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Hawaii Department of Taxation Basics


Some Need to Know things about Hawaii Tax Issues


I want to provide you with some basic information about common Hawaii taxes.


Again, let me stress the basics. As with all tax situations,  it generally depends upon the facts and circumstances of the situation.


Never filed your Hawaii tax return!

If you never file a tax return, there is no time frame for them to pursue you, regardless of what type of Hawaii tax your are talking about.


How far back will they go?

If Hawaii determines you should have filed a tax return, they can and do routinely go back 8 to 10 years, but they can go back further, it is at their discretion.


Is this a problem?

I don’t know about you but most normal people do not have or keep records going back that far!


That can be a real problem! Especially if you don’t have business records or job related expenses or mortgage interest statements etc.

You may be ble to reconstruct your records and the Hawaii Department of Taxation may allow it.


Why does Hawaii wait so long to contact you?

In short, Because they can! They generally have no obligation to tell you and they generally don’t contact you until it’s to late and you are being Audited or if you owe they may have levied your bank account or garnished your wages.


The Hawaii DEPARTMENT OF TAXATION probably knows you need to file but they just don’t have the personnel to go after everyone who has not filed, but eventually they will get around to coming after you! It is only a mater of time.


What if you don’t file?

You must be a gambler because you ar e rolling the dice. While it doesn’t happen often, Just the lack of filing and paying over the tax is enough for Hawaii to actually come after you and prosecute you. Check the news archives, you will find someone they have come after and made an example of. Generally they don’t prosecute but they can!


What will I owe?

Many times is is not the Tax tax you owe, but the penalty and compounded interest that is due. The interest rate they charge is 8%. I don’t know anyone charging 8% or paying you 8% on a savings account. Manybe not as bad as credit card but it must be a close second. Imagine the interest ona 8 or 10 year old tax liability.


What kind of taxes might you owe?

The most common Hawaii tax is the Hawaii income taxes.  The second most common and the one more likely to be overlooked is General Excise Tax. In simple terms general excise taxes are what are called a gross income tax.  It is based upon the gross income regardless of expenses. The GE tax applies to almost all forms of self-employment income, Uber, Lyft, multi-level marketing, Turo,  consulting income, rental income, commissions, royalties etc. Seem like it applies to almost everything, because it does!

Doesn’t sound fair,well it is probably not!


GE taxes can range from .5% to 4.5%.


Have a rental property?

If you rent short-term, less than 30 days at a time you better know about “Transient Accommodation Tax” with a rate of 10.25%

Use  VRBO or AirBnB or something similar, you should be filing and paying TAT. Talk about a communist state, this may take the cake. Think you are free to do what you want?


Rental Vehicle Tax

If you are doing Turo, you May be liable for additional taxes. Do some research if this applies to you.


Can you Deal with the Hawaii Department of Tax Yourself?

You could, but I wouldn’t recommend it! I am not just saying that. They are one of the most difficult agencies to work and deal with and if you miss or ignore the time to take action, you will have an uphill battle.


Try dealing with the HAWAII Department of Taxation on your own and let me know how it goes!


My team and I have been dealing with the Hawaii Department of tax for over 21 years and have been very successful.


Hawaii tax Policy and Law

The Department of generally has very little written tax policy. There are laws on the books but much of what the department of tax does will have no clear policy. Very little of there policy is available for review. Most things they do are based on there discretion. That makes it very hard if not impossible to deal with them.


On many occasions I have asked the same  question to different auditors or collectors and get several different answers. The reason this can happen is because there is not written policy that they publish or that they are required to follow. Many of the laws are vague or leave it to their discretion; how do you challenge rules or policies in those situations. Very carefully!


There are ways to beat the Hawaii Department of Taxation. That is  why you need a qualified, experienced and trained Tax Professional who has been dealing with the Department of Taxation for over a 21 years.

I have only touched on some of the basics. Every situation is different and is based on facts and circumstances.


Always consult you own Tax, Legal or Financial advisor or do your own research and due diligence.


As I stated this is just the basics. Do Not rely upon it with out doing your own research.


The State of Hawaii does offer penalty waivers, payment plans, audit reconsideration, amended tax returns, board of review appeals, formal appeals and legal proceedings. These are the most common options available to you.


The State does have a statute of limitations. A statute of limitations is an amount of time that they must take action or do something. If they don’t,  the law stops them from taking an action. Such as auditing your tax return or collecting back taxes.


If I have made your head spin, now you know what I go through on a daily basis.


If dealing with the Hawaii Department of Taxation was so easy, everyone would be doing it.

Try finding someone to help you with Hawaii Tax Problems. Good Luck 🍀

Our team may make it look easy, but it’s not. We just have the education, training and experience that almost no one else in Hawaii has. I can assure you no Mainland company will be able to provide the help you need.


Hawaii Tax Knowledge is Power!






Charles Ross - eXp Realty LLC
eXp Realty LLC Salina Group - Salina, KS
Love To Help People

Excellent Information. Thank you for sharing. Have a wonderful day and a blessed weekend.


Mar 19, 2023 02:34 AM
Bill Salvatore - East Valley
Arizona Elite Properties - Chandler, AZ
Realtor - 602-999-0952 / em:

Thank you for sharing the information. Wishing you continued success.  Have a wonderful day and sell a house.  bill

Mar 19, 2023 06:53 AM