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Hawaii sales tax notices

Got a letter from the Hawaii Department of Taxation (DOTAX)? Find it below to see what it means, why businesses usually receive it, and what to do next.

Sources checked

Tax authority

Hawaii Department of Taxation (DOTAX) (opens in a new tab)

Official notice guide (opens in a new tab)

Disagree with a notice?

For audit assessments, you can apply to the Administrative Appeals and Dispute Resolution (AADR) program on Form AA-1. AADR takes a proposed assessment (within 20 days) or a final assessment (within 30 days). A final assessment can also be appealed to the Taxation Board of Review (Form BOR-1 or a letter) or the Tax Appeal Court within 30 days of its mailing date. A proposed assessment cannot be appealed to the Board of Review or the Tax Appeal Court. The first appeal does not require paying the tax. Balance due notices, due process notices, line item adjustment letters and referral notices of delinquency cannot be appealed to AADR.

Deadline: 30 days from the mailing date of the Notice of Final Assessment (20 days from a Notice of Proposed Assessment for AADR)

Source: Hawaii Department of Taxation (DOTAX) (opens in a new tab)

Failure to file

The authority has no return on record for a period it expects one, often because an account is open but filings stopped.

Failure to file

Failure to file notice (First Notice / Final Notice)

Notices saying DOTAX records show that annual returns, such as general excise tax returns, were not filed for one or more years. DOTAX sends a First Notice and then a Final Notice, each listing the tax types and years.

Why you got it

  • Annual general excise tax returns not filed for one or more years

What to do

  1. Check the listed tax types and years. If you already filed, contact DOTAX with your evidence
  2. File the missing returns as soon as possible, and pay the tax shown or ask about an installment agreement
  3. If you had reasonable cause for filing late, ask DOTAX to waive the penalties and interest, using the contact details on the notice
  4. If you do not respond, DOTAX may make a proposed assessment based on the best information available

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Source: Hawaii Tax News - Winter 2001, Volume 5, Number 4 (opens in a new tab)

Balance due

A bill for tax, penalty, or interest the authority says is unpaid.

Balance due

Balance due notice

A DOTAX notice that you owe a balance. It is not an audit assessment and cannot be appealed to the Administrative Appeals Office.

Why you got it

  • Tax, penalty, or interest left unpaid on an account

What to do

  1. Check the balance against your returns and payment records
  2. If you think it is wrong, call the phone number or write to the address on the notice. Do not file an AADR appeal (Form AA-1) for this notice; it will be rejected
  3. Pay the tax or ask about an installment agreement. If the penalties resulted from circumstances beyond your control, ask DOTAX to waive penalties and interest

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Source: Administrative Appeals Office FAQs (DOTAX) (opens in a new tab)

Assessment

A proposed or final determination of tax owed, sometimes estimated when returns were never filed.

Assessment

Notice of Proposed Assessment

A notice, usually after an audit, that explains proposed tax, penalties, and interest, such as for general excise tax. It becomes final 30 days after it is mailed.

Why you got it

  • A DOTAX audit that adjusted gross income subject to general excise tax
  • Disallowed deductions or exemptions

What to do

  1. Check the proposed tax, penalties, and interest against your records
  2. Ask for clarification or object within 30 days of the mailing date. You may ask to meet with the auditor or a supervisor, and raise any penalties you think should be waived for reasonable cause
  3. To use AADR, file Form AA-1 within 20 days and send a copy to the auditor

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Response window: 30 days from the mailing date to object (20 calendar days to apply to AADR)

Source: Hawaii Taxpayer Bill of Rights, Rev. July 2022 (opens in a new tab)

Assessment

Notice of Final Assessment

The final assessment issued after the 30-day proposed assessment period ends. It explains the basis of the tax and how to appeal.

Why you got it

  • A Notice of Proposed Assessment that was not resolved within 30 days

What to do

  1. Check the final assessment against your records
  2. If you disagree, appeal to the Board of Review, the Tax Appeal Court, or AADR within 30 days. If you file directly with the Tax Appeal Court, also serve a court-stamped copy on the Director of Taxation within 30 days
  3. If you agree with the tax, pay it or ask about a closing agreement or installment agreement
  4. If late filing or payment was due to reasonable cause, ask DOTAX to waive the penalties and interest

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Response window: 30 days from the mailing date to appeal

Source: Hawaii Taxpayer Bill of Rights, Rev. July 2022 (opens in a new tab)

Collections

Enforcement on unpaid balances, such as liens, levies, warrants, or referral to a collection agency.

Collections

Tax lien

DOTAX Tax Collection Services may file a tax lien to protect the State's interest in a delinquent tax debt. It may also serve levies and seize and sell assets.

Why you got it

  • Delinquent tax that remains unpaid after earlier notices

What to do

  1. Contact Tax Collection Services (Tax.Collection@hawaii.gov or 808-587-1600 on Oahu)
  2. Pay the delinquent balance, or work with a collector to resolve it
  3. You can still ask DOTAX to waive penalties and interest if the delinquency was due to reasonable cause
  4. Under the Hawaii Taxpayer Bill of Rights, you are entitled to a prompt lien release after paying the delinquency and filing fees

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Source: Tax Collection Services | Department of Taxation (opens in a new tab)

Ask for penalty relief

Penalties on a Hawaii notice aren't always final. You can ask for them to be waived. Follow the steps below, including anything the state requires you to file or pay before it reviews the request.

Waiver of penalties and interest

  1. If you can, file any missing returns and pay the tax due, or ask DOTAX about an installment agreement
  2. Ask DOTAX to waive the penalties and interest, using the phone number or address on your notice. Explain why you could not file or pay on time and include supporting documents
  3. For a state-declared disaster, use the Tax Relief Request form DOTAX issues for that event (Form L-115 series) instead

What qualifies: Reasonable cause: the failure to file or pay on time was due to circumstances beyond your control, not your own carelessness, neglect, or wilful disregard of the law

Interest: You can ask DOTAX to waive penalties and interest if the failure was due to reasonable cause. Interest keeps accruing on unpaid tax and penalty during an installment agreement

Source: Hawaii Taxpayer Bill of Rights, Rev. July 2022 (opens in a new tab)

Before you respond

  • Check the date on the notice. Response windows usually run from that date, not the day you open it.
  • Match the account number and filing period to your own records before paying or disputing.
  • If returns are missing, filing the actual returns usually replaces an estimated bill. Confirm how on the notice or with the authority.
  • Ask about penalty relief before paying penalties, and check what must be paid with the request. See how
  • Keep a copy of the notice and everything you send back.

This page is general information, not tax or legal advice. Notice names and procedures change, so always follow the instructions on your notice and the official sources linked above.

Need the rates, nexus thresholds and filing rules? Read the Hawaii sales tax guide.

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