§231-36.7 Promoting abusive tax shelters. (a) A person promotes an abusive tax shelter by:
(1) Organizing or assisting in the organization of, or participating directly or indirectly in the sale of, an interest in:
(A) A partnership or other entity;
(B) Any investment plan or arrangement; or
(C) Any other plan or arrangement; and
(2) In connection with any activity described under paragraph (1), making, furnishing, or causing another person to make or furnish a statement with respect to:
(A) Whether any deduction or credit is allowed;
(B) Whether any income may be excluded; or
(C) The securing of any other tax benefit by reason of holding an interest in the entity or participating in the plan or arrangement,
which the person knows or has reason to know is false or fraudulent or is a gross valuation overstatement as to any material matter.
(b) A person found promoting an abusive tax shelter shall pay, with respect to each activity described in subsection (a), a penalty of $1,000 or, if the person establishes that the abusive tax shelter generated less than $1,000 of gross income, then one hundred per cent of the gross income derived or to be derived by the person from the activity. For purposes of this section, any activity described in subsection (a)(1) shall be treated as a separate activity for each entity or arrangement. Participation in each sale described in subsection (a)(1) shall be treated as a separate activity for each entity or arrangement.
(c) At the request of the director of taxation, a civil action may be brought to enjoin any person described in subsection (a) from engaging in any conduct described in subsection (a). Any action under this section shall be brought in the circuit court of the circuit where the person in subsection (a) resides or where the person's principal place of business is located. The court may exercise its jurisdiction over the action separate and apart from any other action brought by the State against those persons described in subsection (a). If the court finds that a person described in subsection (a) has engaged in any conduct subject to penalty under subsection (b) and that injunctive relief is appropriate to prevent the recurrence of that conduct, the court may enjoin the person accordingly.
(d) The director may waive all or any part of the penalty provided by subsection (b) with respect to any gross valuation overstatement on a showing that there was a reasonable basis for the valuation and that the valuation was made in good faith.
(e) For purposes of this section, "gross valuation overstatement" means any statement of value for any property or services if:
(1) The value so stated exceeds two hundred per cent of the amount determined to be the correct valuation; and
(2) The value of the property or services is directly related to the amount of any deduction or credit allowable to any participant.
(f) The penalty imposed by this section shall be in addition to any other penalty provided by law.
(g) This section shall be construed in accordance with regulations and judicial interpretations given to section 6700 of the Internal Revenue Code. [L 2009, c 166, §2]
Structure Hawaii Revised Statutes
231-1.5 Confidentiality privileges relating to taxpayer communications.
231-1.6 Personnel security program; criminal history record checks.
231-3 Department, general duties and powers.
231-3.1 Consideration paid not indicative of fair market value.
231-3.6 Streamlined sales and use tax agreement compliance.
231-4 Assessing officers eligible to appointment as collecting officers and vice versa.
231-4.3 Investigators; appointment and powers.
231-4.5 Administrative rules officer; specialists; appointment and duties.
231-5 Deceased officers, duties of personal representatives, etc.
231-6 Oath, power to administer.
231-7 Audits, investigations, hearings, and subpoenas.
231-7.5 Expedited appeals and dispute resolution program.
231-8 Timely mailing treated as timely filing and paying.
231-8.5 Electronic filing of tax returns.
231-9 Tax collection; general duties, powers of director; dollar rounding.
231-9.3 Tax collection; mainland contractors working on federal construction projects.
231-9.4 Credit or debit card remittances.
231-9.5 Assessment of additional taxes of corporations or partnerships.
231-9.6 Fiduciaries, liability.
231-9.7 Informalities not to invalidate assessments, mistakes in names or notices, etc.
231-9.9 Filing and payment of taxes by electronic funds transfer.
231-10 Department; keep offices where.
231-10.6 Rules or administrative guidance.
231-10.7 Temporary rulemaking authority for regulation of tax matters.
231-11 Police to aid assessing or collecting officers.
231-13 Director; examination, investigation, and collection.
231-15.3 Signature presumed authentic.
231-15.4 Tax return preparers; preparer tax identification number required.
231-15.5 Disclosure by return preparers.
231-15.7 Returns by fiduciaries.
231-15.8 Time for performing certain acts postponed by reason of service in combat zone.
231-18 Tax and other officials permitted to inspect returns; reciprocal provisions.
231-19.3 Disclosure of letter rulings, et al.
231-20 Evidence, tax records as.
231-21 Due date on Saturday, Sunday, or holiday.
231-21.5 Effect of civil union.
231-23 Adjustments and refunds.
231-24 Jeopardy assessments, etc.
231-26 Extraterritorial enforcement of tax laws.
231-27 Partial payment of taxes.
231-28 Tax clearance before procuring liquor licenses.
231-29 Joinder of party defendant when State claims tax liens.
231-30 Unknown or nonresident delinquents; procedure to collect taxes from.
231-32 Records of delinquent taxes, uncollectible delinquent taxes.
231-33 Tax debt due the State; lien.
231-34 Attempt to evade or defeat tax.
231-35 Wilful failure to file return, supply information, or secure a license.
231-36 False and fraudulent statements; aiding and abetting.
231-36.4 Wilful failure to collect and pay over tax.
231-36.5 Understatement of taxpayer's liability by tax return preparer.
231-36.6 Substantial understatements or misstatements of amounts; penalty.
231-36.7 Promoting abusive tax shelters.
231-36.8 Erroneous claim for refund or credit.
231-37 Neglect of duty, etc., misdemeanor.
231-39 Additions to taxes for noncompliance or evasion; interest on underpayments and overpayments.
231-40.5 Statute of limitations; extension for substantial omissions.
231-41 Statute of limitation for criminal penalties.
231-55 Finalization of setoff; credit on debt.
231-56 Charges for setoff; credit to agency.
231-57 Apportionment of joint refunds.
231-57.5 Notification of address and social security number of debtor parent.
231-61 Tax liens; co-owners' rights.
231-62 Tax liens; foreclosure; property.
231-63 Tax liens; foreclosure without suit, notice.
231-64 Tax liens; registered land.
231-65 Tax liens; notice, form of.
231-66 Tax liens; postponement of sale, etc.
231-67 Tax liens; tax deed; redemption.
231-70 Disposition of surplus moneys.
231-81 Special enforcement section; created.
231-82 Special enforcement section; functions, powers, and duties.
231-83 Investigators and personnel, appointment and power.
231-84 Right to inspection of books, records, and premises; warrants and writs; levy and seizure.
231-85 Identification of cash economy cases; retention of funds.
231-86 Violent interference with a tax official.
231-91 Citations for violations; deposits.
231-92 Cash-based businesses; injunction.
231-93 Cash-based business; defined.
231-94 Failure to produce license upon demand.
231-95 Failure to keep adequate books and records.
231-96 Failure to record transaction.
231-98 Tax avoidance price fixing.