Do I owe Hawaii back taxes because the State of HI auditors say l "may owe" income and GE tax for 2013-2015 for work done 1099misc? I live in WA and work was done in WA.

[daniel-takamura]

The auditor states that because I was paid from Hawaii that is the reason I owe income and GE tax on the 1099misc. He then told me that where the work was done and where I reside does not matter.

[ToddL]

What 1099-MISC box was used to report the income in question, and what was the nature of the work?

[daniel-takamura]

nonemployee comp.  Graphic Design and Graphic Consulting. Ex. they need a logo for an event they want to brand so I design it here in WA and send it over to them. Ex2. They hire a designer in Hawaii so they hire me to make sure the creative work done is inline with their brand look and feel. Hopes thats clear.

[ToddL]

Probably a form letter intended to get you to file a HI return and pay HI tax, just in case you were a HI resident. In any case, you aren't subject to HI tax on this payment.

[daniel-takamura]

Thank you Todd

[ToddL]

You are very welcome!

[daniel-takamura]

hello again todd, what do you recommend for course of action?

[ToddL]

Ignore it. HI doesn't have any leverage over you (you don't live there or own property there, do you?). IF you get further correspondence, update this post with a comment.

[ToddL]

If you can, cover up any personal information on the letter, scan it, and post it in your Question" as an attachment.

[daniel-takamura]

No I don't live there or own property. I moved away in 2009. I'll send doc asap. Thank you Todd!

[daniel-takamura]

todd doc is uploaded

[ToddL]

Send them a letter, with proof of mailing and delivery, stating that you became a resident of WA on (date). Since WA does not have an income tax, you can't send them copies of those returns.

You can leave it at that, but be prepared to show documentation that you have been a resident of WA since 2013 (or whenever). You might want to check with your State Department of Revenue or Secretary of State for specific residency rules, especially as they apply to your particular situation. 

[ToddL]

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[daniel-takamura]

I actually got an answer from the Auditors. They said that they arent going to pursue any further. I read them a paragraph from Hawaii State Tax law that clearly states "Income from the performance or services has its source at the place where the services are performed" this is verbatim from HRS$235-4 $18-235-4-08. The Auditor stated that we were correct and solidifies your statement that they have no leverage. Thanks again for all your help on this matter.

[ToddL]

My pleasure!