Marketing Methods to Consistently Acquire New Tax Resolution Clients

Acquiring new tax resolution clients is unlike traditional tax practices of getting new tax preparation clients. With the sporadic nature of clients' tax problems, nobody really has a go-to person for resolving tax problems. It requires different strategies to bring in new clients consistently.

This guide will review some of the top strategies to attract new tax resolution clients consistently. We’ll explore various marketing methods, community engagement, and more to help you grow and succeed in the tax resolution industry.

This guide is written in collaboration with the owners of TaxCure, who combined have more than 30 years of experience in the tax resolution industry, with a primary focus on marketing. We have spent millions on marketing, tested many marketing methods, and worked with the largest companies in the industry. This guide will cover some of the main techniques to consistently bring in tax resolution revenue for your practice. If you want further customized assistance, please contact us. We have various plans tailored to different size practices. Our goal at TaxCure is to create transparency in this marketplace dominated by scam review sites when we know taxpayers want someone local if given the opportunity. 

 

Website Optimization for Tax Resolution

Your website is a powerful marketing platform that you have complete control over. A powerful website allows you to control what potential clients see when researching or hearing about your services. Your website is your digital storefront that can make or break the deal for a client. Your website can become your most powerful asset to drive new clients, and wise investing in it is essential. Below are some subcategories on how to invest in your website to drive more tax resolution clients.

Search Engine Optimization Specific to Taxpayers that Need Help

Obtaining rankings for terms that taxpayers search into search engines when they have a tax problem or are looking for help can significantly boost traffic and qualified leads for your business. It is essential to understand your potential clients and understanding common search queries to focus on what will drive the best return on investment for your business. (For example, if you arrived at this page through a search engine, you got to this page because TaxCure researched the queries that tax professionals use when searching for ways to obtain new tax resolution clients. We made this article specific to your needs, and we aim to provide valuable content for you to grow your business.) With this article, we hope you sign up as a free profile to be listed on TaxCure to grow your business. 

One way TaxCure grows business for Tax Pros is by consistently publishing content about various problems and services our members help with. There is a science to this, and it is one piece of the puzzle to drive more prospects your way. If you are looking for help with this aspect of your business, you can always contact us to see if we are a good fit for your SEO services.

About Us & Bios for Website

Often this is overlooked. The value of providing valuable insight about yourself and your business helps form a connection with the taxpayer that has arrived at your website. Obtaining new tax resolution clients is a balance between marketing, sales, and quality services. Sales is a major aspect that many companies struggle with. Having a good about page to help people connect with you or your business can help close the deal before they even contact you.

Client Testimonials of Prior Tax Resolution Clients

A page dedicated to testimonials of prior tax resolution clients can be very powerful in closing the deal. It is crucial to showcase real testimonials. Consider using video testimonials as consumers trust them to see real people talking about their experience. 

Professional Badges and Certifications

Use your website to showcase professional certifications and badges. Professional certifications show prospective clients that you have gone above and beyond to take care of their tax problems, and this helps to build trust in your services. Additionally, while you train to become a Certified Tax Representation Consultant or a Certified Tax Resolution Specialist, you learn valuable skills that allow you to provide top-notch services to your family. There are many different training programs for tax pros.

Pay-Per-Click (PPC) Advertising for Struggling Taxpayers

Your website is the first thing people see when you do pay-per-click advertising. This is a game of constant optimizations and a clear call to action. Having a professional site to give the taxpayer confidence to reach out to you and specifically giving them confidence you can assist with the service or problem they searched for is imperative. 

Doing PPC isn’t something you can do overnight and get it running successfully. The PPC market is extremely competitive, with some of the highest costs of keywords to bid on. For example, if you wanted to advertise on the term “Tax Relief Attorney,” you would likely spend $25+ per click. It is important to know what you are doing here before jumping in and knowing which keywords will likely generate the clients you want. You also need to ensure your website is optimized for conversions and has the appropriate KPIs to limit wasted spending.

When optimized, this method can be one of the fastest and most reliable ways to bring in business consistently, but it will cost you a lot of money. You can read more here on what you should pay to bring in a new tax resolution client to put some things into perspective.

Places for Tax Resolution PPC Advertising

• Google Ads: The largest PPC network with the highest potential, the most competitive, and some of the highest prices for keyword bidding. If you don’t have experience with this, it is suggested to hire an expert to assist, especially in the field of tax resolution. Even companies specializing in all-tax marketing tend to fall short when it comes to marketing tax resolution services, and it is a very niche industry. Working with a company with experience is essential to lower your wasted spend. 
• Microsoft Advertising: Very similar to Google Ads, but with a far lower reach and also a bit looser on being able to target specific keywords. This can be effective and should be considered, especially with their potential to increase market share, as they have the first-mover advantage of using AI in their search platform. 
• Facebook Advertising: Different from your typical keyword bidding platform, you can target audiences. It can be difficult to target taxpayers that have issues with FaceBook, but there are clever ways to do it.

Email Marketing

While there can be many aspects of email marketing, we will cover some of the top ways you can use email marketing to increase your tax resolution clients.

Email Marketing to Your Client Database

If you have an existing practice doing tax prep or other tax services, you should have a list of your current clients and their emails. This is a great way to let your services be known to existing clients. Maybe they don’t know that you offer these services and may come into a tax problem. Emailing your current clients that already trust you is a great source of securing existing clients for more services. Even if you only do tax resolution, following up on an annual basis can help ensure you stay in their mind if they come across another tax issue. Many tax resolution clients tend to come into future tax issues as well.

