HAR § 18-235-108 — (Reserved) §18-235-109 Jeopardy assessments, security for payments, etc

(a) In general. Pursuant to sections 235-1 (defining “taxable year”) and 235-109, HRS, and as set forth in section 231-24, HRS, a jeopardy assessment may be issued if the director determines that a taxpayer may depart quickly from the State, may remove or conceal the taxpayer’s self or the taxpayer’s property in or outside the State, or do any other act tending to prejudice or jeopardize, in whole or in part, the assessment or collection of any tax liability. A jeopardy assessment only terminates the taxable period for purposes of computing the amount of tax to be assessed and collected. Pursuant to section 231-24, HRS, tax liability for the taxable period in which a jeopardy assessment is made, may be recalculated. (b) Tax for a short taxable year. Unlike the case of a short taxable year resulting from a change in accounting period made with the approval of the director, tax liability for a short taxable year resulting from a jeopardy assessment is not computed on an annual basis, and any available personal exemptions are not prorated. However, if tax liability for the taxable period is recalculated, the tax shall be recomputed over the entire period, including the portion which was subject to the jeopardy assessment. For example, if a jeopardy assessment is issued because a resident of the State is terminating residency and leaving the State, the taxpayer shall be allowed the full amount of any available personal exemptions and the tax liability shall be computed as if the income received during the short taxable year were the income for a taxable year of twelve months. However, if there is evidence that the taxpayer received income subject to taxation by the State after terminating residency, the director may recalculate the tax for the taxable period. The director shall recompute the tax for the entire twelve-month period, including the months which were subject to the previous jeopardy assessment, and any taxes paid on the previous jeopardy assessment shall be credited against any tax liability resulting from the twelve-month period. (c) Recalculating tax liability after jeopardy assessment made. Where the taxable year has not yet expired, the director may recalculate the tax liability for a taxable period terminated by a jeopardy assessment each time the taxpayer is found to have received additional taxable income during the taxable year. The taxpayer may also reopen a taxable period terminated by a jeopardy assessment by filing a true and accurate return pursuant to chapter 235, HRS.