HI SB851

Changes Department of Taxation authority from "allow" to "require" electronic filing of tax returns, applications, reports, and documents under title 14, with exceptions for reasonable cause as determined by administrative rules.

Establishes a 2% penalty for persons required to file electronically who fail to do so, calculated as 2% of the amount of tax required to be shown on the return.

Lowers the electronic funds transfer threshold from $100,000 to $40,000 for tax liability, and eliminates the separate $40,000 threshold that previously applied only to withholding taxes.

Clarifies that electronic filing and payment thresholds apply per tax type rather than as a single consolidated amount.

Effective upon approval, with the electronic funds transfer threshold change applying to taxable years beginning after December 31, 2017.