Email Opt-ins on Your Website

Leverage your website to have potential clients sign up for a newsletter or other email communications. You can offer incentives like a free e-book on resolving tax problems, tax savings tips, etc, to motivate them to share their email address with you. You can then email them in the future to stay in their mind about your services. Many taxpayers are struggling financially, like to try things themselves sometimes, and aren’t ready to move forward with services. If you give them an offer that doesn’t require them to spend money and you can help them in some way without much effort, you can have their contact information for a future time when they may want to reach out to you.

Getting email opt-ins requires traffic first, so don’t build out this campaign before you have found an effective way to drive some traffic to your brand first. 

Drip Campaigns

These email campaigns help nurture a potential prospect who may have contacted you on your website or inquired about your services but have yet to become a client. An effective email campaign that will consistently send them emails about your services and highlight your company can greatly assist them in making the final decision to move forward with your services.

Networking Event Emails

Networking events can be a powerful way to drive client referrals. If you have a non-competitive business but you share a target audience. Staying in front of these people is essential to drive potential referrals to your business. Have a newsletter that provides value to these clients and keeps them aware of your services, and you are open to referrals. Be sure to collect business cards at networking events, save their emails to your marketing platform, and create a specific campaign targeted just to them.

Claim Relevant Online Listings – Review Sites

People often overlook the value of many online listing services. Business listings are very important for brand reinforcement. Finding ones that reinforce your brand and promote your services are the best, but most are just mainly suitable for brand reinforcement. 

Why is Brand Reinforcement Important?

Various studies have been done on how many touch points it takes before a customer makes a hiring decision. You can have the most optimized website, but people know that you control this information and can say whatever you want. Therefore, many people seek external references before making a hiring decision. They then do a brand search on your company name or a search on your name, and it is vital to have solid listings that support the work you do outside of your website to increase your close rate significantly.

I’m going to list a few below that can be suitable for tax professionals that offer tax resolution services. You must be active on them and only claim the ones that will rank for your brand and aren’t loosely regulated to prevent fraudulent reviews you can’t do anything about. 

TaxCure

We have crafted our system to showcase your expertise and give positive feedback to anyone looking for information about you or your company. We have professional profiles as well as company profiles. Not only do we reinforce your brand, but we also promote your brand through our search and various other aspects of our site features.TaxCure is open to enrolled agents, CPAs, and attorneys to claim their profiles. We allow client reviews that are highly vetted to ensure the professional was explicitly hired for tax resolution services for the review to be published. Our unique system allows you to only show to taxpayers that match your unique skill set to ensure taxpayers can obtain the best quality services and the tax pros can obtain new business from clients that meet their skills. 

You can obtain further reach in acquiring new leads by upgrading to our TaxCure Pro membership. This membership is an easy win to obtain new clients at an excellent return on spend.

Google Business Profile

This profile is one of the most critical profiles you can claim and optimize. Google Business Profile helps with brand reinforcement when someone types in your company name, showing in the results a lot of information about your services. This listing also is essential for catching those local searches where searchers have the intent to make a hiring decision. This is a separate listing from your website and can drive a good amount of traffic to your brand if optimized correctly. In order to for this method to be effective at reaching clients in need of tax relief services it is essential to consistently obtain reviews from current and prior clients to this platform. These reviews don't need to be only about tax relief services, they can be for tax preparation or any other tax-related service. Be sure to be active on here at least once a month, it helps signal to Google you are an active business and can impact your rankings. You can easily post quick updates or add some new product pages related to services you offer.

National Association of Enrolled Agents (NAEA)

The NAEA has professional profiles for enrolled agents that will help you claim a place in the top 10 listings for you as a professional. They also offer other services as well. They do have an annual fee for their membership, but the standard profile is a great promotion to show great credentials at the top of the search results.

AVVO

For attorneys, this is a powerful directory that can provide clients as well as a high-ranking profile for your name and brand. They don’t drive a significant amount of traffic for tax-related topics to drive client referrals, but the listing helps strengthen your brand.

LinkedIn

Having a presence on LinkedIn through a personal profile and creating a company page can help boost your brand visibility. Generally, these profiles rank in the top 10 search results and are essential for brand reinforcement. 

Yelp

Yelp is one of those sites that aren’t great for generating tax resolution clients. It can be suitable for brand reinforcement. If you have a profile already, make sure you maintain it and get some good reviews because it generally is favored high in the results for your brand. This is a go-to place for people to post negative reviews, and it is tough to combat them. This is not a high suggestion of ours, but an easy place to grab a place in the top 10 results for your brand. This can be valuable to those professionals that offer other tax services, like tax preparation, to generate some referrals. 

Super Lawyers

Super Lawyers is a site for lawyers with a profile page that can rank decent for their brand. They have a free listing option, and not all lawyers can get listed. It can be a good place to reinforce your brand and claim a listing if you are an attorney.

Justia

Justia is for attorneys general, blanketing many aspects of the law. For tax resolution, they can showcase your experience. They don’t receive significant traffic from people with tax issues. However, their platform allows your profile to rank high in search for your brand. 

