§231-39  Additions to taxes fornoncompliance or evasion; interest on underpayments and overpayments.  (a) Except as otherwise provided, this section shall apply to every tax or revenuelaw of the State that provides for the filing with the director of taxation ofa return or statement of the tax or the amount taxable.

(b)  There shall be added to and become a partof the tax imposed by such tax or revenue law, and collected as such:

(1)  Failure to file tax return.  In case of failureto file any tax return required to be filed on the date prescribed therefor(determined with regard to any extension of time for filing), unless it isshown that the failure is due to reasonable cause and not due to neglect, thereshall be added to the amount required to be shown as tax on the return five percent of the amount of the tax if the failure is for not more than one month,with an additional five per cent for each additional month or fraction thereofduring which the failure continues, not exceeding twenty-five per cent in theaggregate.  For purposes of this paragraph, the amount of tax required to beshown on the return shall be reduced by the amount of any part of the tax whichis paid on or before the date prescribed for payment of the tax and by theamount of any credit against the tax which may be claimed upon the return. This paragraph shall not apply to any failure to file a declaration ofestimated tax required by section 235-97.

(2)  Failure to pay tax.

(A)  If any part of any underpayment is due tonegligence or intentional disregard of rules (but without intent to defraud),there shall be added to the tax an amount up to twenty-five per cent of theunderpayment as determined by the director.

(B)  If any part of any underpayment of taxrequired to be shown on a return is due to fraud, there shall be added to thetax an amount up to fifty per cent of the underpayment as determined by thedirector.

(C)  If any penalty is assessed undersubparagraph (B) (relating to fraud) for an underpayment of tax which isrequired to be shown on a return, no penalty under paragraph (1) (relating tofailure to file the return) shall be assessed with respect to the sameunderpayment.

(3)  Failure to pay tax after filing timely returns. If a return is filed on or before the date prescribed therefor and the amountshown as tax on the return is not completely paid within sixty days of theprescribed filing date, there shall be added to the unpaid tax an amount up totwenty per cent as determined by the director.

(4)  Interest on underpayment or nonpayment of tax.

(A)  If any amount of tax is not paid on orbefore the last date prescribed for payment, interest on such amount at therate of two-thirds of one per cent a month or fraction of a month shall be paidfor the period beginning with the first calendar day after the date prescribedfor payment, section 231-21 to the contrary notwithstanding, to the date paid.

(B)  If the amount of any tax is reduced byreason of a carryback of a net operating loss allowed under chapter 235, suchreduction in tax shall not affect the computation of interest under thisparagraph for the period ending with the last day of the taxable year in whichthe net operating loss arises.

(C)  Interest prescribed under this paragraphon any tax shall be paid upon notice and demand, and shall be assessed,collected, and paid in the same manner as taxes.

(D)  No interest under this paragraph shall beimposed on interest provided by this paragraph.

(E)  If any portion of a tax is satisfied bycredit of any overpayment, then no interest shall be imposed under thisparagraph on the portion of the tax so satisfied for any period during which,if the credit had not been made, interest would have been allowable withrespect to the overpayment.

(F)  Interest prescribed under this paragraphon any tax may be assessed and collected at any time during the period withinwhich the tax to which the interest relates may be collected.

(G)  This paragraph shall not apply to anyfailure to pay estimated tax required by section 235-97.

(c)  No taxpayer shall be exempt from anypenalty or interest by reason of having contested the tax, but only to theextent that the tax is adjudged to be excessive or contrary to law. [L 1953, c125, §4; RL 1955, §115-43; am L 1967, c 134, §1; HRS §231-39; am L 1974, c 138,§1; am L 1988, c 386, §1; am L 1991, c 136, §2; am L 1992, c 102, §2; am L1994, c 15, §1]

 

Cross References

 

  Cost recovery fees for the administration of taxes, see§231-25.5.

 

Case Notes

 

  Erroneous belief that no tax liability existed held not"reasonable cause" within meaning of subsection (b)(1).  57 H. 436,559 P.2d 264.