TAX DEBT RELIEF OPTIONS – Hawaii Department of Taxation

M&M Financial has been helping taxpayers in Hawaii resolve their tax liabilities since 2008 and taxpayers across the country since 2005.  We deal with the IRS and State taxing authorities, so you do not have to!  

Hawaii Department of Taxation (HI-DOT) liabilities commonly stem from unpaid Withholding Tax, General Excise Tax, Franchise Tax or Income Tax.  

Below is some information that will help you start resolving your state tax liabilities.  If you have questions and would like to talk to a licensed Tax Resolution Specialist please do not hesitate to call us at 866-487-5624.

PAYMENT PLANS TO RESOLVE HAWAII BACK TAXES

If your tax debt is under $10,000, you can set up a monthly payment plan at Hawaii Tax Online. If you owe more than $10,000, you'll need to contact the HI-DOT to set up your payment plan.

If your business owes back-taxes to the HI-DOT, they may not give you an installment agreement without making you work for it.  Be prepared to submit a detailed Personal Financial Statement form CM-2 and Business Financial Statement form CM-2B.  Typical payment plan standards for business tax debts are: 

• 25% down payment required
• 6-12 month installment agreement terms are preferred
• Full tax compliance is a must

Quick Tip:  Hawaii has an “Uncollectible” status for those that aren’t in a financial position to pay their tax debt.  If you are granted “Uncollectible” status, the collection process is put on hold and you will be protected from enforced collection actions such as bank levies and wage garnishments.  

REDUCE YOUR HAWAII TAX DEBT

Offer in Compromise

HI-DOT does have an Offer in Compromise program to resolve your tax liability for a lesser amount.  If you lack equity in assets, and lack the ability to make monthly payments, you may qualify for the OIC settlement.  

Each case is evaluated based on its own unique set of facts and circumstances, and you will have to go through an in-depth financial evaluation before your Offer is approved.  Like the IRS, the HI-DOT will consider 3 basic types Offer in Compromise settlement.

• Doubt as to Collectability, 
• Doubt as to Liability, and 
• Exception Circumstances

M&M does not recommend the Offer in Compromise for operating businesses. 

Quick Tip:  Before you submit your HI-DOT Offer in Compromise Form, make sure you are eligible for consideration by the state.  Consider the following – 

• You must file all tax returns you are legally required to file, 
• Make all current tax payments, 
• Must not be in an open bankruptcy proceeding,
• An open audit may disqualify you from eligibility

Consult with a tax professional (that’s us!) to confirm you are a viable candidate for the Offer in Compromise. 

Penalty Relief

To qualify for a Waiver of Penalties, the reason for the penalty must have been due to reasons beyond your control.  This is what the state calls Reasonable Cause.  It can be difficult, but not impossible, to get Penalty Relief from the DOT.  Be prepared to provide substantiation documents to back up your request.

HAWAII TAX RESOLUTION CASE EXAMPLES

The Hawaii Department of Taxation has some flexibility when it comes to back tax liabilities.  Each case varies based on factors such as your compliance history, type of tax owed and total amount past due.  Here are some case examples in your state negotiated by M&M.


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