FindLaw

FindLaw is another directory just for attorneys. They cover various aspects of law and allow you to create a profile for yourself and your company. This can be great for brand reinforcement as long as you put some effort into it. They don’t receive much traffic related directly to tax, so don’t expect direct referrals from here. If you have a solid profile it should rank top 10 in the search results for your brand.

Better Business Bureau (BBB)

This long-standing brand is well-recognized and a trusty entity. Having a listing here and in good standing will help reinforce your credibility. A BBB profile for your business generally ranks highly in the search results, and if you maintain it well, it is a good profile. The BBB has built somewhat of a strong reputation to give extra trust to clients knowing they have an intermediary to get involved if there are any issues. The BBB does assist in helping resolve client complaints, but the main benefit of their service that is not stated is you get a nice listing that ranks high in the search results for your brand and lets customers know they have some BBB “protection.” This does have an annual or monthly fee to be a part of, but generally, if this listing can sway one person a year to use your services, it will l likely be worth the cost.

Facebook Business Page

Facebook can play a crucial part in enhancing brand reinforcement. With a Facebook business page, your brand is more visibility to your audience. It shows great in search for your brand in search engines and helps foster trust and engagement. Having a Facebook business profile can help to show you are actively engaged with your clients, but it can also hurt you if you don’t show frequent updates and give the impression you aren’t that involved. Generally, this profile ranks high in the results for your brand and is an important marketing angle to maintain. 

TaxBuzz Profile

If you like it or not, you probably already have a profile here if you are a tax professional since they use web scraping technology. They rank well for brands, and that is what they have built their business on. They drive much of their traffic from people searching for certain tax professionals and possibly doing a bait-and-switch tactic, especially if you haven’t claimed your profile. If you haven’t claimed your profile, we suggest you claim it and update you with relevant information. Especially if this profile already ranks for your brand in the top 10 results for your brand name.

Buying Tax Resolution Leads/Tax Relief Leads

Sounds easy, right? Just pay to receive prospects with tax issues and seeking help. Well, it isn’t quite as it seems, and this can be an expensive way to acquire new clients, but many businesses base their whole business solely on this type of marketing. We have a very detailed article on how buying leads works & how to avoid getting ripped off. 

Tax Lien Mailers

This approach involves acquiring lists of individuals who recently had tax liens filed against them and sending them an informative and professionally designed mailer. There are some companies out there that offer this service from obtaining the lien lists to sending the notice. There are many businesses who have relied solely on this practice to build their business. While it can be an effective strategy, there can be times where it isn't effective when the IRS isn't being aggressive and implementing new tax liens. This can also be an expensive form of marketing with the cost of acquiring the lists (there are free ways to do this), printing copy, coming up with the creative for the letter, and setting up effective split testing to see which gets the best response and then the cost of mailing the letters.

Companies that have this dialed in can have an effective and repeatable model of generating new clients. Many people jump in and think they will achieve great results right away, but generally fall short of the return needed to continue. With consistency and testing while having the appropriate KPIs in place, this can become an effective method.

With the mailers, be sure not to come off like you are a tax agency. This was an old-school method used by many marketing companies and shady tax resolution companies back in the day. While this did probably produce good results for them, in this day an age with technology, this will only make a bad name for you and your company, which will hurt your long-term success. Be sure to explain how your services can assist in resolving their tax debt and the benefits they can receive by taking timely action. Be sure to promote trust and include client testimonials and information about your firm to establish credibility. Be sure to have a clear call to action, maybe a phone number that you specifically track so you can attribute that call to the mailer, or a website that you can track that it came from the mailer (maybe acquire a similar domain to yours or a very short name domain that redirects to your site that passes a UTM parameter that you can effectively track traffic from that source).

Social Media Presence

Why Is Presence on Social Media Important?

With over half of the world on social media. This is a tool that no business can ignore. We’ve already mentioned the importance of this in various aspects of marketing above. Here are some tips on leveraging it to help grow your tax resolution services. 

1. Establish Presence and an Indexable Profile: These profiles show high for your brand in search. These profiles should be complete, up-to-date, and reflect your brand’s messaging. 
2. Share valuable content: Share things that meet your target audience. Even if they don’t find you directly through social media, this is your platform to showcase things when someone searches for your brand. Things like tax law updates, tax tips, client testimonials, and more. Just think, if someone was to hire my business or are an existing client, what type of information would they like to see to solidify their commitment to my business?
3. Engage: Be sure to be responsive. Being responsive will lead to new clients and will also show you are a business that cares and will respond to your client's needs.

Social Media Platforms to Consider

• LinkedIn: This is a good platform that showcases your expertise. This is great for creating a company profile and a professional profile. This ranks well in search engines and reinforces your brand to potential prospects. This isn’t that powerful in terms of generating new prospects, but it is an important profile to have. This can be important for professional networking and having a place to connect with other professionals that you may receive referrals from. 
• Facebook: This has a broad user base. Many taxpayers will look up companies' information here, and it has become an essential platform for all businesses to get on.
• Twitter: A good platform for sharing updates, engaging in discussions, and connecting with customers or similar businesses with similar target audiences. Generally, this profile ranks high in search for your brand and can be valuable for brand reinforcement.
• Instagram: While this may not seem like an intuitive choice for tax resolution, Instagram can be effective for sharing visual content, such as infographics that simplify complex tat issues and images about your company to help build more trust. 
• Youtube: Creating video content allows you to show in the second largest search engine in the world. This is also a powerful profile where potential prospects can see you and make a connection with you, which can significantly increase the close rate when they reach out to you. YouTube can be an effective way to generate valuable content that can directly drive prospects and grow your business. This is a good place to showcase your skills and answer common questions from tax problems that you frequently help resolve, and this can help generate potential prospects that meet the types of skills that you have. 

