DAVID Y. IGE

ISAAC W. CHOY

GOVERNORDIRECTOR OF TAXATIONJOSH GREEN M.D.
LT. GOVERNORSTATE OF HAWAII

DEPARTMENT OF TAXATIONP.O. BOX 259
HONOLULU, HAWAII 96809

PHONE NO: (808) 587-1530
FAX NO: (808) 587-1584

January 22, 2021

DEPARTMENT OF TAXATION ANNOUNCEMENT NO. 2021-02
RE:Deposits in the Nature of a Cash Bond – Form D-160

The Department of Taxation (Department) is pleased to announce the issuance of a new
Form D-160. The Form is intended to be used by taxpayers who are contesting an assessment ofadditional tax, but who otherwise wish to limit or suspend the accrual of interest on a potential
underpayment. This Announcement supersedes and replaces Tax Information Release No. 200803.
Effective immediately, taxpayers may submit Form D-160 to make a cash bond deposit(Deposit) to the Department without the need for a review by the Department’s Rules Office.
Making a Deposit will suspend accrual of interest on the amount of the Deposit only. Please
note that interest accrues on principal tax as well as penalties. Under current law, interest
accrues at a rate of two-thirds of a percent per month or 8 percent per year.
If the Deposit does not cover the interest-accruing portion of the potential underpayment,interest will continue to accrue on the remaining difference. Making a Deposit does not affectany interest that was accrued prior to making the Deposit. If it is determined that anunderpayment exists, the interest that accrued prior to the Deposit will become due together withthe underpaid tax.
Unlike a payment made on a tax, a Deposit is not subject to a statute of limitations forfiling a refund claim. If it is later determined that no tax is due, the taxpayer can simply ask theDepartment to cancel the agreement and return the Deposit, without the formality of filing aclaim for refund or the need to show that there had been an overpayment of tax. However,
because the Deposit is not a payment of tax, it cannot be considered a payment under protest
under Hawaii Revised Statutes section 40-35. Taxpayers who wish to pay under protest should
not make a Deposit using Form D-160.
Any request for the return of a Deposit shall be made in writing to the Department’s
Oahu Field Audit Branch Manager. In most instances, upon receipt of demand for return of theDeposit, the Department will initiate the return within five business days. However, the Deposit
will not be returned if the Department determines that a jeopardy assessment/collection of any
tax is appropriate,. If a Deposit is returned, interest will begin to accrue again from that pointforward.

It is important to note that taxpayers are not entitled to earn interest on their Deposit even

Department of Taxation Announcement No. 2021-02
January 22, 2021Page 2 of 2

if an underpayment of tax is determined not to exist. However, where a taxpayer requests thatthe Deposit (or a portion thereof) be moved into a fund in order to perfect an appeal, the taxpayer
will be entitled to earn any interest as provided by law on such amount moved because thecharacter of the amount paid is changed from a Deposit to a payment of tax.
Tax forms, including Form D-160, and information are available on the Department's
website at tax.hawaii.gov. If you have any questions, additional information is available bycalling the Rules Office at (808) 587-1530, or by email at tax.rules.office@hawaii.gov.

ISAAC W. CHOY
Director of Taxation