Hawaii tax payment plan with the Department of Taxation
The Payment Plan Agreement from Hawaii’s Department of Taxation carries a $50 processing fee and a plan that runs longer than one year also triggers a state tax lien.
- Processing fee
- $50
- Apply online when money is owed
- More than $100
- Interest
- Rate each month: 2/3 of 1%
- Levy taken from wages
- 25% of gross pay
What makes Hawaii’s payment plan different
In Hawaii, the payment plan is called a Payment Plan Agreement. After the plan is approved, the payment plan terms from the Department of Taxation call for a nonrefundable $50 processing fee. Any plan that will last beyond one year means the Department places a state tax lien on your property. The lien protects the State. The lien is a public claim.
By signing up, you give the State extra time to collect while the plan stays active. Under the terms of the agreement, the Department may increase your monthly payment if it decides you can pay faster. Adding new tax debt while the plan is active puts it into default.
Can I begin a Hawaii plan online?
Yes. Use Hawaii Tax Online to apply and each one of these must be true:
- What you owe is more than $100.
- No payment plan of yours is currently active.
- You are not in bankruptcy. Your case has not been received by a private collection agency.
- You have no pending offer in compromise.
What to gather before you apply
You need a Hawaii Tax Online login plus a U.S. bank account, either checking or savings, before you apply. Have your current address ready, plus your phone and email. You must upload Form CM-2 for an individual or CM-2B for a business to request more than 12 installments. Bank statements from the previous three months go in your application, according to the online payment plan guide.
Users who cannot work with the online system are sent by the same Department page to Form D-100, Request for Installment Plan Agreement. Send the form by mail, fax or email to the Collection Branch that serves your district. The office address on the form is the one to use.
Interest and penalties during an active plan
Interest and penalties keep growing until the balance reaches zero. The monthly interest rate is two-thirds of 1% under Hawaii’s law in section 231-39. Up to 20% of the unpaid tax can be added by the law if you file on time but do not pay within 60 days.
Any state or federal refund lowers what you owe. Even so, your regular monthly payment is still required by the plan rules.
If the plan breaks down or a payment fails
Tell your case collector seven workdays or more ahead of any payment date you cannot meet. If you default, the Department has several options under the agreement terms. It may place a lien, levy or garnish or it may refer the entire balance to a private collection agency or to the Attorney General. The Tax Collection Services branch may also seize and sell assets.
If you are an individual, a continuous wage levy requires your employer to send the State 25% of gross pay. That goes on until the debt is paid. Under a payment plan, the levy continues. Filing Form CM-2 and proof may reduce the levy if you face real hardship.
An IRS plan together with a lower settlement
Hawaii’s rules for a compromise offer have narrow limits. You must be unable to earn future income because of retirement or health. What you hold in assets must be worth less than the debt and you must have no significant passive income. Filing must be complete and you must not have received earlier tax relief.
Your Hawaii agreement is one debt and the IRS agreement is another and each carries its own rules. Pay both agreements in full each month and record their two due dates in your calendar.
Nearby states
Do you owe both DOTAX and the IRS?
Paying both the IRS and DOTAX at once can put strain on a Hawaii budget. A free call with a licensed tax pro can help you pick realistic amounts for each plan.
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