Partnerships and Referrals

• Professional Networking: Collaborating with complementary service providers such as financial planners, real estate agents, attorneys, accountants, etc. These professional connections can lead to referrals for the services you offer. Networking events, industry conferences, and online forums can be a really great way to build some of these connections. 
• Client Referrals: Happy clients often recommend services to friends. Tax resolution is a touchy subject, and staying in touch with prior clients is important to stay in their minds for possible future services or to remind them of the services you helped them with so that maybe they will refer others to you.

Final Words on Acquiring New Tax Resolution Clients

Attracting new clients requires strategic planning, a good understanding of your target market, and a commitment to providing top-notch services. There are a variety of strategies, and it is best to use multiple techniques to diversify your mix in the ways you receive new clients.

There is also software that can help you track leads, onboard new clients, and follow up. In all cases, it is important to find strategies that work for you that can be consistent and repeatable. The more consistent you can become with implementing various acquisition strategies and consistently putting effort in, your client base will consistently grow over time. 

In the challenging landscape of tax resolution, having a company like TaxCure on your site can make a big difference. We cater to firms of all sizes, providing services that help reinforce your brand, generate new leads, optimize your website, pay-per-click services, and more. You can reach out to us to learn more about the services we offer. Let’s make success a reality together!

State Sales Tax Guide Michigan

Any individual, business, or entity selling goods and services in Michigan must collect sales taxes from their customers and pay them to the state government. Understanding how sales tax in Michigan works is crucial to ensure you pay the correct amount on time.

Failing to pay sales taxes correctly in the state of Michigan can result in fines and criminal charges. Our comprehensive guide can help you understand Michigan’s sales tax rates, schedules, and penalties, how to file and pay sales taxes to the state government, and what to expect in a sales tax audit.

What Are Michigan’s Sales Tax Rates?

The Michigan Department of Treasury and the General Sales Tax Act of 1933, Michigan require the collection of two taxes: the sales tax and the use tax. 

Per Section 205.52 of the General Sales Tax Act, all persons engaged in a retail business or selling tangible personal property must pay the Michigan sales tax. For most taxpayers, the Michigan sales tax rate is 6%.

An exception applies to specific categories of taxpayers providing electricity, natural gas, and home heating fuels, such as state-regulated gas providers. The tax rate for these products is 4%, corresponding to the state’s sales tax rate before April 1994.

In addition to the standard Michigan sales tax, the state government levies the use tax, described by the Michigan Department of Treasury as a companion to the sales tax. The use tax applies where the sales tax cannot apply to businesses providing specific categories of tangible personal property, rentals, leases, telecommunications services, lodging, and out-of-state companies. The use tax rate is 6%, equal to the state’s sales tax rate.

Internet purchases are a typical transaction where the Michigan use tax applies. 

For example, when an out-of-state retailer ships clothing to a Michigan resident, the clothing items count as tangible personal property. The retailer will owe the use tax to the Michigan state government, calculated from the transaction’s total price, including shipping and handling charges.

Only the state government levies the Michigan sales and use tax. There are no city or local sales taxes in Michigan.

Who Needs to Collect Sales Tax?

Generally, any business or organization that meets the legal definition of engaging in retail sales must collect the Michigan sales tax from their customers and pay it to the state government.

The law (MCL 205.52) specifies the sales tax applies to individuals in any of the following cases:

• Transfers of tangible personal property for consideration, such as from a retailer to a customer. Businesses providing repairs, improvements, alterations, or other services to tangible personal property must also pay the sales tax.
• Sales of electricity, when transmitted or distributed to the customer for consumption, either through the seller’s own utilities or another provider’s.
• Sales of prepaid telephone cards, including authorization numbers and reauthorizations of existing telephone cards and numbers.
• Conditional sales, installment lease sales, and any other property transfers if the title is temporarily retained for security with the intent to transfer it later.

Per MCL 205.53(4), any individual who owes the use tax but is not otherwise required to obtain a sales tax license does not have to apply for a sales tax license as long as they are registered under the state’s streamlined sales and use tax agreement.

Individuals and organizations engaged in multiple businesses must keep separate books if at least one business is subject to the sales tax and at least one other isn’t. If you fail to keep the books for each business separate, the Michigan sales tax applies to the gross proceeds of each of your businesses.

For instance, if you manage three businesses and fail to maintain separate books for each one, you will pay sales taxes on the gross proceeds generated by all three, even if only one is subject to the sales tax.

All individuals and businesses required to collect and pay the Michigan sales tax from their customers must be licensed by applying for a Michigan Sales Tax License. Individuals may register for a Sales Tax License through the Michigan Department of Treasury’s online portal.

What Are the Due Dates for the Michigan Sales Tax?

The Michigan Department of Treasury (MTO) states that taxpayers who owe the Michigan sales and use taxes must file and pay them to the state government according to their assigned filing frequency. Each business is allocated a filing frequency ranging from monthly, quarterly, or annual, calculated based on their estimated activity levels. 

