The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Senate Committee on Ways and Means on Feb. 12, 2025.
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Feb. 12, 2025, 10 a.m.
Hawaii State Capitol
Conference Room 211 and Videoconference
To: Senate Committee on Ways and Means
Sen. Donovan Dela Cruz, Chair
Sen. Sharon Moriwaki, Vice-Chair
From: Grassroot Institute of Hawaii
Ted Kefalas, Director of Strategic Campaigns
RE: SB430 — RELATING TO TAXATION
Aloha Chair Dela Cruz, Vice-Chair Moriwaki and other members of the Committee,
The Grassroot Institute of Hawaii supports SB430, which would require the state Department of Taxation to provide refunds for tax overpayments at the same interest rate as the Internal Revenue Service.
Current law requires the department to give refunds at an interest rate of a mere one-third of 1%.
Meanwhile, the IRS provides refunds at a compounded daily rate that varies depending on the federal short-term interest rate.[1] Since 1974, the IRS’ refund rate has never been lower than 3%, and is now 7%.[2]
Tying the state interest rate to the IRS rate will ensure that anyone who has overpaid on their Hawaii taxes will receive a fair return on any money they inadvertently “lent” to the state.
Thank you for the opportunity to testify.
Ted Kefalas
Director of Strategic Campaigns
Grassroot Institute of Hawaii
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[1] 26 U.S. Code § 6621 – Determination of rate of interest, Legal Information Institute, accessed Feb. 10, 2025.[2] “Quarterly Internal Revenue Service Interest Rates Used in Calculating Interest on Overdue Accounts and Refunds of Customs Duties,” Federal Register, Feb. 5, 2025.
