Hawaii Sales Tax Nonpayment Risk Checklist
Hawaii’s General Excise Tax applies to most business activities conducted in the state. The state imposes this tax on businesses rather than consumers, though businesses may pass the cost to customers.
When you fail to file returns on time or miss payment deadlines, the Hawaii Department of
Taxation initiates administrative collection procedures. Understanding these procedures helps you respond effectively before enforcement escalates to liens, levies, or license complications.
What This Issue Means
Nonpayment occurs when you fail to file Hawaii GET returns by the due date or when the state does not receive your tax payment on time. The state tracks both filing compliance and actual payment receipt separately.
Why the State Issues Notices
The Hawaii Department of Taxation monitors compliance through automated systems that flag accounts when due dates are not met for filing returns or when payments are not received.
Unpaid tax represents money that should have been collected from customers and remitted to the state.
Hawaii’s tax administration procedures require businesses to file returns and pay tax by the required deadlines, regardless of business circumstances. These collection activities constitute standard administrative functions that protect state revenue.
What Happens If You Ignore This
The state issues follow-up notices requesting payment when the tax remains unpaid after the initial due date. If you provide no response or payment, the Department of Taxation may assess penalties and interest that add to the original tax amount.
Penalties and interest calculations
- The penalty for failure to file a return on time is calculated at 5% per month or part of a
month on the unpaid tax up to a maximum of 25%.
- Interest is calculated at 2/3 of 1% per month or part of a month on unpaid taxes and
penalties beginning with the first calendar day after the date prescribed for payment.
Collection actions may include placing liens on business or personal property, levying business bank accounts, or initiating legal proceedings to enforce payment. For wage levies, employers must withhold 25% of gross salary, wages, or compensation until the debt is paid in full.
What This Does Not Mean
Nonpayment does not automatically mean the state has filed a lien against you or frozen your assets. Criminal charges have not been filed and are not imminent.
This remains a civil tax collection matter rather than a criminal prosecution. The state has simply recorded that payment was not made by the due date.
Steps to Take After Receiving Notices
1. Gather all documentation: Locate all letters, notices, or documents you received from the Hawaii Department of Taxation. Identify the tax periods involved, the amounts stated, and any deadlines mentioned in the notices.
2. Verify your account status: Contact the Collections Branch at your district office to confirm the current balance owed, applicable penalties and interest, and any collection actions that have been initiated. For Oahu, call (808) 587-1600; for Hawaii, call (808)
974-6374; for Kauai, call (808) 274-3403; for Maui, Molokai, or Lanai, call (808)
984-8511. General taxpayer services can be reached at (808) 587-4242.
3. Confirm which periods are unpaid: Obtain a record of which GET return periods have unpaid balances to understand whether the issue affects one month or multiple months of filings.
4. Locate business records: Gather sales records, invoices, receipts, and any GET returns you may have prepared but not filed for the periods in question.
5. Determine filing status: Review your filing history to establish whether the issue is a payment problem, a filing problem, or both.
6. Review penalties and interest: Request a detailed breakdown of the tax amount, penalties, interest, and any other charges from the Department of Taxation.
7. Document circumstances: Create a record of what occurred during the periods in question, such as business closure, relocation, accounting error, or staff turnover.
8. Assess payment ability: Determine whether you can pay the total balance immediately or whether you will need to request a payment plan for your Hawaii General Excise Tax liability.
9. Contact the Department about payment options: A non-refundable $50 processing fee applies when a payment plan is approved. Payment plans are available for accounts with significant balances through the Collections Branch at your district office.
10. Prepare missing returns: File the returns even if you cannot pay immediately because filing establishes the amount owed and demonstrates compliance intent.
11. Submit payment or payment plan request: Send payment or a formal request for payment arrangement to the address specified by the Department of Taxation. Include your business name, Hawaii Tax ID number, and reference the specific periods involved.
12. Keep copies of correspondence: Maintain records of all letters, emails, payment confirmations, and agreements with the Department of Taxation.
13. Monitor for confirmation: After submitting payment or a payment plan request, follow up with the state to confirm receipt and the updated status of your account.
14. Address liens or levies immediately: Contact the Department of Taxation immediately if you learn that a lien or levy action is in process and inquire about options to resolve the action.
Common Mistakes to Avoid
Ignoring notices from the Department of Taxation does not resolve the issue and typically triggers escalated collection actions. You must file returns even if you cannot pay because filing establishes a clear record of what is owed.
Always include a letter or form clearly stating which tax periods the payment covers to prevent misapplication. Missing payments in approved payment plans can result in plan cancellation and more aggressive collection action.
Tax debt does not disappear due to time passing, though Hawaii has a 3-year statute of limitations for assessment and a 15-year statute of limitations for collection after assessment.
Maintain copies and proof of mailing for all documents sent to the state. Put agreements and commitments in writing rather than relying solely on phone conversations with the state.
Taking Action Now
Sales tax nonpayment requires prompt action, but you can resolve it through direct communication with the Hawaii Department of Taxation. Start by gathering your notices and contacting the Collections Branch at your district office to confirm the current 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.
We help with
- State enforcement actions and notices
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- Penalty and interest reduction options
- Payment plans and compliance solutions
- Representation before state tax agencies
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