Businesses assigned a monthly or quarterly filing frequency must still complete an annual Michigan sales tax return. The Michigan sales tax due dates for each filing frequency are as follows:

• Monthly filing: On or before the 20th of the next month

• Quarterly filing: On or before the 20th of the month following the quarter. For example, when filing for the first quarter of the year (January 1 to March 31), your deadline is April 20.

• Annual filing: February 28

If the due dates fall on a weekend or holiday, Michigan law considers the due date the next business day. If you pay through Electronic Funds Transfer (EFT), the state government recommends paying one business day before the due date or one day before the weekend or holiday if the due date falls into either.

Michigan recognizes 12 holidays, the dates of which may affect your sales tax due dates: New Year’s Day, Martin Luther King Jr. Day, President’s Day, Memorial Day, Juneteenth, Independence Day, Labor Day, General Election Day, Veterans Day, Thanksgiving Day, Christmas Eve and Christmas Day, and New Year’s Eve.

What Are the Penalties for Failing to Collect or Pay Michigan Sales Taxes?

Michigan law (MCL 205.23) outlines the penalties for failing to collect and pay your sales taxes on time. The statute provides three levels of severity for which penalties may be applied:

• First degree: If the state government determines you have failed to collect or pay the Michigan sales tax with the intention of committing tax fraud, you are liable for the first and highest degree of penalties. If it applies to you, you will owe the state government 100% of the taxes you failed to pay, plus interest.

• Second degree: If Michigan determines you failed to collect or pay the sales tax due to an intentional disregard of the law but not with the intent to commit tax fraud, you must pay 25% of the total amount you failed to pay or $25, whichever is higher, plus interest.

• Third degree: If you failed to collect or pay the sales tax due to simple negligence but not intentional disregard, you must pay 10% of the total amount you failed to pay or $10, whichever is higher, plus interest.

The interest owed on a failure to pay sales taxes is calculated based on an annual rate and a daily rate. The Michigan state government revises the interest rates every six months on January 1 and July 1 of each year. You can find the current interest rates in the latest edition of the Michigan Revenue Administrative Bulletin.

• Between January 1, 2023, and June 30, 2023, the annual interest rate is 5.65%, and the daily rate is 0.0001548%.
• Between July 1, 2023, and December 31, 2023, the annual interest rate is 8.25%, and the daily rate is 0.0002260%.

Criminal penalties may apply if the state finds a taxpayer has intentionally failed to collect or pay the sales tax, filed false documents or tax returns, or helped another person avoid paying the sales tax. 

Per MCL 205.27, a criminal failure to pay the Michigan sales tax with intent to commit fraud is a felony punishable by up to $5,000 in fines and up to five years in prison. 

You may be charged with a misdemeanor if you failed to pay but did not intend to commit fraud, such as intentional disregard. This is punishable by up to $1,000 and up to one year of imprisonment.

What Are the Penalties for Late Sales Tax Returns in Michigan?

Michigan taxpayers filing their sales tax returns past the specified deadline are subject to penalties for late returns. The Michigan Department of Treasury outlines all penalties for late payments. 

Failing to file a tax return within the allotted time for the Michigan sales tax exposes you to a penalty equal to 5% of the tax due for the first two months plus 5% for every additional month over the first two, up to a maximum of 25%.

If you filed a sales tax return but failed to pay the tax due on time, the same penalties apply; 5% for the first two months plus 5% for every additional month afterward, up to a maximum of 25%.

How to Avoid Michigan Sales Tax Penalties

To avoid Michigan sales tax penalties, you must pay all applicable taxes and file a sales tax return on time. However, the state government allows you to request a penalty waiver for a failure to pay on time if you can provide sufficient evidence explaining why you were reasonably unable to do so.

Examples of situations where you may need a penalty waiver include:

• Serious illness or death
• Fires and natural disasters
• Criminal acts committed against them
• In specific states of emergency

Whether you need to file a sales tax return on time or require assistance requesting a penalty waiver from the state government, contact an experienced tax professional with TaxCure. 

What to Expect in a Michigan Sales Tax Audit

The Michigan sales tax audit process ensures compliance with the state’s sales tax regulations. The state uses computer-generated risk assessments to select businesses for audits. If your business undergoes a sales tax audit, you can expect the following procedures: 

• Notification: The Michigan Department of Treasury will notify you in writing about the upcoming audit. The notice will include details such as the audit period, the documents they will review, and any specific instructions.

• Documentation review: During the audit, the state auditors will examine your sales records, purchase invoices, exemption certificates, and other relevant documents. They will verify if your sales tax returns accurately reflect your business activities. Generally, an audit can only go back four years; however, if you did not file, the audit can review documents from any period. 

• Interview: The auditors may interview key personnel in your organization to gather additional information and clarify any discrepancies. During this process, you have the right to request that the audit happens at a convenient location and reasonable time, have a tax professional accompany you or represent you during the audit, receive copies of the audit schedule, and meet with the auditor to discuss the findings. 

• Sampling: In some cases, the auditors may use a sampling method to review a representative portion of your sales and purchase transactions. This helps them assess the accuracy of your overall sales tax reporting. 

• Findings and adjustments: The state auditors will provide you with their findings after completing the audit. If discrepancies or errors are identified, they may propose adjustments to your sales tax liability, which could result in additional taxes, penalties, and interest. 

