COLLECTIONPROCEEDINGS

 

§231-25  Payment, enforcement of byassumpsit action or by levy and distraint upon all property and rights toproperty.  (a)  If any tax be unpaid when due, the director of taxation mayproceed to enforce the payment of the same, with all penalties, as follows:

(1)  By action in assumpsit, in the director's ownname, on behalf of the State, for the amount of taxes and costs, or, if the taxis delinquent, for the amount of taxes, costs, penalties, and interest, in anydistrict court, irrespective of the amount claimed.  Execution may issue uponany judgment rendered in any such action which may be satisfied out of any realor personal property of the defendant; and

(2)  By levy upon all property and rights to property(except such property as is exempt under subsection (b)(6)) belonging to suchtaxpayer or on which there is a lien, as the director may deem sufficient tosatisfy the payment of taxes due, penalties and interest if any, and the costsand expenses of the levy.

(b)  The following rules are applicable to thelevy as provided for in subsection (a)(2):

(1)  Seizure and sale of property.  The term"levy" as used in this section includes the power of distraint andseizure by any means.  Except as provided in paragraph (2), a levy shallextend only to property possessed and obligations existing at the time thereof. In any case in which the director or the director's representative maylevy upon property or rights to property, the director may seize and sell theproperty or rights to property (whether real or personal, tangible orintangible);

(2)  The effect of a levy on salary or wages payableto or received by a taxpayer shall be continuous from the date the levy isfirst made until the levy is released.  The levy on salary or wages shallattach to twenty-five per cent of any salary or wages payable or received bythe taxpayer;

(3)  Successive seizures.  Whenever any property orrights to property upon which levy has been made is not sufficient to satisfythe claim of the State for which levy is made, the director or the director'srepresentative, thereafter, and as often as may be necessary, may proceed tolevy in like manner upon any other property liable to levy of the personagainst whom a claim exists, until the amount due from the person, togetherwith all expenses, is fully paid;

(4)  Surrender of property subject to levy.

(A)  Requirement.  Any person in possession of(or obligated with respect to) property or rights to property subject to levyupon which a levy has been made, upon demand of the director or the director'srepresentative, shall surrender the property or rights (or discharge theobligation) to the director or the director's representative, except that partof the property or rights as is, at the time of the demand, subject to anattachment or execution under any judicial process;

(B)  Extent of personal liability.  Any personwho fails or refuses to surrender property or rights to property, subject tolevy, upon demand by the director or the director's representative, shall beliable in the person's own person and estate to the State in a sum equal to thevalue of the property or rights not so surrendered, but not exceeding theamount of taxes for the collection of which the levy has been made, togetherwith costs and interest on the sum at the rate of eight per cent a year fromthe date of the levy.  Any amount (other than costs) recovered under thissubparagraph shall be credited against the tax liability for the collection ofwhich the levy was made;

(C)  Penalty for violation.  In addition to thepersonal liability imposed by subparagraph (B), if any person required tosurrender property or rights to property fails or refuses to surrender theproperty or rights to property without reasonable cause, the person shall beliable for a penalty equal to fifty per cent of the amount recoverable undersubparagraph (B).  No part of the penalty shall be credited against the taxliability for the collection of which the levy was made;

(D)  Effect of honoring levy.  Any person inpossession of (or obligated with respect to) property or rights to propertysubject to levy upon which a levy has been made who, upon demand by thedirector or the director's representative, surrenders the property or rights toproperty (or discharges the obligation) to the director or the director'srepresentative (or who pays a liability under subparagraph (B)) shall bedischarged from any obligation or liability to the delinquent taxpayer and anyother person with respect to the property or rights to property arising fromthe surrender or payment; and

(E)  Person defined.  The term"person", as used in subparagraph (A), includes an officer oremployee of a corporation or a member or employee of a partnership, who as anofficer, employee, or member is under a duty to surrender the property orrights to property, or to discharge the obligation;

(5)  Production of books.  If a levy has been made oris about to be made on any property, or rights to property, any person havingcustody or control of books or records, containing evidence or statementsrelating to the property or rights to property subject to levy, upon demand ofthe director or the director's representative, shall exhibit those books orrecords to the director or the director's representative;

