Hawaii Payroll Tax Payment Plan Options Checklist
Hawaii payroll tax payment plans are formal arrangements that allow employers to pay outstanding obligations in installments rather than in full. The Hawaii Department of Taxation administers these plans for businesses that cannot pay their entire payroll tax liability at once.
What This Issue Means
A Hawaii payroll tax payment plan is a written agreement between an employer and the Hawaii
Department of Taxation that outlines how and when back payroll taxes will be paid. Instead of paying the full amount owed immediately, the employer makes regular monthly or periodic payments over an agreed timeframe.
The plan specifies the total amount owed, the payment amount, the payment schedule, and the due dates for each installment. This arrangement remains in effect until the entire balance, including accrued interest and penalties, is paid in full.
Why the State Issued This or Requires This
The Hawaii Department of Taxation issues payroll tax payment plans to collect outstanding obligations while providing employers with a realistic path to compliance. Employers request such arrangements when they cannot pay their full liability immediately due to cash flow constraints, unexpected expenses, or business difficulties.
What Happens If This Is Ignored
Failure to respond to a payroll tax payment plan offer or maintain payments under an existing plan triggers state collection efforts. The Hawaii Department of Taxation may file a state tax lien against the business, pursue wage garnishment, initiate bank levies, or take other collection actions to recover the debt.
What This Does NOT Mean
A Hawaii payroll tax payment plan does not mean the tax liability has been forgiven or reduced.
The employer still owes the full amount of the original tax, plus interest and applicable penalties, unless those penalties are formally abated through a separate process.
Checklist: Hawaii Payroll Tax Payment Plan Options —
What to Do
- Obtain the most recent bill, notice, or correspondence from the Hawaii Department of
- Confirm the tax type, which may include employee withholding, employer contributions,
- Identify the tax periods covered by the outstanding balance.
- Review the amount owed, including principal, interest, and penalties.
Step 1: Verify the Payroll Tax Debt
Taxation. or both.
Step 2: Contact the Hawaii Department of Taxation Collection Branch
Call the Collection Branch at the phone number listed on the notice or bill. Provide the business name, tax identification number, and the specific tax period or periods owed. Email
Tax.Collection@hawaii.gov with the subject line “I have a payment plan question” or call district
offices: Oahu (808) 587-1600, Hawaii (808) 974-6374, Kauai (808) 274-3403,
Maui/Molokai/Lanai (808) 984-8511.
- Prepare the business’s most recent tax returns for both state and federal filings.
- Have bank account information available if discussing automatic payment options
- Document current monthly payroll tax obligations.
- For plans longer than 12 months, prepare to submit Form CM-2 or Form CM-2B along
Step 3: Gather Required Financial and Business Information
through electronic payment. with the most recent three months of bank statements.
Step 4: Submit the Payment Plan Request Using Form D-100
Follow the Hawaii Department of Taxation’s procedures for submitting a payment plan request using Form D-100. You may request a payment plan agreement online through Hawaii Tax
Online if your unpaid balance exceeds $100, you do not have an active payment plan, you are not in bankruptcy or referred to a private collection agency, and you do not have a pending offer in compromise. A non-refundable $50 processing fee will be charged when the payment plan request is approved, as required by Hawaii Revised Statutes section 231-25.5.
Step 5: Review and Accept the Payment Plan Agreement
Once the state responds, carefully review the installment plan agreement terms. Confirm the total amount owed, the monthly payment amount, and due dates. Verify the plan’s start date and expected completion date. Sign and return the agreement within the timeframe specified by the state.
Step 6: Understand Tax Lien Filing Policy
A state tax lien will be initiated to enter into an installment plan agreement for more than one year, considering the amount of your balance due, the nature of the circumstances that led to noncompliance, your compliance history, and all other relevant facts necessary to protect the state’s interest. Contact the Collection Branch directly about lien release options once the debt is fully paid.
- Mark payment due dates on a calendar or accounting system.
- Ensure payments are submitted by the due date each month or quarter.
- Include the tax identification number with every payment for proper credit.
- Pay through Hawaii Tax Online using electronic funds withdrawal from a checking or
Step 7: Make Timely Payments According to the Plan
savings account, which requires providing your bank routing number and bank account number.
- State enforcement actions and notices
- Payroll tax debt review and resolution
- Penalty and interest reduction options
- Payment plans and compliance solutions
- Representation before state tax agencies
Step 8: Continue Filing and Paying Current Payroll Taxes
File all current payroll tax returns on their regular due dates and pay all current payroll tax obligations when due, separate from plan payments. Maintain consistent compliance with all current filing and payment requirements and report any changes in payroll or business structure to the state.
Common Mistakes to Avoid
Missing payment due dates can result in the plan being canceled. Set payment reminders well in advance of each due date to avoid unintended delays.
Failing to pay current taxes while on a payment plan suggests ongoing compliance problems.
Always include the tax identification number, business name, and tax period with every payment to ensure proper crediting.
Frequently Asked Questions
Does a payment plan reduce the amount of taxes I owe?
No, this arrangement allows you to pay what is legally owed over time.
Are there installment agreement fees or setup charges?
Yes, a non-refundable $50 processing fee will be charged when a payment plan request is approved, as required by Hawaii Revised Statutes section 231-25.5.
Can I pay off the plan early without penalty?
Official guidance does not prohibit early payoff. Contact the Collection Branch directly to confirm how early or additional payments will be applied to your account balance.
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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