You will receive a Determined Audit Adjustments (DAA) letter with the treasury’s Preliminary Audit Determination (PAD) and a Final Audit Notification (FAN) stating your amount due. Unless you pay the bill or request an appeal, you will receive a Final Bill for Taxes Due – Final Assessment (Form 169) 60 days after the first DAA notice. The MTO provides a guide to SUW audit payments you can reference for paying any assessed liability resulting from your audit. 

• Appeal process: You can appeal if you disagree with the audit findings. You can provide supporting documentation and explanations to contest the proposed adjustments. You can request an Informal Conference in writing within 60 days of the DAA notice, where an impartial referee will hear your appeal and report to the Treasury Executive, who will make a final decision. 

If you wish to appeal the Informal Conference decision, you can appeal to the Michigan Tax Tribunal within 60 days or the Michigan Court of Claims within 90 days. These can be appealed to the Michigan Supreme Court as a last recourse. 

To prepare for a sales tax audit, maintain accurate and organized records, have proper documentation for exempt sales, and review your sales tax compliance to identify and address potential issues. A professional tax advisor from TaxCure can help your safeguard against or prepare for an upcoming audit to ensure you comply with state regulations.

How to File and Pay Michigan Sales Tax

Filing and making your on-time Michigan sales tax payment is a crucial responsibility for businesses operating within the state. If you are wondering how do you file sales tax in Michigan, you can take the following steps to ensure you pay and file on time and with the proper forms:

• Registration: Before filing and paying sales tax, you must register for a Michigan sales tax license. You can register for a sales tax permit with the Michigan Department of Treasury through the eRegistration process or by filling out Form 518, allowing 5 to 6 weeks for processing. 

• Filing frequency: Once registered, the Michigan Department of Treasury will assign a frequency and deadline for you to file and pay Michigan sales tax based on your assigned filing frequency, either monthly, quarterly, or annual. You must still file yearly sales tax returns if assigned a monthly or quarterly frequency.

• Electronic filing: Michigan offers convenient electronic filing options. You can file your sales tax returns electronically through the MTO portal following the Michigan Sales, Use, and Withholding Taxes E-File Tax Preparer Handbook guidelines or use approved tax software vendors to submit an electronic return. 

The state requires employers with over 250 employees to complete Michigan sales tax filing online using Form 5082 if submitting an amended return. 

• Paper filing: If you prefer, you can file paper returns by downloading sales and use tax forms and mailing them to the designated address. Forms may include:

• Form 5080 – Monthly/Quarterly Sales, Use, and Withholding Taxes Return
• Form 5081 – Annual Sales, Use, and Withholding Taxes Return
• Form 5092 – Monthly/Quarterly Sales, Use, and Withholding Taxes Amended Return
• Form 5082 – Annual Sales, Use, and Withholding Taxes Amended Return
• Form 5088 – Seller’s Use Tax Return
• Form 3372 – Michigan Sales and Use Tax Certificate of Exemption

• Payment options: You have several options for making sales tax payments in Michigan. If filing electronically, you can make payments through the MTO portal using your checking account and routing number or a credit or debit card. You can also pay by electronic funds transfer (EFT), following instructions provided by the MTO or EFT debit. You can include a check or money order along with your filed return when paper filing. 

• Reconciliation return: An annual reconciliation return may be required if you are registered directly with Michigan. This return reconciles any differences between estimated payments and the actual tax liability. Typically, this is only required if you file and pay sales tax monthly or quarterly. For a 2022 reconciliation, businesses use Form 5081. 

• Voluntary disclosure: If you are an out-of-state seller who has not previously paid Michigan sales tax but now realizes the obligation, you may consider the Voluntary Disclosure program. This program allows you to report unpaid taxes and comply with reduced penalties and limited lookback periods. To do so, you will use Form 4133. 

What Are the Tax Rules Regarding Online Sales in Michigan?

Generally, Michigan follows the same guidelines for online sales as in-person sales. If you sell goods or services to customers within the state, you must collect and remit the 6% sales tax.

If you have an online store and sell products to customers in Michigan, you need to determine whether the items you sell are taxable or exempt. Most tangible goods are subject to Michigan online sales tax, while certain items like grocery food items, prescription drugs, and medical devices are typically exempt.

For example, if you run an online clothing store and sell a shirt to a customer in Michigan, you need to collect sales tax on that transaction. However, if you sell prescription medication to a customer in Michigan through your online pharmacy, that sale would be exempt from sales tax. 

To stay compliant, you must register for your sales tax permit, collect sales tax from customers, keep detailed records of your sales, and file regular sales tax returns. 

If you are an out-of-state seller conducting business without a physical presence in Michigan, you are considered a remote seller. Michigan’s online sales tax rules for remote sellers are outlined in Revenue Administrative Bulletin (RAB) 2021-21, which provides guidance on sales and use tax nexus standards. 

Remote sellers who meet the economic nexus in Michigan must register with the state and report and pay sales tax nexus. If you earn over $100,000 in gross sales or conduct 200 separate transactions selling to Michigan customers in the previous calendar year, you meet the remote seller threshold. This means you must follow the sales tax guidelines for all businesses in Michigan even though you operate out-of-state.

