Number of Hawaii Tax Audits Falls to 7-Year Low

Hawaii Department of Taxation

Antiquated technology at the Hawaii Department of Taxation is hampering efforts to perform effective and timely audits of Hawaii taxpayers.

The department's approximately 100 auditors hand-select returns to review from among the 2.5 million returns processed each year. The number of audits performed — which are intended to ensure taxpayers are paying their fair share — has dropped to its lowest level in seven years, according to a Civil Beat review.

The department's deputy director said auditors are working with aging technology and limited resources as the department awaits a major overhaul of its technology infrastructure.

"Unfortunately, our technology is at a state right now where the audits cases are identified manually," Deputy Director Randy Baldemor told Civil Beat. "The technology in its current state could be improved substantially to improve our auditing abilities."

Baldemor said the department is closely working with the state's chief information officer on a plan to modernize its systems, which date back to 1999. (Read a related story about the state's overall efforts to modernize its technology statewide.)

"A big component is looking at different types of technologies that can assist with the auditing process," Baldemor said. "A number of states are using data analytics to identify cases for auditing. That type of functionality could be very helpful. There's also mechanisms to be able to use data to compare state information to federal information."

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