IMPORTANT: Mandatory e-filing requirements are different from mandatory EFT requirements.
The Department of Taxation (DOTAX) requires certain taxpayers to pay their taxes by Electronic Fund Transfer (EFT) [HRS 231-9.9]. This requirement applies to taxpayers with an annual tax liability of $100,000 or more and withholding taxpayers with tax liabilities of $40,000 or more.
Any person who is required to pay by EFT and fails to do so on or before the due date will be assessed a penalty of 2 percent (2%) of the amount of tax required to be shown on the return, in addition to any other applicable penalties and interest.
Frequently Asked Questions (FAQs)
Q: What is an Electronic Fund Transfer?
A: Electronic Funds Transfer (EFT) is a system of transferring money from one bank account directly to another without any paper money changing hands (e.g. checks, cash).
Q: Who needs make EFT payments?
A: The $100,000 tax threshold applies to the following tax types:
1. Net income, including estimated tax
2. General Excise and Use
3. Transient Accommodations
4. Public Service Company
8. Cigarette and Tobacco
9. Rental and Tour Vehicle Surcharge
The tax threshold for withholding is $40,000.
Q: How will I know if I need to make EFT payments?
A: Taxpayers who need to make EFT payments are sent a letter notification from DOTAX that they are required to participate in the mandatory EFT Program.
Q: What payment methods meet the EFT requirement?
A: You can use Hawaii Tax Online to make a payment (1) from your checking or saving account (free) or (2) using a credit or debit card payment (fees apply). You may also pay by Automated Clearing House (ACH) credit by following these instructions to work with your bank.
Q: How do I setup EFT payments?
A: E-payments can be set up on Hawaii Tax Online.
Q: If I am not required to pay by EFT, can I still pay electronically?
A: Absolutely! All taxpayers are encouraged to e-file or e-pay to ensure that transactions are posted quickly and accurately.
Q: Can I request a waiver from the EFT requirement?
A: Yes. You can request a waiver from the e-filing requirement by completing and submitting Form L-110, the Electronic Filing or Payment Exemption Application, and providing an explanation of why you cannot meet this requirement. Your request is subject to approval.
Q: Will an EFT payment be posted immediately?
A: No. Payments will be posted to your tax account the next business day. It may take two (2) to three (3) business banking days for a withdrawal to be debited from your bank account. The effective date of the payment is the date submitted.
Q: Does mandatory EFT payment apply to all returns for every tax type?
A: Yes. All returns must be paid electronically, including partial payments [Tax Announcement No. 2018-03].
Q: If I drop below the tax liability threshold within the year, does a failure to e-pay penalty still apply?
A: Yes. Once you have met the $100,000 tax threshold, EFT payments will be required for all future payments. Thus, a penalty will still apply unless you have an approved Form L-110, the Electronic Filing or Payment Exemption. Each year you drop below the tax liability you must submit Form L-110 to avoid the penalty.
Q: If I go above the tax liability threshold and need to begin e-paying, what happens?
A: DOTAX will send you a letter notifying you that a participation in the EFT Program is required and that all subsequent payments must be electronically paid through EFT or a 2% penalty will be imposed.
Q: Does the EFT payment requirement apply to all payments that I need to submit or amend for prior tax filing periods?
A: Yes. Once the threshold has been met and you are required to pay by EFT, all future payments, whether for current or past must be made electronically.
Q: If Hawaii Tax Online is inaccessible on the return/payment due date and I am required to e-pay, should I make a paper payment?
A: We encourage you to e-pay early to ensure that your payment can be processed. Availability of Hawaii Tax Online is monitored. If the Department schedules downtime for maintenance, advanced notification will be posted to Hawaii Tax Online. In the unlikely event that Hawaii Tax Online is unavailable on the payment due date, reasonable accommodations will be made to ensure taxpayers can e-pay without a late penalty.
Q: If I can’t sign in to Hawaii Tax Online and need to make an EFT payment, what should I do?
A: You can make EFT payments without signing in to Hawaii Tax Online by clicking on “Make a Payment” under the Quick Links on the homepage.
Q: What happens if an EFT payment is dishonored by my bank?
A: A $25.00 non-waivable penalty will be imposed for payments that are dishonored for ANY reason. If the subsequent payment is after the due date, a failure to EFT penalty will be imposed [HRS 40-35.5.
Q: Can I schedule an EFT payment for a future date?
A: Yes. You can post date an EFT payment on Hawaii Tax Online up to 120 days.
Q: Does the EFT payment requirement apply to collections payments?
A: No. The EFT payment requirement only applies to return and tax payments.
Q: Can I pay my fees due to collection actions (e.g., payment plans) by EFT?
A: Yes. EFT is the recommended method of payment for accuracy and timely posting. You can use Hawaii Tax Online to make a payment for a collection action (1) from your checking or saving account (free) or (2) using a credit or debit card payment (fees apply).
Q: I paid by EFT, but was assessed the EFT penalty. Why?
A: This penalty has two parts – e-filing and timeliness. If you paid by EFT late, the failure to EFT penalty will be assessed. If you did not pay by EFT late and were assessed the EFT penalty, this may have been an error. Please mail your billing statement to us with an explanation so that we can research and correct the error.
Q: How do I get help with EFT payments?
A: Telephone assistance is available during regular business hours, Monday through Friday, 7:45AM – 4:30PM (excluding holidays), by calling (808) 587-4242.
Page Last Updated: March 18, 2020