Sales of tangible personal property, such as clothing, furniture, books, and prewritten computer software, are subject to sales or use tax. If you meet the nexus threshold, you need to register for a Michigan state sales tax license. 

If you’re uncertain about your sales tax obligations or need compliance assistance, consult a professional from TaxCure for guidance tailored to your situation.

Get Help With Michigan Sales Tax

As a business operating in Michigan, it is vital to understand the intricacies of sales tax and manage it effectively. For example, you must pay the current 6% tax rate, know the exemptions available for certain goods and services, and comply with reporting and filing requirements.

Properly managed sales tax ensures you follow legal requirements for Michigan businesses and helps you avoid penalties while optimizing your operations. TaxCure can provide expert assistance and advice to help you manage your sales tax liability. 

At TaxCure, you can find local professionals that are specalized in Michigan sales taxes. You can start a search today using the search feature on the site, or you can view the Michigan sales tax professionals here.

Washington Sales Tax Guide

Washington sales tax rules are complex. Here’s what you should know about them and when to seek help from a professional.

It is important to know whether you need to collect Washington sales tax, and if you do, how — and when — to file your taxes and make payments. You may need to collect Washington sales tax even if you have never stepped foot in the state. Additionally, Washington tax law requires you to take specific steps before you can even begin collecting sales tax. 

Understanding state laws can help you better run a successful business. But failing to follow Washington’s tax regulations can lead to costly penalties or even forced business closure. Here’s everything you need to know about staying compliant with sales tax regulations in Washington.

Washington Sales and Use Tax

Sales tax is applied to all retail sales of tangible goods in Washington State, with very limited exceptions. For instance, postage stamps and most groceries aren't subject to sales tax. Retailers collect the tax from buyers, then file sales tax returns and send the funds to the state. 

When the full Washington sales tax rate has not been paid on a taxable good or service, the buyer may need to pay a Washington use tax. You may encounter Washington use tax if purchases are made in another state with no sales tax or a lower sales tax rate than Washington’s. 

For example, if you make a purchase in Oregon (where there is no sales tax), but you store or use the goods in Washington, you would need to pay a use tax equal to the Washington sales tax rate. 

Washington Sales Tax Rate

The Washington state sales tax rate is 6.5%, but that doesn’t mean retailers only collect a 6.5% tax on their sales. Local sales tax rates may also apply. 

In fact, some areas charge as much as 10.6% when taking into account state and local sales taxes. To sell taxable goods or services in Washington, you need to know the local sales tax rate in every tax jurisdiction you do business in.

How to find local Washington Sales Tax Rates

Since you might do business in several Washington tax jurisdictions, having an easy way to find local Washington sales tax rates is essential. Thankfully, the Washington Department of Revenue (DOR) has a handy local sales tax rate lookup tool that will compute the sales tax you need to collect. You can even check the sales tax rate for a specific address, which is handy if you sell goods or services online.

Register to Collect Sales Tax in Washington

You will need to apply for a Washington business license (Form 700 028) if you need to collect sales tax in Washington. You can find a business license application on the Washington DOR website.

• Washington typically processes online applications within ten business days.
• Paper applications may take up to three weeks to process.
• There is a $50 fee to apply for a business license in the state of Washington.

You cannot collect any sales tax until you receive your Washington business license. Washington will provide you with a Unified Business Identifier (UBI) number, which you will use for tax purposes (such as filing your sales and use tax returns). 

There may be additional steps you need to take after your business license has been processed. Requirements vary depending on the type of business you conduct. Cities and counties in Washington may have separate licensing requirements.

 

What Triggers Nexus in Washington?

You do not necessarily need to have a physical business or live in Washington to trigger a sales tax nexus. The word nexus means "connection" and if you only have to collect sales tax in a state if you have nexus with that state. 

Of course, if you do have a physical presence in Washington, a nexus is automatically triggered. If any of the below apply, you also have nexus in Washington State.

• You have more than $100,000 in combined gross receipts sourced or attributed to Washington State. 
• You are organized or commercially domiciled in Washington.

This means that if you are a remote seller that meets any of the above criteria, you need to register to collect Washington sales tax. Tax-exempt goods and services must be included when determining your gross receipts.

To give you an example, imagine that you have an online store selling gifts, and people living in Washington State buy $50,000 worth of products from you. In this case, you don't have nexus, and you don't have to collect or pay Washington sales tax. Now, imagine that the next year, you sell $101,000 in taxable goods to Washington residents. Now, you are over the threshold and must collect, file, and remit sales tax. 

Who is Required to Collect Sales Taxes?

Any individual who triggers a sales tax nexus in Washington needs to collect sales tax on taxable goods. You can't collect sales tax until you receive your business license from the state. The sales tax you collect must be paid to the state of Washington, so it’s wise to keep sales taxes separate from other business revenue.

How to Report Sales Tax in Washington State

You will report your retail sales on your Washington State excise tax return. This return is for business income as well as sales and use tax. 

Sales tax returns can be tricky, so you may find it beneficial to consult with a tax professional that has experience working with Washington State excise tax returns. Failing to report your sales tax properly can result in expensive penalties. If the penalties go unpaid, you may even lose your Washington business license.

On the other hand, mistakes can also cause you to overpay. A tax pro can help you ensure that you're tracking your sales tax and filing the forms correctly. 

