The Hawaii N-289 form serves as a certification for exemption from the withholding of tax on the disposition of Hawaii real property. This form is completed by the transferor or seller and provided to the transferee or buyer to indicate that tax withholding is not necessary under specific conditions. Understanding this form is crucial for both parties involved in a real estate transaction in Hawaii, as it outlines the requirements and circumstances under which tax withholding can be avoided.
The Hawaii N-289 form serves as a crucial document for individuals and entities involved in the sale of real property in Hawaii. This form is designed to certify that the withholding of tax is not necessary when a transferor or seller disposes of real estate. It is essential for the transferor or seller to complete this form and provide it to the transferee or buyer, ensuring that they are informed of their tax obligations. The form outlines specific criteria under which tax withholding can be exempted, including situations where the transferor is a resident person, or when certain provisions of the Internal Revenue Code apply. Additionally, it addresses cases where the property has been used as a principal residence, and the sale amount does not exceed $300,000. Understanding the nuances of this form is vital for both sellers and buyers to navigate the tax implications effectively. The form must be completed accurately, as any false statements could lead to severe penalties. Therefore, it is imperative that all parties involved are aware of the requirements and implications of the Hawaii N-289 form.
Filling out the Hawaii N-289 form can be straightforward, but many people still make common mistakes. One frequent error occurs when individuals fail to provide the correct transferor/seller identification number. This number is crucial as it helps identify the person or entity involved in the property transfer. If you only include part of the number or use an incorrect one, it can lead to delays or complications in processing.
Another mistake is not checking the appropriate box that explains why withholding tax is not required. The form has three options, and selecting the wrong one can cause confusion. Each box corresponds to specific criteria, such as residency status or the property's use. Make sure to read the instructions carefully and select the box that accurately reflects your situation.
Additionally, many people overlook the requirement to provide a brief description of the transfer and a summary of the law and facts supporting their claim. This section is vital for establishing the basis for the exemption. Skipping this step or providing vague information can result in the form being deemed incomplete, which may require further clarification.
Lastly, individuals sometimes forget to sign the form. A signature is essential as it verifies that the information provided is true and correct. Without a signature, the form cannot be processed. Make sure to double-check that all required fields are filled out and that the form is signed before submission.
STATE OF HAWAII — DEPARTMENT OF TAXATION
Form N-289
(REV. 2008)
CERTIFICATION FOR EXEMPTION FROM THE
WITHHOLDING OF TAX ON THE DISPOSITION OF HAWAII
REAL PROPERTY
(To be completed by transferor/seller and given to transferee/buyer. The transferor/seller should NOT file Form N-289 with the Department of Taxation for approval.)
Section 235-68, Hawaii Revised Statutes (HRS), provides that a transferee/buyer of Hawaii real property must withhold tax if the transferor/seller is a non- resident person. To inform the transferee/buyer that withholding of tax is not required upon the disposition of Hawaii real property by
____________________________________________________ (name of transferor/seller), the undersigned hereby certifies the following:
Transferor/seller’s identification number (Last 4 numbers of the SSN or FEIN) _______________________________
Transferor/seller’s address (home address for individuals, office address for corporations, partnerships, trusts, or estates)
The withholding of tax is not required upon the disposition of Hawaii real property because (check whichever box is applicable):
1 The transferor/seller is a resident person as defined in section 235-68, HRS. Resident person means any: (1) Individual included in the definition of “resident” in section 235-1, HRS; (2) Corporation incorporated or granted a certificate of authority under Chapter 414, 414D, or 415A, HRS; (3) Partnership formed or registered under Chapter 425 or 425E*, HRS; (4) Foreign partnership qualified to transact business pursuant to Chapter 425 or 425E*, HRS; (5) Limited liability company formed under Chapter 428, HRS, or any foreign limited liability company registered under Chapter 428, HRS; provided that if a single member limited liability company has not elected to be taxed as a corporation, the single member limited liability company shall be disregarded for purposes of section 235-68, HRS, and section 235-68, HRS, shall be applied as if the sole member is the transferor; (6) Limited liability partnership formed under Chapter 425, HRS; (7) Foreign limited liability partnership qualified to transact business under Chapter 425, HRS; (8) Trust included in the definition of “resident trust” in section 235-1, HRS; or (9) Estate included in the definition of “resident estate” in section 235-1, HRS.
*Note: Chapter 425E, HRS, replaced chapter 425D, HRS, effective July 1, 2004.
2 That by reason of a nonrecognition provision of the Internal Revenue Code as operative under chapter 235, HRS, or the provisions of any United States treaty, the transferor/seller is not required to recognize any gain or loss with respect to the transfer. (See Instructions) (Complete A and B below.)
