Hawaii Active Collections Timeline Checklist
Understanding State Tax Enforcement
Hawaii Department of Taxation initiates enforcement actions when taxpayers fail to pay assessed tax debts through standard billing and notice procedures. Enforcement represents an advanced collection stage that occurs after initial notices have not resulted in payment or resolution.
The Department uses formal legal collection tools, including wage levies, bank levies, and tax liens under Hawaii Revised Statutes Chapter 231. These enforcement mechanisms allow the state to recover unpaid tax liability through direct seizure or withholding of taxpayer assets and income.
Legal Authority for Collection Actions
Hawaii Revised Statutes Chapter 231 grants the Department of Taxation the authority to collect unpaid state taxes through administrative enforcement without obtaining court orders. Under
HRS § 231-25, the Department can enforce collection through levy and distraint upon all property and rights to property.
HRS § 231-33 creates an automatic lien in favor of the state upon all property belonging to any person liable for unpaid state tax. The lien arises when tax is assessed, when a return is filed, or when the Department files a certificate, whichever occurs first.
Common Enforcement Methods
The Department employs several collection tools when standard billing fails to produce
payment
- Wage levies require employers to withhold twenty-five percent of gross salary until the
debt is paid in full.
- The bank levies freeze and seize funds from financial accounts to satisfy outstanding tax
liability.
- Tax liens under HRS § 231-33 create legal claims against real and personal property
owned by the taxpayer.
- Refund offsets intercept state and federal tax refunds and apply them to outstanding
balances.
Initial Response Steps
Contact the Department of Taxation Collections Branch immediately upon receiving an enforcement notice. Oahu taxpayers should call 808-587-1600, Hawaii island residents should call 808-974-6374, Kauai residents should call 808-274-3403, and Maui, Molokai, or Lanai residents should call 808-984-8511.
Email inquiries can be sent to Tax.Collection@hawaii.gov with the subject line indicating a delinquency question. Request a complete account statement showing all assessed taxes, penalties, and interest for each tax period involved.
Gather documentation, including copies of tax returns for all years in question, records of any prior payments made to the state, recent pay stubs covering at least thirty days, and current bank statements from the last two months. Collect documentation of significant financial changes such as job loss, medical emergencies, or family circumstances that affected your ability to pay.
Understanding Wage Levy Procedures
Hawaii Department of Taxation wage levies differ from court-ordered garnishments that require judicial proceedings. The Department issues continuous wage levies administratively that require employers to withhold twenty-five percent of your gross wages, salary, or compensation.
Wage levies continue until the full tax debt, plus accrued penalties and interest, has been paid.
Payment agreements or partial payments do not stop an active wage levy, though additional voluntary payments shorten the levy duration.
You may request a reduction in the levy amount if it causes significant financial hardship that leaves you unable to afford food, rent, or medication. Submit Form CM-2, Statement of Financial
Condition and Other Information For Individuals, along with supporting documentation such as bills, past due notices, and the last three months of bank statements.
Tax Lien Recording and Priority
Any unpaid state tax constitutes a debt due the state and creates a lien upon all property and rights to property under HRS § 231-33. Once it arises, the lien becomes paramount against all parties, with specific exceptions for mortgagees and purchasers whose interests arose before the Department recorded its certificate.
Recording a lien certificate in the Bureau of Conveyances or filing it with the county director of finance remains an option for the Department. Recording costs become part of the lien amount owed.
After a properly recorded lien remains in place for three hundred sixty-five days with no taxpayer response or action, the director may apply to the circuit court to convert the lien into a civil judgment under HRS § 231-33(j). Liens may be foreclosed through court proceedings or by distraint under HRS § 231-25.
Payment Plan Options
Payment arrangements may prevent or suspend certain collection actions while you resolve the debt over time. Contact the Collections Branch to discuss installment agreement options based on your financial circumstances, and understand that payment plans require regular monthly payments and typically involve entering into a formal agreement with the Department.
Demonstrating your income, expenses, and overall financial condition through Form CM-2 and supporting documents may be required by the Department. Installment agreements do not stop active wage levies but may prevent referral to the Attorney General’s office.
Stopping Active Enforcement
Wage levies end when you pay the debt in full or provide proof of bankruptcy filing. Partial payments and payment agreements reduce the total owed but do not stop the levy.
Consider obtaining a loan from a bank, credit union, or financial institution that may offer lower interest rates than the penalties and interest charged by the state. Compare all available options before deciding how to resolve the debt.
Bank levies and other collection actions continue until the debt is satisfied or legally discharged.
Respond promptly to all Department communications and provide requested documentation within stated deadlines.
Critical Points to Remember
Never ignore enforcement notices from the Hawaii Department of Taxation. Collection actions escalate when taxpayers fail to respond or take action to resolve outstanding liabilities, and filing all required tax returns, even during enforcement periods, remains mandatory as missing returns complicate resolution efforts.
Keep detailed records of all communications with the Department, including dates, times, names of representatives, and substance of discussions. Update your address and contact information to ensure you receive all correspondence about your account status.
Facing State Enforcement or Payroll Tax Issues?
If you’ve received a state tax notice and aren’t sure how to respond, we can help you review your options and next steps.
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