Hawaii Sales Tax Enforcement Actions Checklist
Introduction
Hawaii’s Department of Taxation conducts General Excise Tax (GET) enforcement actions when
a business fails to register, file returns, or pay GET obligations. These enforcement actions represent the state’s attempt to collect unpaid taxes and ensure compliance with Hawaii’s tax laws.
GET enforcement can include notices of deficiency, liens, levies, or other collection activities that escalate over time if the underlying tax debt remains unpaid or unresolved. Understanding what an enforcement action means and how to respond is crucial because ignoring it typically results in additional penalties, interest, and more severe collection measures.
Enforcement actions align with the state’s broader collection process, which begins when a taxpayer misses filing deadlines or payment obligations and intensifies if those obligations remain unaddressed. Receiving an enforcement action does not mean criminal prosecution is automatic, but it does signal that the Department of Taxation is actively pursuing collection. GET is a business privilege tax on gross receipts from business activities, fundamentally different from consumer sales taxes in other states.
What This Issue Means
A General Excise Tax enforcement action is a formal notice or collection activity issued by
Hawaii’s Department of Taxation when a taxpayer owes unpaid GET or has failed to comply with
GET filing or payment requirements.
Enforcement actions can take several forms, including notices of deficiency (which propose additional taxes owed based on an audit or assessment), demand letters for payment, tax liens
(which claim a legal interest in your property or assets), or levies (which seize specific assets or income to satisfy a debt). These actions represent an escalation beyond routine compliance notices and carry legal weight with specific procedural requirements.
Why the State Issues Enforcement Actions
The state issues enforcement actions when standard collection efforts have not resolved the tax
debt or compliance issue. Common triggers include
- A taxpayer fails to file required GET returns (Form G-45 for periodic filing or Form G-49
for annual reconciliation) within the required timeframe.
- A taxpayer files returns but does not pay the GET shown as due.
- An audit or examination reveals unreported GET liability.
- A taxpayer fails to respond to prior notices or payment demands.
- A taxpayer claims exemption from GET but has not provided valid documentation.
The state’s goal in issuing enforcement actions is twofold: to collect unpaid taxes and to encourage future compliance. Hawaii’s Department of Taxation utilizes enforcement actions as a structured legal mechanism to pursue collection when voluntary payment or filing has not been made.
What Happens If This Is Ignored
Ignoring a GET enforcement action typically results in escalating collection measures. The state may pursue additional remedies, such as filing or enforcing a tax lien against your property, seizing bank accounts through levy, or issuing wage levies. When the Department issues a wage levy notice to your employer, they must withhold 25% of your gross salary, wages, or compensation and pay the same to the Department.
Penalties and interest continue to accrue on the unpaid tax amount, thereby increasing the total debt over time. The penalty for failure to file a GET return on time is 5% per month (or part of a month) on the unpaid tax, up to a maximum of 25%. In some cases, the state may revoke GET licenses or suspend business operations.
What This Does NOT Mean
Receiving a GET enforcement action does not mean the state has automatically won a judgment against you in court. It does not automatically imply your property will be seized, or your wages will be garnished—those are separate legal actions that may follow. An enforcement action does not mean criminal prosecution is imminent, as GET enforcement is primarily a civil collection process. It also does not mean the amount stated in the enforcement action is final and unchangeable—you typically have the right to challenge or dispute the proposed assessment, although specific procedures and timeframes apply.
Response Steps After Receiving an Enforcement Action
Step 1: Read the Entire Document Carefully
Review the enforcement notice, letter, or demand in full. Identify the specific type of action
(notice of deficiency, demand for payment, lien, levy), the tax periods involved, the amount claimed due, and any deadlines mentioned.
Step 2: Gather All Related Documents
Collect your GET returns (Forms G-45 and G-49), payment records, bank statements, receipts, and any prior correspondence with Hawaii’s Department of Taxation regarding this matter.
Organize these documents by tax period for easy reference.
Step 3: Verify Your Business Registration Status
Check whether your business is currently registered with Hawaii’s Department of Taxation for
General Excise Tax purposes and holds a valid GET license. Contact the Department of
Taxation or visit their website to confirm your registration details and any outstanding filing or payment obligations.
Step 4: Identify Any Factual Errors
Review the enforcement notice for errors in business name, address, tax identification number, tax periods, or amounts claimed. Note any discrepancies between what the notice states and your records.
Step 5: Determine If You Filed All Required Returns
Verify that you have filed all GET returns due for the periods listed in the enforcement action.
GET periodic returns are due on the 20th day of the month following the close of the tax period.
If you did not file, note which periods are missing and why.
Step 6: Determine If You Made All Required Payments
Review your payment records to confirm whether you have paid the full amount of GET due for each listed period. Note any partial payments or missed payments, as these affect the total amount owed, including penalties and interest.
Step 7: Check the Deadline on the Enforcement Notice
Identify the specific deadline given in the notice for responding, filing a return, making a payment, or taking other action. Be sure to record this date in a place where you won't forget it, as failure to do so could result in further collection actions.
Step 8: Research Your Right to Appeal or Dispute
Contact Hawaii’s Department of Taxation or consult official state tax guidance to understand what options exist for challenging or appealing the enforcement action. The statute of limitations for the Department to assess or levy additional GET is generally three years from the date the annual return was filed or three years from the due date, whichever is later.
Step 9: Document Any Extenuating Circumstances
If there are reasons you did not file or pay on time—such as a business closure, illness, accounting error, or reliance on incorrect advice—document these in writing with supporting evidence (medical records, business closure notices, correspondence).
Step 10: Prepare a Response or Compliance Plan
Based on the type of enforcement action and the deadline given, determine what the state is asking you to do and prepare to do it by the deadline. If you are unable to meet the deadline, document the reasons and prepare to request an extension.
Step 11: Contact the Department of Taxation if Unclear
If the notice is unclear, the deadline is ambiguous, or you do not understand the required action, contact Hawaii’s Department of Taxation for clarification before the deadline passes. Request written confirmation of your understanding, if possible.
Step 12: Keep Copies of Everything You Send
If you file a return, make a payment, send documents, or submit a response to the enforcement action, retain copies of everything you submit and proof that it was received.
Step 13: Monitor for Follow-Up Notices
After you respond to or comply with the enforcement action, monitor your mail and email for any follow-up correspondence from the Department of Taxation.
- State enforcement notices and responses
- Sales tax audits, assessments, and collections
- Payroll & trust fund tax enforcement issues
- Penalty and interest reduction options
- Payment plans and state tax relief eligibility
- Representation before state tax agencies
Step 14: Consider Professional Assistance
If the enforcement action is complex, involves large amounts of money, or you are uncertain about your next steps, consider consulting a tax professional, accountant, or attorney familiar with Hawaii tax law.
Taking Action
Receiving a GET enforcement action can feel overwhelming, but it is manageable when you respond promptly and stay organized. The notice signals a tax compliance issue related to your tax return, use tax, filing frequency, or filing requirements, and it often follows an audit assessment in the Audit Process.
While serious, this step does not end your options. You may comply, dispute the findings, request clarification, or seek professional guidance through the Hawaii Department of Taxation.
Act within the stated deadline to avoid added penalties or interest tied to the federal interest rate. Review the notice carefully, protect any confidential information, and gather records related to prior filings or Tax Refunds. If something is unclear, contacting the Hawaii Department of
Taxation for clarification is a reasonable and appropriate first step.
Facing State Tax Enforcement Action?
If you’ve received a notice related to sales tax or payroll tax enforcement and are unsure how to respond, our team can help you understand your options and next steps.
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