A. Brief description of the transfer:
B. Brief summary of the law and facts supporting the claim that recognition of gain or loss is not required with respect to the transfer:
3 For the year preceding the date of the transfer the property has been used by the transferor/seller as a principal residence, and that the amount realized for the property does not exceed $300,000. (See Instructions)
____________________________________________________ (name of transferor/seller) understands that this certification may be disclosed to the
State of Hawaii, Department of Taxation by the transferee/buyer and that any false statement contained herein could be punished by fine, imprisonment, or both.
I declare, under the penalties set forth in section 231-36, HRS, that this certification has been examined by me, and to the best of my knowledge and belief, it is true, correct, and complete. In the case of corporations, partnerships, trusts, or estates, I further declare that I have authority to sign this document on behalf of ____________________________________________________ (name of transferor/seller).
Signed:
_______________________________________
Print Name:
________________________________________________
Title:
Date:
INSTRUCTION
FORM N-289
Instructions for Form N-289
CERTIFICATION FOR EXEMPTION FROM THE WITHHOLDING OF TAX ON THE DISPOSITION OF HAWAII REAL PROPERTY
General Instructions
Purpose of Form
Use Form N-289 to inform the transferee/buyer that the with- holding of tax is not required upon the disposition of Hawaii real property if (1) the transferor/seller is a resident person, (2) by reason of a nonrecognition provision of the Internal Revenue Code as operative under chapter 235, HRS, or the provisions of any United States treaty, the transferor/seller is not required to recognize any gain or loss with respect to the transfer, or (3) for the year preceding the date of the transfer the property has been used by the transferor/seller as a principal residence, and that the amount realized for the property does not exceed $300,000.
Who Can Complete Form N-289
The transferor/seller can complete Form N-289.
Where to Send Form N-289
Form N-289 must be completed by the transferor/seller and given to the transferee/buyer. The transferor/seller should NOT file Form N-289 with the Department of Taxation for approval. The transferee/buyer is to retain Form N-289 and NOT forward it to the Department of Taxation if ALL the transferor/sellers have provided a certification of exemption on Form N-289 to the transferee/buyer. If one or more, but not all of the transferor/sell- ers has provided a certification of exemption on Form N-289 to the transferee/buyer, the transferee/buyer shall attach a copy of the Form N-289 to Forms N-288 and N-288A, which must still be filed with the Department of Taxation.
Specific Instructions
At the top of Form N-289, enter the transferor/seller’s name, identification number (last 4 numbers of the social security number, individual identification number or federal I.D. number), and address. The Internal Revenue Service (IRS) issues Indi- vidual Taxpayer Identification Numbers (ITINs) to certain aliens who are required to have a U. S. taxpayer identification number but who do not have, and are not eligible to obtain, a social secu- rity number. The ITIN issued by the IRS must be used as the in- dividual’s identification number. If the individual has applied for an ITIN but the IRS has not yet issued the ITIN, write “Applied For”.
Check the applicable box to indicate the reason the withhold- ing of tax is not required upon the disposition of Hawaii real property.
Box number 1. Check box number 1 if the transferor/seller is a resident person as defined in section 235-68, HRS.
Box number 2. Check box number 2 if by reason of a nonrecognition provision of the Internal Revenue Code as oper- ative under chapter 235, HRS, or the provisions of any United States treaty, the transferor/seller is not required to recognize any gain or loss with respect to the transfer. Complete sections A and B requesting a brief description of the transfer and a brief summary of the law and facts supporting the claim that recogni- tion of gain or loss is not required with respect to the transfer.
NOTE: If the withholding of tax is not required upon the dispo- sition of Hawaii real property because the disposition qualifies for the exclusion of gain from the sale of a principal residence under Internal Revenue Code section 121, check box number 2.
Box number 3. Check box number 3 if for the year preceding the date of the transfer the property has been used by the trans- feror/seller as a principal residence, and the amount realized for the property does not exceed $300,000. The "amount realized" means the sum of the cash paid, or to be paid (not including in- terest or original issue discount), the fair market value of other property transferred or to be transferred, and the amount of any liability assumed by the transferee/buyer or to which the Hawaii real property interest is subject to immediately before and after the transfer. Generally, the amount realized, for purposes of this withholding, is the sales or contract price.
NOTE: Although the withholding of tax may not be required upon the disposition of Hawaii real property, the trans- feror/seller is required under section 235-92, HRS, to file an in- come tax return to report the sale or other disposition.
Signature
Form N-289 must be signed by an individual, a responsible corporate officer, a member or general partner of a partnership, or a trustee, executor, or other fiduciary of a trust or estate. In addition, Form N-289 may be signed by an authorized agent with a power of attorney.
Where to Get Information
Taxpayer Services Branch
P. O. Box 259
Honolulu, HI 96809-0259
Tel. No.: 808-587-4242
Toll Free: 1-800-222-3229
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