO account to send a secure web message. Do not use regular email to send your tax information because the security of the transmission cannot be assured. U.S. Postal Mail Service

Mail delivery continues to be processed in a timely manner. The postmark date is used as the received date. Mailing addresses are listed HERE.

Income Tax Deadline Extended to July 20, 2020 (posted March 23, 2020)

The Department of Taxation issued Tax Announcement 2020-01 to grant special tax relief for State income taxpayers similar to the Internal Revenue Service (IRS).

The due date for filing 2019 State income tax returns due from April 20, 2020 to June 20, 2020 is postponed to July 20, 2020.

The due date for making 2019 State income tax payments due from April 20, 2020 to June 20, 2020 is postponed to July 20, 2020.

Additional action is not needed by Income taxpayers to participate in this tax relief program.

The Tax Announcement applies to individuals, trusts and estates, corporations, and other non-corporate tax filers as well as those who pay self-employment tax.

The relief provided in the Announcement applies solely to returns and payments for Tax Year 2019 due from April 20, 2020 to June 20, 2020, and does not include estimated income tax payments for the 2020 taxable year.

Filing and payment dates for all non-Income taxes (Withholding, General Excise, Transient Accommodations, etc.) are unchanged.

Frequently Asked Questions (FAQs)

Due Date/Deadline Changes

Q: Why hasn’t the return/payment due date for all other taxes (e.g., General Excise, Transient Accommodations, etc.) been changed?

A: The due dates for all other returns and payments have not been extended because they are necessary in enabling critical government functions to continue. The tax revenues collected will enable the State to offer other relief programs to address areas not being addressed by the Federal government during this crisis. As business activity declines due to COVID-19 and the Governor’s Stay at Home order, many businesses are seeing revenue and the associated tax obligations decline. By receiving and processing tax returns, this provides the State with valuable information to understand which businesses are operating and the level of operations being sustained.

Q: Have the 2019 due dates and payment dates been extended to July 20 for Fiduciary returns?

A: Yes, fiduciary returns qualify for relief. Fiduciary returns are income tax returns filed on behalf of another taxpayer.

Q: Does Tax Announcement 2020-01 further extend the extended due date for a fiscal year return that covers the fiscal tax year beginning on July 1, 2018 and ending on June 30, 2019?

A: The original due date for this return was October 20, 2019 and the extended due date is April 20, 2020. Tax Announcement 2020-01 does not further extend the extended due date of April 20, 2020 and it does not apply to Tax Year 2018 filings or payments.

Q: Since the 2019 Annual Reconciliation Return (Form G-49) ties in with the 2019 income tax return, has the due date for Form G-49 been extended?

A: No, the due dates for Form G-49 have not been extended. The relief provided under Tax Announcement 2020-01 only applies to income tax. The due dates for all other tax types including, general excise tax, have not been extended.

Q: Can I get a payment extension, waiver, or deferment?

A: Please contact us to work with you to address or correct your liability.

Estimated Income Tax

Q: Has the deadline for Tax Year 2020 estimated income tax payments been extended?

A: No, the relief provided in Tax Announcement 2020-01 applies solely to returns and payments for Tax Year 2019 due from April 20, 2020 to June 20, 2020. Unlike the IRS, it does not include estimated income tax payments for the 2020 taxable year.

Please refer to Tax Fact 2019-3 and the instructions to Form N-11 for more information on the requirements for estimated tax payments. Estimated payments can be calculated using 60% of the tax to be shown on your current year return or 100% of the tax shown on your tax return for 2019. Because of changes experienced by businesses and individuals as a result of COVID-19, taxpayers will have the opportunity to adjust their estimated income payments based on their current situation. The penalty for underpayment of estimated tax will be reconciled in 2021, when the Income tax returns are due.

Q: How can I estimate my tax liability for 2020 if I have not completed my 2019 return yet?

A: The calculation of your 2020 estimated tax liability does not need to be based on your 2019 liability. In this case, estimated payments can be calculated using 60% of the tax to be shown on your tax return for 2020, or 100% of the tax shown on your tax return for 2019. Please see Tax Facts 2019-3 (Estimated Income Tax for Individuals), Tax Facts 2020-01 (Estimated Income Tax for Corporations, S Corporations), and section 18-235-97(c), Hawaii Administrative Rules (HAR), which lays out the method for calculating the estimated tax for any given year.