(6)  Property exempt from levy.  Notwithstanding anyother law of the State, no property or rights to property shall be exempt fromlevy other than the following:

(A)  Wearing apparel and school books.  Thoseitems of wearing apparel and those school books that are necessary for thetaxpayer or for members of the taxpayer's family;

(B)  Fuel, provisions, furniture, and personaleffects.  If the taxpayer is the head of a family, so much of the fuel,provisions, furniture, and personal effects in the taxpayer's household, and ofthe arms for personal use, livestock, and poultry of the taxpayer, as does notexceed $500 in value;

(C)  Books and tools of a trade, business, orprofession.  So many of the books and tools necessary for the trade, business,or profession of the taxpayer as do not exceed in the aggregate $250 in value;

(D)  Unemployment benefits.  Any amount payableto an individual with respect to the individual's unemployment (including anyportion thereof payable with respect to dependents) under an unemploymentcompensation law of the United States or the State; and

(E)  Undelivered mail.  Mail, addressed to anyperson, which has not been delivered to the addressee; and

(7)  Sale of the seized property.

(A)  Notice of sale.  The director shall takepossession and keep the levied property until the sale.  After takingpossession, the director shall sell the taxpayer's interest in the property atpublic auction after first giving fifteen days' public notice of the time andplace of the sale in the district, and by posting the notice in at least threepublic places in the district where the sale is to be held;

(B)  Assistance in seizure and sale.  Thedirector may require the assistance of any sheriff or authorized police officerof any county to aid in the seizure and sale of the levied property.  Thedirector may further retain the services of any person competent and qualifiedto aid in the sale of the levied property, provided that the consent of thedelinquent taxpayer is obtained.  Any sheriff or the person so retained by thedirector shall be paid a fair and reasonable fee but in no case shall the feeexceed ten per cent of the gross proceeds of the sale.  Any person other than asheriff so retained by the director to assist the director may be required tofurnish bond in an amount to be determined by the director.  The fees and thecost of the bond shall constitute a part of the costs and expenses of the levy;

(C)  Time and place of sale.  The sale shalltake place within thirty days after seizure; provided that by publicannouncement at the sale, or at the time and place previously set for the sale,it may be extended for one week.  Any further extension of the sale shall bewith the consent of the delinquent taxpayer.  The sale, in any event, shall becompleted within forty-five days after seizure of the property;

(D)  Manner and conditions of sale.  Sufficientproperty shall be sold to pay all taxes, penalties, interest, costs, andexpenses.  On payment of the price bid for any property sold, the deliverythereof with a bill of sale from the director shall vest the title of theproperty in the purchaser.  No charge shall be made for the bill of sale.  Allsurplus received upon any sale after the payment of the taxes, penalties, interest,costs, and expenses, shall be returned to the owner of the property sold, anduntil claimed shall be deposited with the department subject to the order ofthe owner.  Any unsold portion of the property seized may be left at the placeof sale at the risk of the owner; and

(E)  Redemption of property.  If the owner ofthe property seized desires to retain or regain possession thereof, the ownermay give a sufficient bond with surety to produce the property at the time andplace of sale, or pay all taxes, penalties, interest, costs, and expenses. [L1932 2d, c 40, §69; RL 1935, §1963; RL 1945, §5131; am L 1949, c 311, §1(b); amL 1955, c 246, §1; RL 1955, §115-30; am L Sp 1959 2d, c 1, §16; am L 1967, c37, §1; HRS §231-25; am L 1972, c 83, §2; gen ch 1985; am L 1989, c 211, §10;am L 1990, c 281, §11; am L 1998, c 2, §66; am L 2002, c 153, §3]

 

Note

 

  The 2002 amendment applies to a levy made on or after July 1,2002.  L 2002, c 153, §7(1).

 

Rules of Court

 

  Applicability of rules, see HRCP rule 81(b)(8); DCRCP rule81(b)(4).

 

Case Notes

 

  Distress of goods.  2 H. 241; 2 H. 259.

  Enforcing tax lien by foreclosure in equity.  18 H. 170.

  Pre-hearing summary constraint is constitutional.  57 H. 1,548 P.2d 246.