Cash businesses get temporary reprieve from tax citations

Published: Aug. 4, 2011 at 10:27 PM HST|Updated: Aug. 5, 2011 at 12:31 AM HST
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Matt Duffy
Matt Duffy
Mallory Fujitani
Mallory Fujitani

By Brooks Baehr - bio | email

HONOLULU (HawaiiNewsNow) - Tax collectors are taking a gentler approach in going after cash business that bend state tax rules.

Late last year tax investigators angered vendors at farmers markets, craft fairs, and swap meets by suddenly issuing citations for shoddy bookkeeping and not offering receipts to customers.

Now the investigators are forgiving some of those citations and temporarily backing off their hard-line approach.

"That is a lesson that was learned by the department after they had gone out without laying the groundwork and educating people really about the new law. I think there were a lot of people, even though it was a year after the adoption of the 2009 law, that people still didn't understand what people needed to do," said Mallory Fujitani, Public Information Specialist with the Department of Taxation.

Now, instead of fining vendors the state is trying to educate them on tax law. Tax investigators are personally visiting cash businesses to explain the law.

"We provide them with a lot of information about general excise tax licenses. We have brochures in different languages, because we're not out there to get them necessarily. We would prefer if all these businesses would pay their taxes like everybody else," Fujitani said.

Once the Department of Taxation believes it has informed as many vendors as possible it will resume inspections and begin issuing new citations to those who still do not comply.

"We make a great taco, and we keep all our records in shape," said Matt Duffy, who owns and operates Shogunai Tacos, a popular Honolulu taco truck.

"We give a receipt to everyone that comes in. We keep a receipt for ourselves. We file those at the end of the day, pay our GE Taxes every month ... on time," Duffy added.

That kind of accounting enables the state to collect its share of taxes and prevents Duffy from being cited.

Fujitani said the Department of Taxation anticipates it will have informed the vast majority of vendors by the end of the year. Then it will send investigators back out into the field, and if merchants still are not playing by the rules, they will be cited.

Fines can range from $500 to $1,000 per improper transaction.

About 100 citations were issued during the first wave of enforcement in late 2010. A majority of those cited have not paid their fine. Fujitani said the state will forgive those who have not paid. But they are on notice. Skirt tax law again and new fines will be issued and vendors will have to pay.

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