§231-33  Tax debt due the State; lien. 
(a)  Within the meaning of this section:



(1)  The terms "mortgagee",
"pledgee", and "purchaser" do not include any person to
whom property or an interest in property is conveyed (A) as security for or in
satisfaction of an antecedent or pre-existing debt of a debtor who is insolvent
within the meaning of the Bankruptcy Act, or (B) as trustee, assignee, or agent
for the benefit of one or more creditors, other than mortgage bondholders.



(2)  The term "motor vehicle" means any
self-propelled vehicle to be operated on the public highways.



(3)  The interest of a party, if required to be
recorded or entered of record in any public office in order to be valid against
subsequent purchasers, does not arise prior to the time of such recording or
entry of record.



(4)  An employer or other person who is required by
any tax law to withhold tax at the source, or to collect a tax, and who is made
liable for the tax if the employer or other person does not fulfill the
employer's or other person's duties in that regard, shall be deemed a person
liable for the tax.



(5)  The term "real property" includes
leasehold or other interest in real property and also any personal property
sold or mortgaged with real property if affixed to the real property and
described in the instrument of sale or mortgage.



(b)  Any state tax which is due and unpaid is a
debt due the State and constitutes a lien in favor of the State upon all
property and rights to property, whether real or personal, belonging to any
person liable for the tax.  The lien for the tax, including penalties and
interest thereon, arises at the time the tax is assessed, or at the time a
return thereof is filed, or at the time of filing by the department of taxation
of the certificate provided for by subsection (f) whichever first occurs.  From
and after the time the lien arises it is a paramount lien upon the property and
rights to property against all parties, whether their interest arose before or
after that time, except as otherwise provided in this section.



(c)  The lien imposed by subsection (b) is not
valid as against:



(1)  A mortgagee or purchaser of real property, or the
lien of a judgment creditor upon real property, whose interest arose prior to
the recording by the department of the certificate provided for by subsection
(f);



(2)  A mortgagee or purchaser of a motor vehicle who
becomes the legal owner or owner at a time when the tax lien and encumbrance
record provided for by section 286-46 does not show the lien.



(d)  As to tangible personal property,
possession of which is held by a person liable for tax for the purpose of sale
to the public in the ordinary course of the person's business, the lien imposed
by subsection (b) is extinguished as to any such property sold in the ordinary
course of the business by or under the direction of the person to any purchaser
for valuable consideration.  As to securities, negotiable instruments, and
money, the lien imposed by subsection (b):



(1)  Is extinguished as to such property upon passage
of title to a person without notice or knowledge of the existence of the lien,
for an adequate and full consideration in money or money's worth;



(2)  Is not valid as against a mortgagee or pledgee
for an adequate and full consideration in money or money's worth, who is
located outside the State and takes possession of the property, if at the time
of taking possession of the property the mortgagee or pledgee is without notice
or knowledge of the existence of the lien.  The mere recording or filing of the
certificate provided for by subsection (f) does not constitute notice for the
purposes of this subsection.



(e)  Subject to the provisions of this
subsection, the lien imposed by subsection (b) is not valid as against a
mortgagee, pledgee, or purchaser who gives notice to the department on a form
prescribed by it of the mortgage, pledge, or purchase made or about to be made,
with a description of the property encumbered or conveyed or proposed to be
encumbered or conveyed thereby, and whose interest in the property arises prior
to the recording or filing by the department of the certificate provided for by
subsection (f) or within ten days after the filing.  If the notice is given the
lien imposed by subsection (b) is valid against the party giving the notice, as
to any taxes set forth in a certificate filed as provided in subsection (f)
within the period of fifteen days after the notice.  The department may waive
all or any part of the period herein allowed.



(f)  The department may record in the bureau of
conveyances at Honolulu, or in respect of a lien on a motor vehicle, file with
the county director of finance, a certificate setting forth the amount of taxes
due and unpaid, which have been returned, assessed, or as to which a notice of
proposed assessment has issued.  The certificate shall identify the taxpayer,
the taxpayer's last known address, and the tax or taxes involved.  The
recording or filing of the certificate has the effect set forth in this
section, but nothing in this section shall be deemed to require that a
certificate recorded or filed by the department must include the amount of any
penalty or interest, in order to protect the lien therefor.  The certificate,
if recorded or filed with the county director of finance, shall be entered of
record as provided by law.  Recordation of the certificate in the bureau of
conveyances shall be deemed, at such time, for all purposes and without any
further action, to procure a lien on land registered in the land court under
chapter 501.  Any cost incurred in the filing of the certificate shall be a
part of the lien for the tax therein set forth.



(g)  The department may issue a certificate of
discharge of any part of the property subject to the lien imposed by this
section, upon payment in partial satisfaction of such lien, of an amount not
less than the value as determined by the department of the lien on the part to
be so discharged, or if the department determines that the lien on the part to
be discharged has no value.  Any such discharge so issued shall be conclusive
evidence of the discharge of the lien as therein provided.



(h)  The lien imposed by subsection (b) may be
foreclosed in a court proceeding or by distraint under section 231-25.



(i)  This section shall not apply to a tax
levied by a chapter which contains a specific provision for a lien for the tax
levied by the chapter, any provision in this section to the contrary
notwithstanding. [L 1957, c 185, §1; am L Sp 1959 2d, c 1, §16; am L 1963, c
104, §1; Supp, §115-37.5; am L 1966, c 33, §2; HRS §231-33; gen ch 1985; am L
1989, c 20, §1]



 



Case Notes



 



  Federal court's equitable discretion to award attorney's fees
to the interpleader stakeholder was not precluded by the statutory priority
given by the state tax lien statute.  488 F. Supp. 2d 1084.



  Pre-hearing tax lien does not violate due process.  57 H. 1,
548 P.2d 246.