Tax Audit Protest and Appeal — Hawaii

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Tax Audit Protest and Appeal (HAWAII)

Quick-Reference Summary

Part A — Informal Conference Request Letter (Pre-Final Assessment)

[TAXPAYER / FIRM NAME]
[________________________________]
[Street Address]
[________________________________]
[City], Hawaii [ZIP]
Telephone: [________________________________]
Email: [________________________________]
HI Tax ID / GE License No.: [____________]
HI Bar No.: [____________] (if attorney)

Date: [__/__/____]

VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED

TO:
Hawaii Department of Taxation
[Office of the Tax Director / Field Audit Branch / Office Audit Branch]
[Auditor Name and Title]
P.O. Box 259
Honolulu, HI 96809-0259

RE: Request for Audit Closing Conference (Pre-Final-Notice)
Taxpayer: [TAXPAYER LEGAL NAME]
HI Tax ID: [____________]
Audit File No.: [____________]
Tax Type: ☐ General Excise Tax (Ch. 237) ☐ Transient Accommodations Tax (Ch. 237D) ☐ Use Tax (Ch. 238) ☐ Net Income Tax (Ch. 235) ☐ Withholding (Ch. 235) ☐ Conveyance (Ch. 247) ☐ Other: [____________]
Period(s): [__/__/____] – [__/__/____]
Proposed Adjustment: Tax $[__________] / Penalty $[__________] / Interest $[__________] / Total $[__________]

Aloha [Auditor Name]:

Pursuant to the Hawaii Taxpayer Bill of Rights and DOTAX audit-closing practice, Taxpayer respectfully requests a closing conference to discuss the proposed audit adjustments set out in the [Preliminary Audit Findings / Notice of Proposed Assessment] dated [__/__/____] before a Final Notice of Assessment is issued.

1. Items in Dispute.

2. Taxpayer's Position Summary.
[________________________________________________________________________
________________________________________________________________________]

3. Documentation Offered. ☐ GE Form G-45 / G-49 reconciliation; ☐ resale-certificate file (Form G-17/G-18); ☐ TAT exemption documentation; ☐ apportionment workpapers (Form N-30 Sch O/P); ☐ federal Forms 1040/1120/1120S/1065; ☐ closing letters from IRS audit (RAR); ☐ banks statements; ☐ contracts; ☐ other: [____________].

4. Preservation of Rights. This request does not waive or extend the 30-day appeal deadline under HRS §§ 232-2 / 232-16 once a Final Notice of Assessment issues. Taxpayer reserves all rights to appeal to the State Taxation Board of Review or directly to the Tax Appeal Court under HRS § 232-13.

5. Availability. Counsel and Taxpayer are available for in-person, telephonic, or videoconference conference at [__________________________________].

Mahalo for your consideration.

[________________________________]
[Name, Title]

Part B — Formal Protest / Notice of Appeal to Board of Review

STATE OF HAWAIʻI
STATE TAXATION BOARD OF REVIEW

BOR Case No. [TO BE ASSIGNED]

NOTICE OF APPEAL TO STATE TAXATION BOARD OF REVIEW
(HRS Chapter 232, §§ 232-6, 232-7, 232-16)

TO:
State of Hawaii Taxation Board of Review
c/o Department of Taxation
P.O. Box 3559
Honolulu, HI 96811-3559

AND COPY TO:
Director of Taxation
State of Hawaii Department of Taxation
P.O. Box 259
Honolulu, HI 96809-0259

Date Filed: [__/__/____]

I. Appellant

1. Name: [TAXPAYER LEGAL NAME]
2. Entity Type: [Individual / Sole Proprietor / Partnership / LLC / S corp / C corp / Trust]
3. Address: [____________________________]
4. HI Tax ID / GE License No.: [____________] FEIN/SSN: [____________]
5. Telephone / Email: [____________] / [____________]
6. Authorized Representative: [Name, HI Bar No., Firm, Address, Phone, Email] (Form N-848 Power of Attorney attached)

