Hawaii State Income Tax Protest

HAWAII STATE INCOME TAX PROTEST AND NOTICE OF APPEAL

TABLE OF CONTENTS

1. Header and Caption
2. Identification of Taxpayer and Notice
3. Statement of Timeliness
4. Statement of Facts
5. Issues Presented
6. Legal Argument
7. Requested Relief
8. Hearing Request and Forum Election
9. Reservation of Rights
10. Verification
11. Signature and Service Block
12. Certificate of Service
13. Hawaii Practice Notes
14. Sources and References

1. HEADER AND CAPTION

STATE OF HAWAII

DEPARTMENT OF TAXATION

[☐ TAXATION BOARD OF REVIEW ☐ ADMINISTRATIVE APPEALS OFFICE ☐ TAX APPEAL COURT, FIRST CIRCUIT]

TAXPAYER ID / SSN (LAST 4): [____]

HAWAII TAX I.D. NO.: [GE-/W-/etc. ________________]

TAX YEAR(S) AT ISSUE: [____]

NOTICE OF FINAL ASSESSMENT NO.: [________________________________]

MAILING DATE OF FINAL ASSESSMENT: [__/__/____]

AMOUNT IN CONTROVERSY: $[________________]

WRITTEN PROTEST AND NOTICE OF APPEAL — INCOME TAX (HAW. REV. STAT. CH. 235)

2. IDENTIFICATION OF TAXPAYER AND NOTICE

2.1. Appellant [TAXPAYER NAME] ("Taxpayer") is [an individual / a Hawaii corporation / a foreign corporation registered to do business in Hawaii / a partnership / a trust / an estate] with a principal residence or place of business at [ADDRESS, CITY, HI ZIP].

2.2. Taxpayer received a Notice of Final Assessment (the "Final Assessment") issued by the State of Hawaii Department of Taxation ("DOTAX") dated [__/__/____] asserting an income tax deficiency under Haw. Rev. Stat. Chapter 235 in the amount of $[________________], plus penalties of $[________________] and interest of $[________________], for the tax year(s) ending [__/__/____].

2.3. Taxpayer timely files this Written Protest and Notice of Appeal pursuant to Haw. Rev. Stat. § 235-114 and Haw. Rev. Stat. Chapter 232, and respectfully requests that the Final Assessment be cancelled, abated, or reduced.

3. STATEMENT OF TIMELINESS

3.1. The Final Assessment is dated [__/__/____].

3.2. Pursuant to Haw. Rev. Stat. § 235-114, a taxpayer aggrieved by a final assessment of income tax may appeal to the Taxation Board of Review or to the Tax Appeal Court within thirty (30) calendar days after the mailing date of the final assessment.

3.3. The thirtieth (30th) day after the mailing date is [__/__/____]. This Notice of Appeal is filed on [__/__/____], which is on or before that deadline.

3.4. This appeal is therefore timely.

4. STATEMENT OF FACTS

4.1. Background of Taxpayer. [Describe Taxpayer's Hawaii residency status (resident, part-year resident, nonresident), filing history, sources of Hawaii-source income, and any Hawaii nexus facts.]

4.2. Tax Returns Filed. Taxpayer filed Hawaii Form [N-11 / N-15 / N-30 / N-20 / N-40] for tax year [____] on [__/__/____], reporting Hawaii taxable income of $[________________] and Hawaii income tax liability of $[________________].

4.3. Audit History. [Describe DOTAX audit chronology — opening conference date, IDRs received, position statements exchanged, Notice of Proposed Assessment date, taxpayer response dates.]

4.4. Adjustments Asserted in the Final Assessment. DOTAX has proposed the following adjustments, each of which Taxpayer disputes:

• [Adjustment 1 — e.g., disallowance of itemized deduction for $X];
• [Adjustment 2 — e.g., reclassification of nonresident wages as Hawaii-source income];
• [Adjustment 3 — e.g., denial of credit for taxes paid to another state under Haw. Rev. Stat. § 235-55];
• [Adjustment 4 — penalty under Haw. Rev. Stat. § 231-39 (failure to file/pay)].

4.5. Taxpayer's Position. [Summarize the factual basis supporting Taxpayer's reported position — e.g., physical-presence days outside Hawaii, allocation/apportionment computations, supporting documentation.]

5. ISSUES PRESENTED

5.1. Whether DOTAX correctly determined Taxpayer's Hawaii residency status under Haw. Rev. Stat. § 235-1 and Haw. Admin. R. § 18-235-1.

5.2. Whether the disputed adjustments are supported by Hawaii law and the facts of record.

5.3. Whether the asserted penalties should be abated for reasonable cause under Haw. Rev. Stat. § 231-39(b)(4) and DOTAX guidance.

5.4. Whether interest on the contested principal should be reduced or abated to the extent the underlying assessment is incorrect.

