HRS § 235-111 — Limitation period for assessment, levy, collection, or credit; net operating loss carrybacks


§235-111 Limitation period for assessment,
levy, collection, or credit; net operating loss carrybacks. (a) General
rule. The amount of income taxes imposed by this chapter (also the amount of
income taxes imposed by any preceding law of the State) and the liability of
any employer in respect of wages, shall be assessed or levied and the
overpayment, if any, shall be credited within three years after filing of the
return for the taxable year, or within three years of the due date prescribed
for the filing of the return, whichever is later. No proceeding in court
without assessment for the collection of the taxes or the enforcement of the
liability shall be begun after the expiration of the period. Where the
assessment of the tax imposed by this chapter has been made within the period
of limitation applicable thereto, the tax may be collected by levy or by a
proceeding in court under chapter 231; provided that the levy is made or the
proceeding was begun within fifteen years after the assessment of the tax. For
any tax that has been assessed before July 1, 2009, the levy or proceeding
shall be barred after June 30, 2024.
Notwithstanding any other provision to the
contrary in this section, the limitation on collection after assessment in this
section shall be suspended for the period:
(1) The taxpayer agrees to suspend the period;
(2) The assets of the taxpayer are in control or
custody of a court in any proceeding before any court of the United States or
any state, and for six months thereafter;
(3) An offer in compromise under section 231-3(10) is
pending;
(4) During which the taxpayer is outside the State
for a continuous period of at least six months; provided that if at the time of
the taxpayer's return to the State the period of limitations on collection
after assessment would expire before the expiration of six months from the date
of the taxpayer's return, the period shall not expire before the expiration of
the six months; and
(5) An appeal of the assessment is pending before the
taxation board of review or the tax appeal court, beginning on the date the
notice of appeal is filed and concluding on the date a final decision is issued
or the case is withdrawn or dismissed.
(b) Limitations on credit or refund. Claim
for credit or refund of an overpayment of any tax imposed by this chapter shall
be filed by the taxpayer or employer within three years from the time the
return was filed or from the due date prescribed for the filing of the return,
or within two years from the time the tax was paid, whichever is later. For
the purposes of this section, taxes paid before the due date of the return
shall be deemed to have been paid on the due date of the return determined without
regard to any extensions.
(1) If the claim was filed by the taxpayer during the
three-year period prescribed in this subsection, the amount of the credit or
refund shall not exceed the portion of the tax paid within the period,
immediately preceding the filing of the claim, equal to three years plus the
period of any extension of time for filing the return.
(2) If the claim was not filed within the three-year
period, the amount of the credit or refund shall not exceed the portion of the
tax paid during the two years immediately preceding the filing of the claim.
(3) If no claim was filed, the credit or refund shall
not exceed the amount which would be allowable under paragraph (1) or (2), as
the case may be, if the claim was filed on the date the credit or refund is
allowed.
(c) Exceptions; fraudulent return or no
return. In the case of a false or fraudulent return with intent to evade tax
or liability, or of a failure to file return, the tax or liability may be
assessed or levied at any time; provided that the burden of proof with respect
to the issues of falsity or fraud and intent to evade tax shall be upon the
State.
(d) Extension by agreement. Where, before the
expiration of the time prescribed in subsection (a) for the assessment, levy,
and collection of the tax or liability, or in subsection (b) for the credit or
refund of an overpayment, both the department and the taxpayer or employer have
consented in writing to its assessment or levy after that date, the tax or
liability may be assessed or levied or the overpayment, if any, may be credited
at any time prior to the expiration of the period previously agreed upon. The
period so agreed upon may be extended by the subsequent agreements in writing
made before the expiration of the period previously agreed upon.
(e) Overpayment of carrybacks. If an
overpayment results from a net operating loss carryback, the statute of
limitations in subsections (a) and (b) shall not apply. The overpayment shall
be credited within three years of the due date prescribed for filing the return
(including extensions thereof) for the taxable year of the net operating loss,
or the period agreed to under subsection (d) with respect to the taxable year,
whichever expires later.