II. Assessment Being Appealed (Attach as Exhibit A)

7. Type of Action: ☐ Final Notice of Assessment ☐ Notice of Final Determination ☐ Refund Denial ☐ Other appealable action under HRS Ch. 232: [____________]
8. Date Issued: [__/__/____]
9. Date Received: [__/__/____]
10. Notice / Letter ID: [____________]
11. Tax Type and Chapter: [General Excise Tax (Ch. 237) / TAT (Ch. 237D) / Use (Ch. 238) / Net Income (Ch. 235) / Withholding (Ch. 235) / Conveyance (Ch. 247) / Estate (Ch. 236E) / Other]
12. Period(s): [__/__/____] – [__/__/____]
13. Amounts Asserted: Tax $[__________] / Penalty $[__________] / Interest $[__________] / Total $[__________]
14. Timeliness: This Notice of Appeal is filed within thirty (30) days of the date of the Final Notice of Assessment and is timely under HRS §§ 232-2 and 232-16.

III. Grounds for Appeal

15. Appellant appeals the Final Notice of Assessment on the following grounds:

a. Substantive ground 1 — [e.g., Receipts Are Exempt from GET Under HRS § 237-25 (Sales to Federal Government)]: [_________________________________________].
b. Substantive ground 2 — [e.g., Allocation/Apportionment Under HRS § 235-22]: [_________________________________________].
c. Substantive ground 3 — [e.g., TAT — Furnishing Was Not "Transient Accommodation" Under HRS § 237D-1]: [_________________________________________].
d. Procedural ground — [e.g., SOL Bars Assessment Under HRS § 235-111 / § 237-40]: [_________________________________________].
e. Penalty ground — [e.g., Reasonable Cause Under HRS § 231-39]: [_________________________________________].

IV. Statement of Facts

16. [Numbered paragraphs setting out facts relevant to each ground.]

V. Relief Requested

17. WHEREFORE Appellant respectfully prays the Board of Review:

A. Modify the Final Notice of Assessment by reducing the assessment to $[__________] (or canceling it in full);
B. Order refund of $[__________] if applicable;
C. Abate all penalties for reasonable cause (HRS § 231-39);
D. Adjust interest accordingly;
E. Set the appeal for hearing by teleconference or other cost-efficient means under HRS § 232-6;
F. Grant such other relief as is just.

Dated: Honolulu, Hawaiʻi, [__/__/____].

[________________________________]
[Counsel or Pro Se Appellant]
HI Bar No. [____________] (if attorney)
[Firm Name]
[Address] · [Phone] · [Email]

CERTIFICATE OF SERVICE: I certify that on [__/__/____] a copy of this Notice of Appeal was served on the Director of Taxation, State of Hawaii Department of Taxation, P.O. Box 259, Honolulu, HI 96809-0259, by certified mail, return receipt requested.

ATTACHMENTS

• Exhibit A — Final Notice of Assessment dated [__/__/____]
• Exhibit B — Form N-848 Power of Attorney
• Exhibit C — Federal returns / Hawaii returns for the periods
• Exhibit D — Resale / exemption certificates; audit workpapers

Part C — Appeal Cover Letter to Tax Tribunal / Court

C-1. Direct Appeal to Tax Appeal Court (HRS § 232-13 — Bypass of BOR)

IN THE TAX APPEAL COURT OF THE STATE OF HAWAIʻI

T.A. No. [TO BE ASSIGNED]

NOTICE OF APPEAL TO TAX APPEAL COURT
(HRS §§ 232-13, 232-16; Rules of the Tax Appeal Court, Rule 2)

Appellant [TAXPAYER NAME], pursuant to HRS § 232-13 and § 232-16, appeals to the Tax Appeal Court of the State of Hawaiʻi from the Final Notice of Assessment dated [__/__/____] issued by the Department of Taxation in Tax File No. [____________], a copy of which is attached as Exhibit 1.

1. Parties. Appellant is [an individual residing in / a [state]-organized entity doing business in] the State of Hawaiʻi. Appellee is the Department of Taxation, by and through its Director.

2. Jurisdiction. This Court has jurisdiction under HRS § 232-13 (direct appeal to Tax Appeal Court bypassing the Board of Review).

