§40-35  Payment to State under protest. 
(a)  Any disputed portion of moneys representing a claim in favor of the State
may be paid under protest to a public accountant of the department, board,
bureau, commission, or other agency of the State with which the claimant has
the dispute.  The protest shall be in writing, signed by the person making the
payment, 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 public
accountant to whom the payment is made shall hold that portion of the moneys
paid under protest in a trust account in the state treasury for a period of
thirty days from the date of payment.



(b)  Action to recover moneys paid under
protest or proceedings to adjust the claim may be commenced by the payer or
claimant against the public accountant to whom the payment was made, in a court
of competent jurisdiction, within thirty days from the date of payment.  If no
suit or proceeding is brought within the thirty-day period, the money paid
under protest shall be deposited into the appropriate account in the treasury
of the State by the accountant and the amount deposited shall thereupon become
a government realization.  Any action to recover payment of taxes under protest
shall be commenced in the tax appeal court.



(c)  If action to recover the money paid under
protest or a proceeding to adjust the claim is commenced within the thirty-day
period, the amount paid under protest shall, pending final decision of the
cause, be deposited by the public accountant into the state treasury, in a fund
to be known as the "litigated claims fund", together with subsequent
payments or portions thereof, made to the accountant under the same protest. 
If judgment is rendered in favor of the claimant, the claimant shall be paid
the amount of the judgment out of the litigated claims fund by warrants signed
by 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 the
judgment the head of the department, board, bureau, commission, or other agency
with which the claimant had the dispute shall include in their respective
budget requests to the department of budget and finance an amount necessary to
pay the judgment, plus interest, as provided herein.  Interest at the rate of
two per cent a year from the date of each payment under protest shall also be
paid 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 by
the claimant, the rate of interest and the overpayment of taxes shall be
refunded in the manner provided in section 231-23(c) and (d).  The amount of
the judgment to be paid to the claimant shall be ascertained by the head of the
department, board, bureau, commission, or other agency with which the claimant
had the dispute from a certified copy of the judgment, which shall be the
authority for making payment to the claimant.  If judgment is rendered against
the claimant, the amount of money paid by the claimant under protest which is
in the litigated claims fund shall be deposited into the appropriate account in
the 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, c
224, §1; RL 1955, §34-24; am L Sp 1959 2d, c 1, §14; am L 1963, c 114, §1; am L
1967, c 231, §7 and c 251, §1; HRS §40-35; am L 1978, c 174, §1; am L 1980, c
51, §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 of
taxpayer's challenge to gross receipts tax.  742 F.2d 546.



  Taxpayer's 42 U.S.C. §1983 claim against validity of Hawaii's
general 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 "motion
pictures".  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 and
kept in special deposit, property of taxpayer.  32 H. 38.  Recovery by
charitable 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 interstate
commerce.  36 H. 170. Recovery of unemployment contributions.  38 H. 16. 
Recovery of gross income tax by radio station asserting interstate
transmission.  40 H. 121, aff'd 216 F.2d 700.



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



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



  Not exclusive means of challenging validity of inheritance
tax.  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 recreation
management area permit fee dispute, all of plaintiff's tort claims were barred
under §662-15(3), which unambiguously provides that chapter 662 is inapplicable
to "any claim for which a remedy is provided elsewhere in the laws of the
State"; trial court thus did not err in determining that §662-15(3) barred
all of plaintiff's tort claims.  113 H. 184, 150 P.3d 833.



  This section is the proper avenue for recovery of ocean
recreation 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 days
after the last ocean recreation management area permit fee payment sometime in
September, 2001, plaintiff was time-barred from seeking relief pursuant to this
section.  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 action
for recovery of taxes paid under protest to be commenced in tax appeal court. 
Prohibits original actions by insurers to recover moneys paid to State without
protest under §431-318.  5 H. App. 122, 678 P.2d 1101.



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