HAR § 18-231-3-10 — Compromises

(a) In general. (1) Authority. Pursuant to section 231-3(10), HRS, the director of the department of taxation may compromise any tax liability or interest or penalty thereon, arising under any tax law, the administration of which is within the scope of the department’s duties, subject to approval of the governor. (2) Basis for compromise. An offer to compromise a tax liability may be considered only if: (A) There is doubt as to liability; (B) There is doubt as to collectability; or (C) The compromise promotes effective tax administration. No liability shall be compromised if the liability is established by a valid judgment and there is no doubt as to the State’s ability to collect the tax. (b) Scope of compromise. In general, a compromise agreement may relate to civil or criminal liability with respect to taxes, interest, and penalties. Acceptance of an offer in compromise of civil liability shall not compromise criminal liability, nor shall acceptance of an offer in compromise of criminal liability compromise civil liability. Criminal liability may be compromised only if the liability results from violation of a regulatory provision or related statute, and the violation was not done deliberately or with an intent to defraud. (c) Effect of compromise agreement. A compromise agreement shall relate to a taxpayer’s entire liability, including taxes, interest, penalties, or any combination thereof, for the periods specified and as set forth in the compromise agreement. Upon acceptance and approval of a compromise agreement by the governor, neither the taxpayer nor the State may reopen the matter, unless: (1) There was falsification or concealment of assets by the taxpayer, (2) A mutual mistake of a material fact was made (sufficient enough to set aside or reform an agreement), (3) The taxpayer is in breach of any collateral agreement entered into by the department of taxation and the taxpayer, or (4) The taxpayer defaults on payments owed under the compromise agreement. (d) Procedure. (1) Submission of an offer. The taxpayer or the taxpayer’s duly authorized agent shall submit an offer in compromise in writing to the director of the department of taxation. Any offer in compromise asserting doubt as to collectability shall be accompanied by a detailed statement of the taxpayer’s financial condition. (2) Remittance of compromise amount. Each offer in compromise shall be submitted with a remittance representing the amount of the compromise offer, or a substantial deposit, if the offer provides for installment payments. HRS §231-3 HRS §231-3(10) ADMINISTRATION OF TAXES