Hawaii Tax Update 2019-08

Withholding Taxes on Income of Nonresident Partners and Beneficiaries of Partnerships, Estates, and Trusts

Announcement 2019-08

The Hawaii Department of Taxation announced a delay in implementing a law regarding the withholding of taxes on income of nonresident partners and beneficiaries of partnerships, estates, and trusts. The Act became effective on July 2, 2019, and is applicable to tax years beginning after December 31, 2018. The Act requires income tax withholding for nonresident taxpayers on the basis of the taxpayer’s distributive share of income attributable to the state as reflected in the partnership’s, estate’s, and trust’s return for the tax period. Further, the Act provides an exemption from withholding for publicly traded partnerships which are required to file an annual information return of each unit holder with income sourced to Hawaii. The department clarified that it is currently in the process of preparing to implement and enforce the Act and, therefore, partnerships, estates, and trusts are not required to withhold income taxes as required by the Act during this preparation phase. The department intends on requiring withholding no sooner than for tax years beginning after December 31, 2019. 

View the full announcement here -