6. LEGAL ARGUMENT

6.1. Standard of Review. Under Haw. Rev. Stat. § 232-3, the burden in a tax appeal is on the taxpayer to overcome the presumption of correctness attaching to a DOTAX assessment, but that presumption is rebuttable by competent evidence.

6.2. Argument I — [Substantive Issue, e.g., Residency / Nonresidency].

• [Set out the controlling statute (e.g., Haw. Rev. Stat. § 235-1 definition of "resident") and applicable rule (Haw. Admin. R. § 18-235-1-14).]
• [Apply the statute to Taxpayer's facts — physical-presence days, domicile factors, ties to other state.]
• [Cite supporting authority — e.g., In re Tax Appeal of Aloha Airlines, Travelocity v. Director of Taxation, 135 Haw. 88, 346 P.3d 157 (2015).]

6.3. Argument II — [Substantive Issue, e.g., Apportionment / Allocation].

• [Address Hawaii's apportionment regime under Haw. Rev. Stat. § 235-21 et seq. (UDITPA-derived) for business income.]
• [Identify any UDITPA distortion / alternative apportionment claim under Haw. Rev. Stat. § 235-38.]

6.4. Argument III — Credit for Taxes Paid to Other States. To the extent Hawaii-source income is contested, Taxpayer is entitled to a credit under Haw. Rev. Stat. § 235-55 for income taxes paid to [OTHER STATE] on the same income, preventing double taxation.

6.5. Argument IV — Penalty Abatement. Hawaii law authorizes abatement of penalties for reasonable cause and absence of willful neglect. Haw. Rev. Stat. § 231-39(b)(4). Taxpayer acted in good-faith reliance on [professional advice / prior DOTAX guidance / a reasonable interpretation of the statute] and therefore qualifies for full penalty abatement.

6.6. Argument V — Interest. Interest follows the principal. To the extent the principal assessment is reduced or abated, the corresponding interest must be recomputed under Haw. Rev. Stat. § 231-39(b)(1).

7. REQUESTED RELIEF

WHEREFORE, Taxpayer respectfully requests that the [Board of Review / Administrative Appeals Office / Tax Appeal Court]:

• A. Cancel and abate the Final Assessment in its entirety;
• B. Alternatively, reduce the assessed deficiency, penalties, and interest to the amount properly owed under Hawaii law;
• C. Grant a hearing at which Taxpayer may present testimony and documentary evidence;
• D. Issue a written decision setting forth findings of fact and conclusions of law; and
• E. Grant such other and further relief as is just and proper.

8. HEARING REQUEST AND FORUM ELECTION

8.1. Taxpayer requests an in-person evidentiary hearing pursuant to Haw. Rev. Stat. § 232-7.

8.2. Taxpayer elects the following forum (check one):

• ☐ Taxation Board of Review (intra-DOTAX informal hearing under Haw. Rev. Stat. §§ 232-6, 232-7; no filing fee; Form BOR-1).
• ☐ Administrative Appeals Office (AAO) (independent within DOTAX; AADR Program under Haw. Rev. Stat. § 231-7.5; Form AA-1).
• ☐ Tax Appeal Court, First Circuit (direct appeal under Haw. Rev. Stat. § 232-16; costs of court under § 232-22 apply).

9. RESERVATION OF RIGHTS

9.1. Taxpayer reserves the right to amend or supplement this Protest, to introduce additional evidence and legal argument, to request informal conferences with DOTAX personnel under Haw. Rev. Stat. § 231-7.5, and to seek further appellate review by the Hawaii Tax Appeal Court, the Hawaii Intermediate Court of Appeals, and the Hawaii Supreme Court as permitted by Haw. Rev. Stat. Ch. 232 and Hawaii Rules of Appellate Procedure.

9.2. Nothing in this Protest constitutes a waiver of any defense, including the running of the limitations period under Haw. Rev. Stat. § 235-111, the Hawaii Taxpayer Bill of Rights, or any constitutional defense (Due Process, Commerce Clause, or Privileges and Immunities).

10. VERIFICATION

STATE OF HAWAII

CITY AND COUNTY OF [HONOLULU / MAUI / HAWAII / KAUAI]

I, [TAXPAYER NAME / OFFICER NAME AND TITLE], being first duly sworn upon oath, depose and say that I am the Taxpayer (or the duly authorized officer of the Taxpayer) in the foregoing Protest; that I have read the foregoing Protest and Notice of Appeal; and that the statements contained therein are true and correct to the best of my knowledge, information, and belief.

[________________________________]

[TAXPAYER / OFFICER NAME]

Title (if applicable): [________________________________]

Subscribed and sworn to before me this [____] day of [_______________], 20[____].

