Hawaii Administrative Rules
Title 18 - DEPARTMENT OF TAXATION
Chapter 235 - INCOME TAX LAW
Subchapter 2 - DIVISION OF INCOME FOR TAX PURPOSES
Section 18-235-38-01 - Equitable adjustment of apportionment formula
Universal Citation: HI Admin Rules 18-235-38-01
Current through January, 2025
(a) If the director of taxation determines that the apportionment formula prescribed by section 235-29, HRS, does not fairly determine net income derived from or attributable to Hawaii, the director may direct or permit the use of an apportionment formula based on other factors that would more clearly reflect income attributable to Hawaii.
(b) A taxpayer may petition the director to use an allocation or apportionment method other than that prescribed in part II of chapter 235, HRS, by written request.
(1) The petition shall include data clearly
showing that the application of factors provided in the law, including these
rules, do not result in a reasonable attribution of net income to Hawaii due to
the peculiar nature of the taxpayer's business and that the taxpayer's proposed
method more clearly reflects income attributable to Hawaii.
(2) The petition shall disclose whether the
method that is being used or requested is being employed in all other states to
which the taxpayer reports under Article IV of the Multistate Tax Compact or
the Uniform Division of Income for Tax Purposes Act.
(c) The following shall be sufficient to constitute the director's imposition of alternative apportionment under this section:
(1) Issuance of an assessment based
on an alternative method accompanied by notification that an alternative method
was used;
(2) For a claim for
refund on an original return, denial of a taxpayer's claim for refund
accompanied by notification that an alternative method was used;
(3) For a claim for refund made via an
amended original return, denial of a taxpayer's claim for refund without more,
provided that the alternative used by the director consists wholly of the
method used by the taxpayer in filing its original return.
(4) In all other cases, any notification that
an alternative method was used.
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