Q. I received a letter in December saying I owed the state of Hawai'i $600 for a 1988 general excise tax assessment. It's the first time I've been notified about owing the tax, and it's been so long I can't remember if I paid it or not. Isn't there a statute of limitations on this?

A. You aren't the only one who's receiving notices these days. The state Tax Department hired 23 collectors recently and is hiring nine more.

The 4 percent general excise tax is the state's largest revenue source and is paid by almost everyone doing business in Hawai'i. Depending how much they owe, people are required to pay the tax either monthly, quarterly or semi-annually.

Everyone with a general excise tax license is required to file an annual return, even if you didn't earn anything during the year.

Filing is key to avoiding situations such as yours. If you filed all of the forms on time and correctly in 1988, you most likely would not be liable for the back taxes.

The statute of limitations runs for three years after the annual tax form's due date or the date on which it was filed, whichever is later. But there is no statute of limitations if you didn't file the yearly form.

You can ask the department if you posted either of the two required forms for 1988. Getting to see the forms is most likely out of the question, though. They're probably tucked away in a warehouse somewhere and difficult to retrieve.

People may receive a series of letters if they don't file. The first will inform them they haven't filed and request that they do so or explain why something wasn't sent in.

Depending on your response or nonresponse, other letters could be sent, including one asking for you to contact the department.

You should also receive something if the case is turned over to the department's collections branch. The burden of proof is on you to show you've already paid the tax or previously settled it.

Dig up your old records and send a letter to the tax people letting them know you've paid, and include a copy of a canceled check showing the remittance.

A warning, though: letting assessments go unpaid for years can be costly. If you failed to file on time and owed $100, you can be assessed a 25 percent penalty after five months.

You'll also be charged interest at 2/3 of 1 percent a month, or 8 percent a year. So after one year, you would owe 35 percent more than that original assessment. This works out to $135 once a $25 penalty and $10 in interest is added.

There can be additional penalties if the department determines you've underpaid taxes because of fraud or intentionally disregarding the department's rules.

If you let the matter go long enough, the state will file a tax lien against you and put your name on a list of people or businesses with delinquent taxes. The list is updated monthly and is available for viewing at the department's collection offices.

Reach Greg Wiles at gwiles@honoluluadvertiser.com.