3. Timeliness. This Notice of Appeal is filed within thirty (30) days of the Final Notice of Assessment and is timely under HRS § 232-16.

4. Tax, Period, and Amount. Tax type: [______]; period(s): [__/__/____] – [__/__/____]; tax $[__________]; penalty $[__________]; interest $[__________]; total $[__________].

5. Issues on Appeal. Pursuant to HRS § 232-17, this appeal brings up for determination all questions of fact and all questions of law, including constitutional questions involved in the appeal. Without limiting that general scope, Appellant specifically presents:

a. [____________________________]
b. [____________________________]
c. [____________________________]

6. Costs. Filing fee in the amount of $[____] under HRS § 232-22 is enclosed.

7. Payment / Bond. [☐ Appellant has paid the disputed tax under HRS § 40-35; ☐ Appellant proceeds without prepayment under HRS § 232-13 (direct appeal of assessment).]

8. Relief Requested. Reversal of the Final Notice of Assessment; redetermination at $[__________]; refund with interest under HRS § 231-23; abatement of penalty; costs.

Dated: Honolulu, Hawaiʻi, [__/__/____].

[________________________________]
[Counsel Name], HI Bar No. [____________]
[Firm], [Address], [Phone], [Email]

CERTIFICATE OF SERVICE: Pursuant to Aregger v. State of Hawaii, Department of Taxation (ICA 2010), I certify that on [__/__/____] a copy of this Notice of Appeal was served on the Director of Taxation, State of Hawaiʻi Department of Taxation, P.O. Box 259, Honolulu, HI 96809-0259, by certified mail, return receipt requested, and on the Department of the Attorney General, 425 Queen Street, Honolulu, HI 96813.

C-2. Notice of Appeal from Board of Review to Tax Appeal Court (HRS § 232-17)

IN THE TAX APPEAL COURT OF THE STATE OF HAWAIʻI

T.A. No. [TO BE ASSIGNED]
BOR Decision No.: [____________]

NOTICE OF APPEAL FROM DECISION OF STATE TAXATION BOARD OF REVIEW
(HRS § 232-17; TAC Rule 2)

Appellant [TAXPAYER NAME] hereby appeals to the Tax Appeal Court of the State of Hawaiʻi from the Decision of the State Taxation Board of Review filed [__/__/____] in BOR Case No. [____________].

1. Timeliness. This Notice is filed within thirty (30) days of the filing of the Decision of the Board of Review and is timely under HRS § 232-17.
2. Payment. Appellant has paid the assessed tax, penalty, and interest in the amount of $[__________] on [__/__/____] as required by HRS § 232-17 case law before appeal from an adverse BOR decision.
3. Costs. Filing fee in the amount of $[____] under HRS § 232-22 is enclosed.
4. Scope of Appeal. This appeal brings up for determination all questions of fact and law, including constitutional questions (HRS § 232-17).

Dated: Honolulu, Hawaiʻi, [__/__/____].

[________________________________]
[Counsel Name], HI Bar No. [____________]

CERTIFICATE OF SERVICE: I certify that copies of this Notice of Appeal were served on the Director of Taxation at P.O. Box 259, Honolulu, HI 96809-0259, and on the [Real Property Assessment Division of the County of ______ (if applicable)] by certified mail on [__/__/____].

Part D — Pre-Filing Checklist

Critical Deadlines

☐ 30 days from Final Notice of Assessment to BOR or TAC (HRS §§ 232-2, 232-16).
☐ 30 days from BOR Decision to TAC (HRS § 232-17).
☐ 30 days from TAC final judgment to ICA / Supreme Court (HRS § 232-19; HRAP 4(a)).
☐ 30 days from payment under protest to file action under HRS § 40-35 (requires "formal decision" — Grace Business v. Kamikawa).
☐ 3 yr / 6 yr / unlimited SOL on assessment (HRS § 235-111 income; § 237-40 GET).
☐ 3 yr / 2 yr refund window (HRS § 235-111(b); § 237-40).

