DEPARTMENT OF TAXATION Annual Report REQUIRED BY ACT 100, SESSION LAWS OF HAWAII 1999
The following is a list of the Department of Taxation’s goals and objectives as required
by Act 100, Session Laws of Hawaii, 1999:
GOAL 1: Increase voluntary compliance
Objective 1: Increase oversight utilizing various branches/areas of our
Compliance Division
Action Plan 1:
We have consolidated our fraud and investigative teams to identify and address
taxpayer issues and potential non-compliance areas and business sectors.
Action Plan 2:
We continue to actively engage in community outreach programs including public
service announcements. We will continue to help taxpayers understand and
meet their Hawaii tax obligations by providing timely and relevant information,
and keeping them apprised of new developments. We will continue to provide
public outreach through workshops, seminars, enhanced website features, and
assistance to both taxpayers and tax preparers.
Action Plan 3:
We continue to utilize in-house and IRS-provided data to identify non-filers and
returns identified through filters and manual review with questionable and/or
inconsistent filing information. We continue to develop cases for enforcement
and prosecution against those who have not filed or who have filed fraudulently.
Action Plan 4:
We continue to actively engage Office Audit and Field Audit staff to work with the
Rules Office where needed to ensure they are working and closing audits that
are consistent with the Administrative Rules of the Department of Taxation.
Objective 2: Develop procedures to ensure a more efficient and timely audit
process
Action Plan 1:
We continue to develop procedures to identify returns to be earmarked for audit,
and to determine scope and reasonable and prudent timeframes for completion.
Action Plan 2:
We will continue to develop metrics relating to audit response time, number of
cases handled, tax collectability, tax recoveries, and
GOAL 2: Reduce tax fraud
Objective 1: Identify and prevent payment of fraudulent refunds
Action Plan 1:
The TSM Fraud Manager was configured and deployed in Rollout 4. The
configuration uses the computer to review the refund requests according to the
business rules that were being used for manual reviews. We request additional
information to substantiate deduction claims and other questionable data, and
enforce and prosecute where applicable.
Action Plan 2:
With Rollout 4 of TSM, the Department added additional security measures to
protect taxpayers and their identities. Taxpayers can now enroll in the new
Identity Theft Protection Program. In addition, a feature has been included on efiling portal, Hawaii Tax Online, to prevent web bots from making fraudulent
submissions. We will continue to monitor the effectiveness of these new security
features.
GOAL 3: Improve technology and efficiencies through the successful
implementation of the Tax System Modernization (TSM) project
Objective 1: We will complete Rollout 5 of the Tax System Modernization
(TSM) project
Action Plan 1:
With the implementation of Rollout 1 of TSM on December 28, 2015, Rollout 2 on
August 15, 2016, Rollout 3 on August 14, 2017, and Rollout 4 on November 13,
2018, we will complete Rollout 5 in September 2019. Rollout 5 will address
functionality needed related to fuel, liquor, cigarette and tobacco tax types, retail
tobacco permit, and liquid fuel retail dealer. The functionality delivered will enable
these taxpayers to register, file returns, renew permits, make payments, etc.
Action Plan 2:
Rollout 5 will utilize the electronic filing mandate approved by the 2018
Legislature. Approximately 60 percent of the R5 taxpayers are already enrolled in
Hawaii Tax Online for other taxes.
Action Plan 3:
Through enhanced functionality of TSM, we will be able to capture more data for
revenue impact determination relative to tax credits and exemptions,
demographics and other useful research and planning purposes as Rollouts are
completed and once sufficiently relevant data is available.
Action Plan 4:
We will continue to review positions impacted by TSM and rewrite position
descriptions to better align with the greater complexity and increased technical
requirements for the new computer system.
