SB194 SD2.DOC

SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235‑ Direct deposit of refund. (a) An individual taxpayer who:

(1) Is subject to this chapter;

(2) Qualifies for an income tax refund; and

(3) Requests a direct deposit of the refund,

shall designate the taxpayer's checking or savings accounts at financial institutions for direct deposit of the taxpayer's income tax refund.

(b) An income tax return preparer shall not designate the income tax return preparer's personal or business checking or savings account for direct deposit of a client taxpayer's income tax refund.

An income tax return preparer who violates this subsection shall be fined $500 for each separate offense and shall return the full amount of the direct deposit to the taxpayer for whom the return was prepared. All moneys collected for violation of this subsection shall be credited to the department of taxation and shall not lapse to the general fund.

(c) For the purpose of this section, the term "income tax return preparer" refers to a preparer who is paid or not paid for services rendered."

SECTION 2. Section 235-1, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Income tax return preparer" means any person who prepares, or who employs one or more persons to prepare for compensation, any return of tax imposed by this chapter or any claim for refund of tax imposed by this chapter. The preparation of a substantial portion of a return or claim for refund shall be treated as if it were the preparation of the return or claim for refund. However, a person shall not be an income tax return preparer merely because the person:

(1) Furnishes typing, reproducing, or other mechanical assistance;

(2) Prepares a return or claim for refund of the employer (or of an officer or employee of the employer) by whom the person is regularly and continuously employed;

(3) Prepares as a fiduciary a return or claim for refund for any person; or

(4) Prepares a claim for refund for a taxpayer in response to any notice of deficiency issued to such taxpayer or in response to any waiver of restriction after the commencement of an audit of such taxpayer or another taxpayer if a determination in such audit of such other taxpayer directly or indirectly affects the tax liability of such taxpayer."

SECTION 3. Section 235-98, Hawaii Revised Statutes, is amended to read as follows:

"§235-98 Returns; form, verification and authentication, time of filing. (a) Returns shall be in such form as the department of taxation may prescribe from time to time and shall be verified by written declarations that the statements therein made are subject to the penalties prescribed in section 231‑36. Corporate returns shall be authenticated by the signature of the president, vice president, treasurer, assistant treasurer, chief accounting officer, or any other officer duly authorized so to act, under the penalties prescribed by section 231-36. The fact that an individual's name is signed on the corporation return shall be prima facie evidence that the individual is authorized to sign the return on behalf of the corporation.

(b) An individual who is an income tax return preparer, with respect to a return of tax or claim for refund of tax shall sign the return or claim for refund after it is completed and before it is presented to the taxpayer for signature. If the income tax return preparer is unavailable for signature, another income tax return preparer shall review the entire preparation of the return or claim for refund, and then shall sign the return or claim for refund. If more than one income tax return preparer is involved in the preparation of the return or claim for refund, the individual income tax return preparer who has the primary responsibility as between or among the preparers for the overall substantive accuracy of the preparation of the return or claim for refund shall be considered to be the income tax return preparer for the purposes of this subsection.

An income tax return preparer of any return or claim for refund who fails to sign a return, unless it is shown that the failure is due to reasonable cause and not due to wilful neglect, shall be fined $50 for each failure to sign, with a maximum of $25,000 per person imposed with respect to each calendar year.

(c) The department may grant a reasonable extension of time for filing returns under such rules as it shall prescribe. Except as otherwise provided by statute for cases in which exceptional circumstances require additional time, including cases of persons who are outside the United States, no extension of time for filing returns shall be for more than six months in order to expedite the timely determination of tax liability and the timely remission of taxes.

(d) For the purpose of this section, the term "income tax return preparer" refers to a preparer who is paid or not paid for services rendered."

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2050, and shall apply to taxable years beginning after December 31, 2008.

THE SENATE	S.B. NO.	194
TWENTY-FIFTH LEGISLATURE, 2009		S.D. 2
STATE OF HAWAII