[________________________________]

Notary Public, State of Hawaii

(My Commission Expires: [_______________])

11. SIGNATURE AND SERVICE BLOCK

Date: [__/__/____]

Respectfully submitted,

[LAW FIRM / CPA FIRM NAME]

By: [________________________________]

[ATTORNEY / CPA NAME], Hawaii Bar No. [####] / Hawaii CPA License No. [####]

Counsel / Authorized Representative for Taxpayer

[STREET ADDRESS]

[CITY, HI ZIP]

Telephone: [NUMBER]

Email: [EMAIL]

12. CERTIFICATE OF SERVICE

I hereby certify that on [__/__/____], a true and correct copy of the foregoing WRITTEN PROTEST AND NOTICE OF APPEAL was served upon the following by the method indicated:

[________________________________]

[ATTORNEY / CPA NAME]

13. HAWAII PRACTICE NOTES

• Three forums, one election. Hawaii allows informal review through the AAO (AADR program) or the BOR, or direct appeal to the Tax Appeal Court. Filing in AAO and BOR simultaneously is permitted, but if AAO accepts the case the taxpayer must withdraw from BOR (and vice versa). See tax.hawaii.gov/appeals/.
• Jurisdictional 30-day deadline. Under Haw. Rev. Stat. § 235-114, the appeal must be filed within 30 calendar days after the mailing date of the Notice of Final Assessment. Late filings are jurisdictionally barred.
• No prepayment for first appeal. Haw. Rev. Stat. § 235-114(b) permits the first appeal without prepayment of tax. Subsequent appeals (e.g., from BOR to TAC) may require payment unless the small-case exception applies (≤ $50,000 aggregate; proof of irreparable injury).
• Form BOR-1 (2024) or letter equivalent. The Board of Review accepts Form BOR-1 or a letter to the Director of Taxation that contains the same content.
• Tax Appeal Court costs. Under Haw. Rev. Stat. § 232-22, costs of court (currently $5 minimum, scaled to amount in controversy) are required for TAC filings and must be paid at the time of filing.
• Burden of proof. Haw. Rev. Stat. § 232-3 places the burden on the taxpayer to overcome the presumption of correctness of the assessment, but this is rebuttable.
• Statute of limitations on assessment. Haw. Rev. Stat. § 235-111 generally provides a three-year period for assessment, extended to six years for substantial omissions (>25% of gross income) and unlimited for fraud or no return.
• Subsequent appellate review. Decisions of the Tax Appeal Court are appealable to the Hawaii Intermediate Court of Appeals, then the Hawaii Supreme Court. Haw. Rev. Stat. § 232-19; Haw. R. App. P. 4.
• Pay-and-protest alternative. A taxpayer may pay the tax under protest and sue for refund under Haw. Rev. Stat. § 40-35; this is a separate track from the § 232 administrative appeal and has its own limitations rules.

14. SOURCES AND REFERENCES

• Haw. Rev. Stat. Ch. 235 (Income Tax Law) — https://www.capitol.hawaii.gov/hrscurrent/Vol04_Ch0201-0257/HRS0235/HRS_0235-.htm
• Haw. Rev. Stat. § 235-114 (Income tax appeals) — https://www.capitol.hawaii.gov/hrscurrent/Vol04_Ch0201-0257/HRS0235/HRS_0235-0114.HTM
• Haw. Rev. Stat. Ch. 232 (Tax Appeals) — https://www.capitol.hawaii.gov/hrscurrent/vol04_ch0201-0257/HRS0232/HRS_0232-.htm
• Haw. Rev. Stat. § 232-17 (Appeals from board of review to tax appeal court) — https://www.capitol.hawaii.gov/hrscurrent/vol04_ch0201-0257/HRS0232/HRS_0232-0017.htm
• DOTAX Administrative Appeals Office — https://tax.hawaii.gov/appeals/
• DOTAX Post-Assessment Appeals (Final Assessments) — https://files.hawaii.gov/tax/java/other.html
• Form BOR-1 (2024), Notice of Appeal — https://files.hawaii.gov/tax/forms/2024/bor1.pdf
• Form AA-1 (Rev. 2024), AADR Application — https://files.hawaii.gov/tax/forms/2024/aa1.pdf
• AADR Deadline Calculator — https://tax80.hawaii.gov/appeals/deadlines/
• Rules of the Tax Appeal Court — https://www.courts.state.hi.us/wp-content/uploads/2024/09/rtac_ada.htm
• Travelocity.com, L.P. v. Director of Taxation, 135 Haw. 88, 346 P.3d 157 (2015)
• DOTAX Tax Facts 2001-1 (Taxpayer Bill of Rights, May 2022) — https://files.hawaii.gov/tax/legal/taxfacts/tf2001-1.pdf

Disclaimer: This template is provided for informational purposes only and does not constitute legal advice. A licensed Hawaii attorney or CPA must review and customize this document before filing. Tax appeal deadlines are jurisdictional; verify all citations and dates against the current Hawaii Revised Statutes and DOTAX guidance before use.