When did Hawaii pass a tax collection statute of limitations?

In 2009.


Was the law retroactive?

No. The law set a fifteen year deadline that started on July 1, 2009. For all taxes “assessed” prior to July 1, 2009, the first date that the statute of limitations will apply will be midnight on June 30, 2024.

After that point, a straight 15 year period will apply. For example, a tax assessed on January 1, 2010 will expire on December 31, 2025.


What common tax types will be barred by the limitations period?

  • Net Income Taxes (HRS 235-111)
  • Withholding Taxes (HRS 235-111)
  • General Excise Taxes (HRS 237-40)
  • Transient Accommodations Taxes (HRS 237D-9)

What other taxes are covered?

  • Use Tax (HRS 238-7)
  • Fuel Tax Law (HRS 243-14)
  • Conveyance Tax (HRS 247-6.5)
  • Rental Motor Vehicle (HRS 251-8)
  • Nursing Facility Tax (HRS 346E-6)
  • Certain types of Insurance Taxes (HRS 431:7-204.6)

What is limited by the statute of limitations?

If the statute of limitations expires on an otherwise covered tax period, the Department of Taxation may no longer issue a levy or begin a legal proceeding to collect the tax.    A common translation of this sentence is that the tax obligation becomes unenforceable.


How do I know if the taxes on my Statement are covered by the limitations period?

This is a complicated question.  To simplify at the risk of losing some details, the taxes on your statement must be the result of either (a) filing an annual return; or (b) an assessment by the Department of Taxation.  

Thus, for Net Income Taxes, all taxes will be covered because there is only an annual return.  

For General Excise and Transient Accommodations Taxes, the main category missing here are taxes that are the result of “periodic” returns (monthly, quarterly, semi-annually) where no annual return was filed for that year.


How long is the Hawaii statute of limitations on collection?

Fifteen (15) years after assessment.


How long is the Internal Revenue Service period?

Ten (10) years.


If the statute of limitations on collection is fifteen years, when does the fifteen-year period start?

It starts upon the “assessment.”  Most returns are “assessed” by processing a filed tax return.  Remember that for only annual returns qualify.  Some taxes are also “assessed” after an audit or examination results in an “assessment.”


How do I know when my return was “assessed”?

Previously, including at the time the statute of limitations law was enacted, this was a more complicated question because of the Department’s then-outdated computer system and the effort involved in determining when the Department considered a tax assessed.  

Currently, it might be reasonable to use the date listed by the Department of Taxation on the e-filing computer system as a starting point. 


If I file a tax return, then am audited two years later, resulting in a change in the amount owed, which “assessment” date is used, the filing date or the audit date?

There is not any guidance on this issue in the statute.  A conservative approach would be to use the most recent date, in your case, the audit date. 


Assuming my taxes have been assessed, what events could extend the fifteen-year period?

According to the legislation, after assessment, there are basically four things that could extend the fifteen year period for the duration of the event.  Lawyers call these “tolling” events.  Here are the events:

  • An agreement to extend the period;
  • Taxpayer’s assets are in the control or custody of a court, plus six months (probably referring to a bankruptcy proceeding);
  • An offer in compromise is pending pursuant to HRS 231-3(1); or
  • Taxpayer is outside the state for a continuous period of at least six months.

Beyond those four, are there other things that could extend the date of assessment, “toll” the statute of limitations, or otherwise make a tax debt enforceable past the 15 year period after assessment?


The tax laws and rules can be complicated and this is an area where many questions are likely to only be resolved after July 1, 2024, when the initial fifteen year period (for all taxes assessed prior to June 30, 2009, that were not otherwise tolled) elapses.  

Its not over until its over.


If I have not filed my tax returns, will the DoTax be barred from collection after fifteen years?

As I read the statute, only if the State has assessed the taxes, and fifteen years pass without a tolling event from the date of assessment.  

Absent a State assessment, there is no collection statute of limitations on unfiled tax returns.

Absent a State assessment, there is no collection statute of limitations on periodic (monthly, quarterly, semi-annual) GE and TA returns. In my experience, it is a common situation that the annual GE and TA returns have been left unfiled.


I filed my 2005, 2006, and 2007 corporate G-49 returns in 2012, will the collection statute of limitations expire on June 30, 2024?

No.  The collection statute of limitations starts upon assessment, so the time period will start upon assessment, in this situation filing, sometime in 2012.  Absent an extension or tolling factor, the collection statute will expire sometime in 2027.


How might the Department of Taxation change its procedures and policies between now and July 1, 2024? Or as tax periods begin to elapse due to the operation of the statute of limitations?

This is hard to evaluate and depends upon many factors.  It would be reasonable to anticipate the DoTax might take steps to collect as much as reasonably possible prior to the expiration of substantial cumulative balances on July 1, 2024.  How they might do this, the ratio of carrot to stick, is guesswork looking forward.



How should I plan my affairs in light of a substantial tax balance, some or all of which might be subject to expiration in the next five years due to the statute of limitations?

In my view, the statute of limitations is another factor to be used in evaluating your situation and recommending meaningful options to resolve it.  

My professional view is that the initial July 1, 2024 date will be a complicating factor for larger ($100,000+ owed) matters, and matters where balances straddle the expiration date (some expiring on July 1, 2024, some at later dates.)