Hawaii Administrative Rules
Title 18 - DEPARTMENT OF TAXATION
Chapter 231 - ADMINISTRATION OF TAXES
ADMINISTRATIVE GUIDANCE APPLICABLE TO CERTAIN PENALTIES AND FINES
Section 18-231-36.5-01-6694 - Guidance, understatement of taxpayer liability by tax return preparer; conformity to treasury-regulations related to Internal Revenue Code section 6694

Universal Citation: HI Admin Rules 18-231-36.5-01-6694

Current through August, 2024

(a) In administering the penalty set forth under section 231-36.5, HRS, relating to imposition of a penalty for understatements of taxpayer liability by a tax return preparer, the following treasury regulations shall be operative:

(1) Title 26, code of federal regulations, section 1.6694-1;

(2) Title 26, code of federal regulations, section 1.6694-2;

(3) Title 26, code of federal regulations, section 1.6694-3;

(4) Title 26, code of federal regulations, section 1.6694-4.

(b) The director may prescribe a list of positions that the director believes do not meet the substantial authority standard. Such list (and any revisions thereof) shall be published and made public by Tax Information Release.

(d) Action to enjoin a tax return preparer. Section 231-36.5(g), HRS, authorizes the director to seek an injunction from a court enjoining a tax return preparer from preparing tax returns in certain circumstances. A civil action to enjoin a tax preparer shall be subject to the following procedures:

(1) A civil action to enjoin a tax return preparer may be brought by the attorney general at the director's request.

(2) The civil action to enjoin a tax return preparer shall be based upon facts alleging conduct by the tax return preparer that is prohibited under sections 231-36.5(a) or (b), or both.

(3) The civil action shall be brought in the circuit court where the tax return preparer resides, has a principal place of business, or where the taxpayer with respect to whose tax return the action is brought resides, at the election of the director.

(4) Where a court finds that a tax return preparer has continually or repeatedly engaged in conduct prohibited under sections 231-36.5(a) or (b), and that an injunction prohibiting that conduct would not be sufficient to prevent the preparer's interference with the proper administration of chapter 231, which is applicable to all of title 14, HRS, the court may enjoin the preparer from acting as a tax return preparer in any capacity.

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