My name is Stan Baptista. For 25 years I lived in Massacusetts and New Hampshire working for various commercial software companies including Wang Laboratories, Kurzweil AI, Lotus Corporation, and Avid Technologies. I decided to return home to Hawaii in 2001 and in 2002 started working for the Hawaii Tax Department.

From 2003 to 2006, I was the Department's in-house software subject matter expert for Act221/215 audits participating in over 20 cases. This experience tends to color my thinking about the tax credit in that audits are very much about the minutiae of accounting and particularly about the law. (Remarkably little has to do with the technology itself.) So bear in mind that the content of this site can sometimes get quite involved in details of legal interpretation.

I created this web site primarily because:

• From the Tax Department's perspective, auditing Act221/215 cases puts a severe strain on its resources. In my view, taxpayers are much better served if those resources are utilized elsewhere. The fewer audits, the better.

• Ultimately, disputes as to whether a taxpayer is entitled to the credit are not so much about the technology as it is about interpretations of the law. So, from the taxpayer's perspective, I believe it is helpful to understand the fundamental principles of the research credit and how the Tax Department tends to interpret its language.

Being audited is costly, disruptive, and time-consuming. It can really ruin your day, your week, and several years of your life. The best advice I can give to a corporation contemplating applying for this tax credit is:

Don't give the Tax Department a reason to audit you.

Along those lines, the next bit of advice I can give you is:

Don't be greedy.

On the subject of greed, there can be substantial amounts of money at play (hundreds of thousands, sometimes millions). Everyone involved recognizes this. It seems to me that some taxpayers decide to be, let's say, "aggressive" in what activity and expenses they claim. Those are usually the ones that end up under audit.

I hope that readers will find this site useful. But for those of you that simply believe you are entitled to the tax credit regardless of what the current law states, this site will offer you little. On the other hand, if you are basically willing to play by the rules and want to get your fair share of what the law allows (but no more), then I think you will find that there is a wealth of information here.

Finally, let me make one last comment: According to the article Better data would shed light on tech credit, "[t]his credit is far more generous than the technology credit offered by any other state." It is yet to be determined whether that is net positive or negative for Hawaii.