Question and Answers On Collection Statute of Limitations (for Hawaii State Taxes)
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Answers to Common Questions about the State of Hawaii Statute of Limitations on the Collection of Unpaid or "Back" Taxes.
Q. What is a statute of limitations?
A. A statute of limitations is time a person or entity has to bring a legal case or enforce a legal right. After the limitations period has elapsed, a court or administrative body will typically be ready to dismiss a claim as untimely.
Q. What do you mean by a “collection” statute of limitations?
A. The amount of time that a tax authority, in this discussion the State of Hawaii Department of Taxation, has to collect upon taxes that are owing to the State.
Q. Are there different tax statutes of limitations?
A. Yes. There are various time periods for refund claims, for civil audits and assessments, and for criminal prosecutions.
Q. The State Department of Taxation sent me a bill for taxes from the 1990s. Has the collection statute of limitations elapsed for this?
A. No. Hawaii did not enact a collection statute of limitations until 2009. The “new” law in 2009 was not retroactive. The period of limitations is 15 (fifteen) years. The earliest that any period will elapse is June 30, 2024. So tax years even from the early 1990s will not expire, if they qualify for the statute, until June 30, 2024. And, just getting a bill does not mean the statutory period has started.
Q. Are there particular requirements for the statute to start?
A. Yes. The requirements are too detailed to get into in this short Q & A, but in general, the taxes must be filed or “assessed” for the period to start. This means that the statute does not run, in most circumstances, for unfiled returns. Taxes that require annual returns (employment, general excise, transient accommodations) must have annual returns filed.
Q. Are there events that keep the statute from running (in other words, extend the statute or make it last longer than fifteen years?)
A. Yes. There are a number of events that can extend the statute and it can become complicated. Basic events that extend the statute by its terms are (a) bankruptcy; (b) submitting an offer in compromise; (c) agreeing with the State to extend to extend; and, (d) being absent from the State of Hawaii for more than six months at a time.
Q. Can the State Department of Taxation do anything to get at my assets before the statute runs?
A. Yes. The State can levy accounts, garnish wages, seize assets, foreclose on real property, and seek to reduce its tax lien to a judgment, so long as the State initiates the process prior to the period elapsing. While the parameters are unclear, if the State reduces the tax lien to a judgment the State probably can enforce the judgment for a period similar to civil judgments (10 years plus possible renewal.)
Q. How can I be sure the statute is running in my favor?
A. Obtain guidance from a qualified tax professional into the particulars of your situation.
© 2012
ABOUT THE AUTHOR: Richard Paul McClellan III, Lawyer
Richard Paul McClellan III Lawyer © Honolulu, Hawaii, July 2, 2012
Copyright Richard Paul McClellan III Lawyer
More information about Richard Paul McClellan III Lawyer
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
A. A statute of limitations is time a person or entity has to bring a legal case or enforce a legal right. After the limitations period has elapsed, a court or administrative body will typically be ready to dismiss a claim as untimely.
Q. What do you mean by a “collection” statute of limitations?
A. The amount of time that a tax authority, in this discussion the State of Hawaii Department of Taxation, has to collect upon taxes that are owing to the State.
Q. Are there different tax statutes of limitations?
A. Yes. There are various time periods for refund claims, for civil audits and assessments, and for criminal prosecutions.
Q. The State Department of Taxation sent me a bill for taxes from the 1990s. Has the collection statute of limitations elapsed for this?
A. No. Hawaii did not enact a collection statute of limitations until 2009. The “new” law in 2009 was not retroactive. The period of limitations is 15 (fifteen) years. The earliest that any period will elapse is June 30, 2024. So tax years even from the early 1990s will not expire, if they qualify for the statute, until June 30, 2024. And, just getting a bill does not mean the statutory period has started.
Q. Are there particular requirements for the statute to start?
A. Yes. The requirements are too detailed to get into in this short Q & A, but in general, the taxes must be filed or “assessed” for the period to start. This means that the statute does not run, in most circumstances, for unfiled returns. Taxes that require annual returns (employment, general excise, transient accommodations) must have annual returns filed.
Q. Are there events that keep the statute from running (in other words, extend the statute or make it last longer than fifteen years?)
A. Yes. There are a number of events that can extend the statute and it can become complicated. Basic events that extend the statute by its terms are (a) bankruptcy; (b) submitting an offer in compromise; (c) agreeing with the State to extend to extend; and, (d) being absent from the State of Hawaii for more than six months at a time.
Q. Can the State Department of Taxation do anything to get at my assets before the statute runs?
A. Yes. The State can levy accounts, garnish wages, seize assets, foreclose on real property, and seek to reduce its tax lien to a judgment, so long as the State initiates the process prior to the period elapsing. While the parameters are unclear, if the State reduces the tax lien to a judgment the State probably can enforce the judgment for a period similar to civil judgments (10 years plus possible renewal.)
Q. How can I be sure the statute is running in my favor?
A. Obtain guidance from a qualified tax professional into the particulars of your situation.
© 2012
ABOUT THE AUTHOR: Richard Paul McClellan III, Lawyer
Richard Paul McClellan III Lawyer © Honolulu, Hawaii, July 2, 2012
Copyright Richard Paul McClellan III Lawyer
More information about Richard Paul McClellan III Lawyer
View all articles published by Richard Paul McClellan III Lawyer
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
