Hawaii Wage Garnishment Checklist

Hawaii Wage Levy Checklist

Understanding the Wage Levy

A wage levy issued by the Hawaii Department of Taxation represents a legal directive to your employer requiring the withholding of money from your paycheck. Withheld funds go directly to the state to satisfy your unpaid tax debt, and this action differs from a simple notice because it actively changes how your employer processes your paycheck.

Your employer must comply with the levy once received. Withholding continues until your tax debt is paid in full or the state releases the levy.

Why the State Issues a Wage Levy

The Hawaii Department of Taxation issues wage levies when a taxpayer carries an unpaid tax liability and has not responded to or resolved earlier collection notices. Common triggers include unpaid income tax, unpaid excise tax, or unpaid tax on other forms of income, and the state sends multiple notices and bills before resorting to a levy.

When you do not respond to those earlier notices or make arrangements to pay, the state moves forward with a wage levy as a collection tool. This administrative procedure under Hawaii tax law serves as the state’s method for collecting overdue tax debts.

Consequences of Ignoring the Levy

The levy will continue with each paycheck until the debt is resolved or the order is modified.

Continued non-response may result in additional enforcement actions, including bank account levies or liens against property.

What the Levy Does Not Mean

A wage levy does not mean your employment is being terminated, as federal law under 15

U.S.C. 1674 prohibits employers from terminating employees solely due to wage garnishment for any single indebtedness. The levy does not mean all of your paycheck will be withheld, since the Hawaii Department of Taxation levies a withholding of exactly 25 percent of your gross salary by statute.

This action does not mean you have no options for resolution. You retain the right to dispute the underlying tax debt or explore payment arrangement options with the state, and a levy is a collection tool under HRS 231-25 rather than a final judgment.

Steps to Take After Receiving a Wage Levy

1. Verify the Levy Notice: Confirm the notice came from the Hawaii Department of

Taxation and check that your name, Social Security number, and tax period are correct.

Set aside the original notice in a safe place for your records.

2. Review the Debt Information

○ Identify which tax year or period the debt applies to and review all documentation related to that specific timeframe.

○ Note the total amount claimed as owed, including any penalties and interest that have accrued on the original tax liability.

○ Determine whether you recognize the debt or believe it may be incorrect based on your records and tax filing history.

3. Contact the Department: Call the Hawaii Department of Taxation at the phone number listed on the levy notice and explain your situation. Request information about the debt, including how it was calculated, and ask whether payment arrangements or other options are available.

4. Gather Documentation: Collect copies of any previous tax notices or bills related to this debt. Locate your tax returns for the relevant year or years, gather any payment receipts or bank statements showing payments made to the state, and compile documentation of any hardship circumstances if applicable.

5. Notify Your Employer: Inform your Human Resources or Payroll department that you have received a levy notice. Provide a copy of the notice to the appropriate department, ask your employer to confirm they have received the notice from the state, and request notification of the withholding amount on your pay stubs.

6. Document All Communications

○ Keep a record of all phone calls, including dates, times, names of representatives, and summaries of conversations.

○ Save copies of any letters, emails, or notices you send to or receive from the state.

○ Maintain detailed records of any payment arrangements discussed or agreed upon.

○ Retain receipts or confirmation numbers for any payments made.

7. Explore Resolution Options: Ask the Hawaii Department of Taxation about installment agreements or payment plans. Inquire whether a lump-sum payment to satisfy part of the debt would reduce the levy duration, ask about offer in compromise or penalty abatement options if your situation qualifies, and request written confirmation of any payment arrangement discussed. Submit Form CM-2, Statement of Financial Condition and Other Information for Individuals, if you need to request a reduction due to significant financial hardship.

8. Monitor Your Paystub: Review each paystub carefully to confirm the levy amount and frequency. Verify that the withheld amount matches what the state indicated would be taken, and watch for changes in the levy amount or notice of changes from the state.

What Happens After You Take Action

After you contact the Hawaii Department of Taxation and provide information about your situation, the state will review your account and respond to you. If you request an appeal regarding the underlying tax assessment, you may file with the Administrative Appeals Office, and the state will process that request according to its procedures.

The wage levy will continue while your case is being reviewed. Hawaii Department of Taxation policy states that when a wage levy is in effect, it cannot be stopped by entering into a payment agreement or making a partial payment, and the state will not release the levy until the debt is fully paid or until proof of bankruptcy relief is provided.

Key Facts About Hawaii Wage Levies

The Hawaii Department of Taxation withholds exactly 25 percent of your gross salary, wages, or compensation when issuing a wage levy. This rate is established by HRS 231-25 and applies continuously until the debt is paid in full, and the levy is continuous from the date it is first made until the levy is released.

Your state refunds or federal income tax refunds may be intercepted and applied to pay down your liability to shorten the duration of the levy. Reduction of the levy amount becomes possible if it causes significant financial hardship, meaning the levy leaves you unable to afford food, rent, or medication, and you must submit a written request with Form CM-2 and supporting documentation to request a reduction.

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.