Haw. Rev. Stat. § 231-36.6 – Substantial understatements or misstatements of amounts; penalty.

(a) There shall be added to the tax an amount equal to twenty per cent of the portion of any underpayment that is attributable to any substantial understatement of any tax in a taxable year. The penalty under this section shall be in addition to any other penalty assessable by law.
(b) Except as provided under subsection (c), there is a substantial understatement of tax for any taxable year if the amount of the understatement for the taxable year exceeds the greater of:
1. (1) Ten per cent of the tax required to be shown on the return for the taxable year; or
2. (2) $1,500.
(c) In the case of a corporation other than a corporation taxable under subchapter S of the Internal Revenue Code, there is a substantial understatement of tax for any taxable year if the amount of the understatement for the taxable year exceeds the greater of:
1. (1) Ten per cent of the tax required to be shown on the return for the taxable year; or
2. (2) $30,000.
(d) The amount of any understatement shall be reduced by that portion of the understatement that is attributable to:
1. (1) The tax treatment of any item by the taxpayer if there is or was substantial authority for such treatment; or
2. (2) Any item if the relevant facts affecting the item's tax treatment are adequately disclosed in the return or in a statement attached to the return and there is a reasonable basis, as defined under section 231‑36.8, for the tax treatment by the taxpayer.
  The reduction in this subsection shall not apply to any item attributable to a tax shelter as described in section 231‑36.7.
(e) This section shall be construed in accordance with regulations and judicial interpretations given to section 6662 of the Internal Revenue Code.
(f) For purposes of this section, "understatement" means the excess of:
1. (1) The amount of tax required to be shown on the return for the taxable year; over
2. (2) The amount of tax imposed that is shown on the return, reduced by any rebate as that term is defined by section 6211(b)(2) of the Internal Revenue Code.

[L 2009, c 166, §4]