Q: How can I avoid the penalty for underpayment of estimated taxes for 2020 if I do not know my 2019 tax liability?

A: This situation is not unique to the tax relief provided by Tax Announcement 2020-01. For any given year, if you file with automatic extensions, you would also calculate estimated taxes due prior to filing the previous year’s return. Please see Section 18-235-97(c), HAR, for guidance on calculating your estimated tax liability. DOTAX suggests overestimating your tax liability in order to avoid the penalty.

Q: If I elect to apply my 2019 refund to my 2020 estimated taxes, when will my 2020 account be credited?

A: If your credit carryforward from 2019 was generated from tax credits, wage withholding, or any other payments made on or before July 20, 2020, the effective date of your credit carryforward is July 20, 2020. If your credit carryforward from 2019 was generated from payments made after July 20, 2020, the effective date of your credit carryforward is the date that the payment was made.

Other

Q: I received a Statement of Taxpayer notice showing a tax liability in the mail. Why are bills being sent out?

A: DOTAX is an essential government function and we are continuing to operate. Statement of Taxpayer notices are sent every other month to update taxpayers about their liabilities a shown in our records. This gives the taxpayer an opportunity to work with us to correct any problems on the liability as interest continues to accrue. Please refer to your Statement of Taxpayer notice under Questions Concerning this Statement for best point of contact to work with to address or correct your liability.

Q: I’m trying to file and pay using Turbo Tax (or some other tax preparer software), and it keeps getting rejected. I thought the filing and payment due date was extended?

A: Because you’ve chosen to use the Internal Revenue Service’s Modernized e-File program (MeF), with software vendors such TurboTax, HRBlock, etc., payments submitted with these tax returns MUST have the same date as the return. You are able to submit the return and payment on MeF with the current date or submit your return without payment then pay online at HTO or send in a check at a later time, taking advantage of the payment extension.

Q: I am doing work for a web platform (Uber, Lyft, Bite Squad, Door Dash, Rover, Instacart, Delivery Drivers, and Grub Hub) and the Hawaii Department of Labor and Industrial Relations made a determination that I am an employee for the purposes of Unemployment Insurance. Am I exempt from Hawaii general excise tax (GET)? Should I amend my tax returns?

A: For the purpose of GET only, until a final determination that the drivers are employees has been made (i.e., all avenues of appeal have been exhausted), DOTAX is treating you as an Independent Contractor (1099) since the platforms are not paying tax. Thus, you are subject to GET at the wholesale rate of 0.5%. Please continue to pay GET until a final determination on this issue has been made.

Federal Aid

Q: Will the IRS individual payments be taxed?

A: Economic Income Payments will NOT be subject to income tax.

Unemployment payments will be subject to income tax.

Q: How will CARES Act Funds be taxed?

A: See State and Federal Tax Treatment of CARES Act Funds table below.

State and Federal Tax Treatment of CARES Act Funds Description Federal Tax State Income Tax State GE Tax INDIVIDUAL INCOME PROGRAMS Econmic Impact Payment Payments made to qualifying individual taxpayers of up to $2,400, depending on adjusted gross income and filing status. Qualifying taxpayers may also receive $500 per qualifying child. No No No Pandemic Unemployment Assistance (PUA) Provides up to $648 per week for those who ordinarily may not be eligible for unemployment benefits, such as business owners, self-employed persons, independent contractors, and others, that are out of business or whose services are significantly reduced as a direct result of the COVID-19 pandemic. Yes Yes No Federal Pandemic Unemployment Compensation (FPUC) Additional $600 per week of unemployment compensation for employees who are eligible for unemployment benefits. Yes Yes No SMALL BUSINESS PROGRAMS Paycheck Protection Program (PPP) Forgivable loans to small businesses. No No* No Economic Injury Disaster Loan Emergency Advances (EIDL Grant) Loan advances of up to $10,000 made to small businesses, which does not need to be repaid. Yes Yes No Economic Injury Disaster Loans (EIDL) Loans up to $2,000,000. No No No * DOTAX intended recommendation to Hawaii State Legislature.

For more information, please review Tax Information Release 2020-02.

Tax Announcements and Media Releases: