Administrative Directives, Part 1

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While our legislature has been hard at work, and we at the Tax Foundation of Hawaii also have been striving to keep up with legislative bills affecting tax and public finance, the Foundation also has been working and fighting on another battleground.

In the Hawaii Department of Taxation‘s annual report, some passages refer to a class of documents called “administrative directives” (ADs).  These documents are directions from the Director of Taxation to staff.  Often, they tell staff that the tax laws are to be applied in a particular way.  The Department also publishes other documents, like Tax Information Releases and Department of Taxation Announcements, that also interpret the laws.  The difference between these documents and ADs is that ADs are for “Internal Use” and are not supposed to be disclosed to the public.


In the late 1980’s, however, Hawaii adopted public records laws saying, among other things, that interpretations of law that are adopted by an agency must be made public.  There is to be no “secret law.”  An interpretation for the goose also must be made for the gander, in other words.

So, in May 2023 the Foundation went to the department with a public records request asking the Department to fork over all of their ADs.  We went back-and-forth with them for about a year and, early in May, the department stated that it was producing 11 of these directives and wouldn’t give us anymore.

The first question in our mind was whether the Department withheld records and had not told us about it.  For various reasons, we think that’s what happened, and we are pursuing a remedy with the state office of information practices.

How do we know that there are documents missing? There are several indications.  First, just like Tax Information Releases and Department of Taxation Announcements, ADs are serially numbered by year.  For example, the first AD in 1990 would be 1990-01, then 1990-02, and so forth.  The Department produced AD 1982-54 and didn’t produce any other ADs from 1982.  So, we have to wonder what happened to the other 53 directives that preceded 1982-54.

Also, several of the directives reference others. AD 2021-02 states on page 1 that it supersedes ADs 2012-02, 2012-03, and 2013-01.  But the Department didn’t cough up either AD 2012-02, 2012-03, or 2013-01.

Against this, we expect the department to argue that it doesn’t have to produce ADs that are no longer “current,” whatever that means.  But the public records laws don’t allow agencies to suppress documents based on “what’s hot and what’s not.”  If a document contains an interpretation of law that the Department then adopted, that document needs to be published, period, even if the Department never cites it again.  Next, the Department often audits taxpayers going back several years.  Suppose a couple’s 2021 tax return is being audited in 2024.  The calculation on their return was based on a 2020 Tax Information Release.  Would it be fair for the Department to say in 2024 that it changed its mind, depublish the 2020 Release, and then penalize the couple for having nothing to cite in support of their 2021 return?  I’m not saying that the Department is actually doing that, but if you look on their website at the list of Tax Information Releases and Department of Taxation Announcements you can see several marked “Obsolete” that are no longer clickable.  Those documents have important historical significance and shouldn’t be removed from view simply because someone in a later tax administration decides that they don’t like them anymore.

Next week we will go over what one of these ADs actually says.




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