Tax Relief Services Hawaii

How Hawaii Collects State Taxes & How its Taxpayers Can Get Tax Help

The Hawaii Department of Taxation has the authority to collect delinquent taxes by all legitimate means. This includes placing tax liens, the seizure and sale of any assets of value, utilizing private collection agencies, and etc. Unless the Department concludes that the interests of the State are at risk, it will do try every possible avenue before seizing a taxpayer’s assets. Before any collection activities are taken against you, the Department will send you a letter at the current address on file, notifying you of the possibility. If you receive such a letter, it is time to consult with a reputable tax professional for the advice and any tax help he/she can provide.

Interest Charges

Interest is going to be charged and added to any outstanding tax debt. This amount will be collected along with the overdue taxes. Interest is assessed on unpaid taxes at 2/3 of 1% for every month or fraction thereof that the taxes are still outstanding. Taxpayers are allowed to ask that their interest be waived if they can prove that they failed to file or pay their taxes on time was because of something reasonable and not due to a disregard for the law, carelessness or utter neglect.

Penalties

If you fail to file your State tax returns or statements when due, or fail to pay your taxes on time, you will incur additional penalties, which will be added to your taxes as follows:

Failing to file a tax return: penalty is 5% of the taxes due as long as the taxpayer’s delay is not over a month. For each additional month late or fraction thereof, another 5% will be added up to a total penalty of 25%.

Failing to pay taxes after filing return on time: if the taxpayer does not pay the full amount owed within 60 days of filing their taxes on time, the penalty can go up to 20% of the taxes due. The director will decide how much the penalty should be and that amount shall be added to the tax liability.

Paying less than owed due to fraud: in the event that a portion of the unpaid tax is the result of fraud, the penalty can go up to 50% of the amount underpaid, which shall be added to the tax liability.

Paying less than owed due to disregard, carelessness or negligence: if a portion of the unpaid tax is the result of negligence or disregarding the rule of law, the penalty can go up to 25% of the amount underpaid, which shall be added to the tax liability.

You may be within your rights to ask for tax relief in the form of a waiver of penalties if you are able to show that the reason you didn’t file your return or pay what you owe in taxes on time was