§40-35  Payment to State under protest. (a)  Any disputed portion of moneys representing a claim in favor of the Statemay be paid under protest to a public accountant of the department, board,bureau, commission, or other agency of the State with which the claimant hasthe dispute.  The protest shall be in writing, signed by the person making thepayment, or by the person's agent, and shall set forth the grounds of protest. If any payment, or any portion of any payment, is made under protest, the publicaccountant to whom the payment is made shall hold that portion of the moneyspaid under protest in a trust account in the state treasury for a period ofthirty days from the date of payment.

(b)  Action to recover moneys paid underprotest or proceedings to adjust the claim may be commenced by the payer orclaimant against the public accountant to whom the payment was made, in a courtof competent jurisdiction, within thirty days from the date of payment.  If nosuit or proceeding is brought within the thirty-day period, the money paidunder protest shall be deposited into the appropriate account in the treasuryof the State by the accountant and the amount deposited shall thereupon becomea government realization.  Any action to recover payment of taxes under protestshall be commenced in the tax appeal court.

(c)  If action to recover the money paid underprotest or a proceeding to adjust the claim is commenced within the thirty-dayperiod, the amount paid under protest shall, pending final decision of thecause, be deposited by the public accountant into the state treasury, in a fundto be known as the "litigated claims fund", together with subsequentpayments or portions thereof, made to the accountant under the same protest. If judgment is rendered in favor of the claimant, the claimant shall be paidthe amount of the judgment out of the litigated claims fund by warrants signedby the comptroller upon vouchers approved by the head of the department, board,bureau, commission, or other agency with which the claimant had the dispute. If the amount of money in the litigated claims fund is insufficient to pay thejudgment the head of the department, board, bureau, commission, or other agencywith which the claimant had the dispute shall include in their respectivebudget requests to the department of budget and finance an amount necessary topay the judgment, plus interest, as provided herein.  Interest at the rate oftwo per cent a year from the date of each payment under protest shall also bepaid out of the amount appropriated for the judgment payable to the claimant;provided that if the claim is for the recovery of taxes paid under protest bythe claimant, the rate of interest and the overpayment of taxes shall berefunded in the manner provided in section 231-23(c) and (d).  The amount ofthe judgment to be paid to the claimant shall be ascertained by the head of thedepartment, board, bureau, commission, or other agency with which the claimanthad the dispute from a certified copy of the judgment, which shall be theauthority for making payment to the claimant.  If judgment is rendered againstthe claimant, the amount of money paid by the claimant under protest which isin the litigated claims fund shall be deposited into the appropriate account inthe treasury of the State and the amount shall become a government realization.[L 1907, c 45, §1; RL 1925, §1444; RL 1935, §571; RL 1945, §1575; am L 1951, c224, §1; RL 1955, §34-24; am L Sp 1959 2d, c 1, §14; am L 1963, c 114, §1; am L1967, c 231, §7 and c 251, §1; HRS §40-35; am L 1978, c 174, §1; am L 1980, c51, §1; am L 1981, c 169, §1; gen ch 1985]

 

Revision Note

 

  Section 231-23(c) and (d) substituted for 231-23(d)and (e).

 

Rules of Court

 

  Tax appeals, see RTAC rules 1, 2.

 

Case Notes

 

  Provides avenue for a full and fair consideration oftaxpayer's challenge to gross receipts tax.  742 F.2d 546.

  Taxpayer's 42 U.S.C. §1983 claim against validity of Hawaii'sgeneral excise tax barred, where state remedies available to taxpayer were"plain, adequate, and complete".  940 F. Supp. 260.

  Recovery of a license fee to exhibit "motionpictures".  18 H. 646.  Recovery of conservation tax.  21 H. 571. Recovery of inheritance tax.  22 H. 742.  Recovery of property tax.  29 H.555.  Recovery of interest earned on inheritance tax paid under protest andkept in special deposit, property of taxpayer.  32 H. 38.  Recovery bycharitable trust of excise tax on "doing business".  33 H. 371. Recovery of gross income tax by persons practicing a "profession". 34 H. 245.  Recovery of aviation fuel tax asserted as burden on interstatecommerce.  36 H. 170. Recovery of unemployment contributions.  38 H. 16. Recovery of gross income tax by radio station asserting interstatetransmission.  40 H. 121, aff'd 216 F.2d 700.

  Mentioned with respect to applicable statutory period forbringing action for refund of general excise taxes.  53 H. 1, 486 P.2d 396.

  Section not applicable where taxpayer contests valuationplaced on property for real property taxes; §246-46 applies.  54 H. 250, 505P.2d 1179.

  Not exclusive means of challenging validity of inheritancetax.  66 H. 276, 660 P.2d 30.

  Absent a formal administrative decision by the tax director,taxpayer's payment under protest did not present an "actual dispute"over which the tax appeal court had subject matter jurisdiction.  92 H. 608,994 P.2d 540.

  As this section applied to plaintiff's ocean recreationmanagement area permit fee dispute, all of plaintiff's tort claims were barredunder §662-15(3), which unambiguously provides that chapter 662 is inapplicableto "any claim for which a remedy is provided elsewhere in the laws of theState"; trial court thus did not err in determining that §662-15(3) barredall of plaintiff's tort claims.  113 H. 184, 150 P.3d 833.

  This section is the proper avenue for recovery of oceanrecreation management area permit fees.  113 H. 184, 150 P.3d 833.

  Where plaintiff's complaint was not filed until April 17,2002, and the statute of limitations under this section had expired thirty daysafter the last ocean recreation management area permit fee payment sometime inSeptember, 2001, plaintiff was time-barred from seeking relief pursuant to thissection.  113 H. 184, 150 P.3d 833.

  Section only allows recovery of money paid under protest;requires action to be commenced within thirty days of payment; requires actionfor recovery of taxes paid under protest to be commenced in tax appeal court. Prohibits original actions by insurers to recover moneys paid to State withoutprotest under §431-318.  5 H. App. 122, 678 P.2d 1101.

  Cited:  37 H. 475, 476, aff'd 174 F.2d 21.