HRS § 231-25 — Payment, enforcement of by assumpsit action or by levy and distraint upon all property and rights to property


COLLECTION PROCEEDINGS
COLLECTION
PROCEEDINGS
§231-25 Payment, enforcement of by
assumpsit action or by levy and distraint upon all property and rights to
property. (a) If any tax be unpaid when due, the director of taxation may
proceed to enforce the payment of the same, with all penalties, as follows:
(1) By action in assumpsit, in the director's own
name, on behalf of the State, for the amount of taxes and costs, or, if the tax
is delinquent, for the amount of taxes, costs, penalties, and interest, in any
district court, irrespective of the amount claimed. Execution may issue upon
any judgment rendered in any such action which may be satisfied out of any real
or 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 such
taxpayer or on which there is a lien, as the director may deem sufficient to
satisfy the payment of taxes due, penalties and interest if any, and the costs
and expenses of the levy.
(b) The following rules are applicable to the
levy 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 and seizure by any
means. Except as provided in paragraph (2), a levy shall extend only to
property possessed and obligations existing at the time thereof. In any case
in which the director or the director's representative may levy upon property
or rights to property, the director may seize and sell the property or rights
to property (whether real or personal, tangible or intangible);
(2) The effect of a levy on salary or wages payable
to or received by a taxpayer shall be continuous from the date the levy is
first made until the levy is released. The levy on salary or wages shall
attach to twenty-five per cent of any salary or wages payable or received by
the taxpayer;
(3) Successive seizures. Whenever any property or
rights to property upon which levy has been made is not sufficient to satisfy
the claim of the State for which levy is made, the director or the director's
representative, thereafter, and as often as may be necessary, may proceed to
levy in like manner upon any other property liable to levy of the person
against whom a claim exists, until the amount due from the person, together
with 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 levy
upon which a levy has been made, upon demand of the director or the director's
representative, shall surrender the property or rights (or discharge the
obligation) to the director or the director's representative, except that part
of the property or rights as is, at the time of the demand, subject to an
attachment or execution under any judicial process;
(B) Extent of personal liability. Any person
who fails or refuses to surrender property or rights to property, subject to
levy, upon demand by the director or the director's representative, shall be
liable in the person's own person and estate to the State in a sum equal to the
value of the property or rights not so surrendered, but not exceeding the
amount of taxes for the collection of which the levy has been made, together
with costs and interest on the sum at the rate of eight per cent a year from
the date of the levy. Any amount (other than costs) recovered under this
subparagraph shall be credited against the tax liability for the collection of
which the levy was made;
(C) Penalty for violation. In addition to
the personal liability imposed by subparagraph (B), if any person required to
surrender property or rights to property fails or refuses to surrender the
property or rights to property without reasonable cause, the person shall be
liable for a penalty equal to fifty per cent of the amount recoverable under
subparagraph (B). No part of the penalty shall be credited against the tax
liability for the collection of which the levy was made;
(D) Effect of honoring levy. Any person in
possession of (or obligated with respect to) property or rights to property
subject to levy upon which a levy has been made who, upon demand by the
director or the director's representative, surrenders the property or rights to
property (or discharges the obligation) to the director or the director's
representative (or who pays a liability under subparagraph (B)) shall be
discharged from any obligation or liability to the delinquent taxpayer and any
other person with respect to the property or rights to property arising from
the surrender or payment; and
(E) Person defined. The term "person",
as used in subparagraph (A), includes an officer or employee of a corporation
or a member or employee of a partnership, who as an officer, employee, or
member is under a duty to surrender the property or rights to property, or to
discharge the obligation;
(5) Production of books. If a levy has been made or
is about to be made on any property, or rights to property, any person having
custody or control of books or records, containing evidence or statements
relating to the property or rights to property subject to levy, upon demand of
the director or the director's representative, shall exhibit those books or
records to the director or the director's representative;
(6) Property exempt from levy. Notwithstanding any
other law of the State, no property or rights to property shall be exempt from
levy other than the following:
(A) Wearing apparel and school books. Those
items of wearing apparel and those school books that are necessary for the
taxpayer or for members of the taxpayer's family;
(B) Fuel, provisions, furniture, and personal
effects. 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 of
the arms for personal use, livestock, and poultry of the taxpayer, as does not
exceed $500 in value;
(C) Books and tools of a trade, business, or
profession. 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
payable to an individual with respect to the individual's unemployment
(including any portion thereof payable with respect to dependents) under an
unemployment compensation law of the United States or the State; and
(E) Undelivered mail. Mail, addressed to any
person, which has not been delivered to the addressee; and
(7) Sale of the seized property.
(A) Notice of sale. The director shall take
possession and keep the levied property until the sale. After taking
possession, the director shall sell the taxpayer's interest in the property at
public auction after first giving fifteen days' public notice of the time and
place of the sale in the district, and by posting the notice in at least three
public places in the district where the sale is to be held;
(B) Assistance in seizure and sale. The
director may require the assistance of any sheriff or authorized police officer
of any county to aid in the seizure and sale of the levied property. The
director may further retain the services of any person competent and qualified
to aid in the sale of the levied property, provided that the consent of the
delinquent taxpayer is obtained. Any sheriff or the person so retained by the
director shall be paid a fair and reasonable fee but in no case shall the fee
exceed ten per cent of the gross proceeds of the sale. Any person other than a
sheriff so retained by the director to assist the director may be required to
furnish bond in an amount to be determined by the director. The fees and the
cost of the bond shall constitute a part of the costs and expenses of the levy;
(C) Time and place of sale. The sale shall
take place and be completed within one hundred eighty days after seizure;
provided that the time period set herein shall be tolled during the pendency of
any action commenced by any person relating to the seized property until a
final order is rendered in that action, whether by stipulation with the person
or by court order, or upon the expiration of any extended time as may be agreed
upon;
(D) Manner and conditions of sale.
Sufficient property shall be sold to pay all taxes, penalties, interest, costs,
and expenses. On payment of the price bid for any property sold, the delivery
thereof with a bill of sale from the director shall vest the title of the
property in the purchaser. No charge shall be made for the bill of sale. All
surplus 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, and until claimed shall be deposited with the department subject to the
order of the owner. Any unsold portion of the property seized may be left at
the place of sale at the risk of the owner; and
(E) Redemption of property. If the owner of
the property seized desires to retain or regain possession thereof, the owner
may give a sufficient bond with surety to produce the property at the time and
place of sale, or pay all taxes, penalties, interest, costs, and expenses.