Forum Election (Critical)

☐ Decide: BOR first (informal, no payment required to file) or direct to TAC under HRS § 232-13.
☐ If choosing BOR, plan that a TAC appeal from an adverse BOR decision requires payment of tax + penalty + interest before filing.
☐ For disputes ≤ $50,000, consider TAC Small Claims Division (HRS § 232-3.5; TAC Rule 31).

Petition / Notice of Appeal Content

☐ Appellant identification (name, HI Tax ID, address, contact, counsel).
☐ Identification of the action appealed (Final Notice of Assessment, BOR decision, etc.) attached as exhibit.
☐ Tax type, statutory chapter, periods, and dollar amounts.
☐ Statement of timeliness with date computation.
☐ Statement of grounds / issues presented.
☐ Form N-848 Power of Attorney attached for representative.
☐ Filing fee (HRS § 232-22) check enclosed if filing in TAC.

Service — CRITICAL TRAP

☐ Service of TAC Notice of Appeal MUST be on the Director of Taxation personally/by certified mail to P.O. Box 259, Honolulu, HI 96809-0259. Aregger v. State (ICA 2010) holds failure is jurisdictional and the TAC must dismiss.
☐ Do NOT rely on the language in TIR 2002-01 suggesting service on "the tax assessor" — that guidance is outdated and incorrect. See Tax Foundation of Hawaii guidance (2025) and Hawaiian Airlines v. Dept. of Taxation (Haw. 2024).
☐ Serve copy on Department of the Attorney General.

Settlement / Hearing Stage

☐ BOR hearings are informal and conducted by teleconference or other cost-efficient means under HRS § 232-6. Prepare concise oral and documentary presentation.
☐ TAC proceeds under Rules of the Tax Appeal Court (Parts I and II); HRCP applies as gap-filler.
☐ Identify expert witnesses (CPA, valuation, industry).
☐ Build prima facie record to overcome the presumption that the Director's assessment is correct (HRS § 235-114).
☐ Settlement authority: engage DOTAX Office of the Director / Attorney General Tax Division early.

Appeal of TAC Judgment

☐ Calendar 30-day ICA appeal deadline from entry of TAC judgment (HRS § 232-19; HRAP 4(a)).
☐ File Notice of Appeal with TAC clerk; pay filing fee or file in forma pauperis application.
☐ Designate record on appeal under HRAP 10; order transcripts.
☐ Calendar Hawaii Supreme Court application for transfer / certiorari if applicable.

Sources and References

• HRS Chapter 232 (Tax Appeals — full text) — https://files.hawaii.gov/tax/legal/hrs/hrs_232.pdf
• HRS § 232-17 (Appeals from BOR to Tax Appeal Court — 30 days) — https://codes.findlaw.com/hi/division-1-government/hi-rev-st-sect-232-17/
• State of Hawaii Taxation Board of Review (post-2021 reform) — https://tax.hawaii.gov/geninfo/a9_4boards/
• Rules of the Tax Appeal Court of the State of Hawaiʻi — https://www.courts.state.hi.us/wp-content/uploads/2024/09/rtac_ada.htm
• Hawaii Taxpayer Bill of Rights (2022) — https://files.hawaii.gov/tax/legal/info/22bor.pdf
• TIR 2002-01 (DOTAX appeals guidance — note Tax Foundation cautions) — https://files.hawaii.gov/tax/legal/tir/1990_09/tir02-01.pdf
• Tax Foundation of Hawaii, "Pitfalls in Tax Appeals" (2025) — https://www.tfhawaii.org/wordpress/blog/pitfalls-in-tax-appeals/
• Hawaii Department of Taxation — https://tax.hawaii.gov
• Act 118, SLH 2021 (BOR reform) — https://www.capitol.hawaii.gov/sessions/session2021/bills/HB1041_CD1_.HTM
• Act 218, SLH 2022 (BOR refinement) — https://www.capitol.hawaii.gov/sessions/session2022/bills/HB2278_CD1_.HTM
• HRS § 40-35 (Payment under protest) — https://www.capitol.hawaii.gov/hrscurrent/Vol01_Ch0001-0042F/HRS0040/HRS_0040-0035.htm