How to Pay Sales Tax in WA

Most businesses in Washington need to file and pay taxes online. However, some can get an exemption and file through the mail. The Washington DOR accepts the following payment methods.

• EFT Debit: The Washington DOR withdraws specific funds from your bank account (no fee)
• EFT Credit: Your bank or financial institution sends specific funds to the Washington DOR (fees may apply)
• E-Check: Similar to EFT debit but requires taxpayers to enter financial information for every transaction
• Credit Card: The Washington DOR accepts American Express, Discover, Master Card, and Visa (convenience fee applies)

There are certain circumstances where you may pay your Washington sales tax in other ways. It is possible to pay your sales taxes via a paper check or cash, but you must request an e-file/e-pay requirement waiver to make a payment this way. 

Payments may be made over the phone only if you receive a bill from the Washington DOR for an outstanding excise tax debt. The department has special requirements for cash payments that exceed $20,000.

Can You Pay Sales Tax With a Payment Plan?

If you have trouble paying your Washington State sales tax bill, you may qualify for a self-service payment plan. If you qualify for a payment plan, you will have between three and nine months to pay your tax bill in full, but interest will continue accumulating, so it is not the best choice for everyone. 

The rules for payment plans in Washington State can be complicated, and the DOR has specific criteria that must be met to enroll in a self-service payment plan. Qualifying criteria includes the following.

• Must have received a Notice of Balance Due.
• Including penalties and interest, your total tax due must be more than $100 but less than $100,000.
• Must have the ability to schedule ACH debit payments.
• Must not have had an active payment plan within the last 12 months.
• Must not have penalties related to tax evasion or avoidance.
• Must not have any active DOR tax warrants or liens.

The above is not an exhaustive list. You may need to meet other criteria to qualify for a Washington State payment plan. Additionally, you must follow payment plan guidelines or risk defaulting on your payment plan. Failure to follow the below guidelines could cause Washington DOR collection efforts to resume.

• Make a payment within 30 days of setting up your payment plan.
• File future returns by their regular due dates.
• Make all future tax payments within five days. 

Can You Settle Sales Tax in Washington?

You may be able to settle certain sales tax liabilities or penalties through a Rule 100 settlement in Washington. However, that option is only available in cases of dispute. You cannot directly apply for a settlement. Instead, you need to request a formal or informal review of the tax issue. Then, at any point during the review process, you may request a settlement. The state only settles sales tax in cases of dispute, when it is a non-recurring issue, forcing you to pay the tax would have harsh consequences, or you received incorrect written advice from the Department. 

Sales Tax Deadline in Washington 

Washington sales tax filing frequency requirements vary. When you receive your Washington business license, you will also receive a packet that details your specific filing frequency requirement. How often you need to file depends on your estimated Washington State annual revenue.

• If you are a monthly filer, your tax return is due by the 25th of every month.
• If you are a quarterly filer, you must file by the last day of the month following the end of the quarter.
• Annual filers must file taxes by April 15 for the prior year’s tax return.

If your regular filing due date falls on a weekend or federal holiday, you have until the next business day to submit your tax return. All people conducting business in Washington who collect retail sales tax must file sales tax returns.

Washington State Tax Extension

If you cannot file your Washington tax return by the due date, you may be granted a tax extension. Tax extensions will not be approved if requested after your filing due date.

Most tax extensions are for 30 days or less, and Washington will only grant them in certain situations. You may get approved for an extension if any of the following scenarios apply.

• A natural disaster impacted your ability to file.
• You had a medical emergency.
• You experienced technical difficulties that prevented timely tax filing.
• Your business records were lost or stolen.

Penalties for Filing or Paying Late

Filing your sales tax return late comes with hefty penalties. Taxpayers will face a 9% penalty ($5 minimum) for late payments, but larger penalties may apply, including the following.

• 19% penalty after the last day of the month a return was due.
• 29% penalty after the last day of the second month that a return was due.

Some taxpayers may have late tax filing penalties waived. If you fail to file your Washington tax return due to reasons beyond your control, Washington may waive late penalties. Simply not having the money or not knowing when your tax return is due are not valid reasons for a penalty waiver, according to the department’s website. 

You might also avoid a late filing penalty if you filed all Washington state tax returns and made all tax payments for 24 consecutive months prior to your latest tax return due date, regardless of your filing frequency requirement. 

Interest Rate for Late Payments in WA

If you fail to pay your full tax balance, you could face late payment penalties. These are in addition to Washington's late filing penalties. The interest rates for late tax payments in Washington vary each year. For 2023, the late payment interest penalty is 3%.

Are Discounts Taxable in Washington State?

Offering discounts is a good way to attract more customers or clients, but offering discounts can make filing your Washington excise tax return a little more complicated. For true discounts (discounts offered by you and not the manufacturer), you won’t need to collect sales taxes on the discounted amounts. You will only charge and collect Washington sales tax on the amount your customer actually pays. 

However, you must include the full price (price before the discount) in the gross amount column of your excise tax return. You will also need to report the discounted amount, but this amount goes in the deductions column of your tax return. 

Individual reporting and collection requirements may vary depending on the type of discount you give. Consulting with a local CPA or tax attorney can ensure you don’t make mistakes that could cost you later.

Does Washington Audit Sales Taxes?

Washington State audits sales tax returns. In fact, the Washington DOR’s website states that it does so “routinely.” So, you’ll want to make sure you are prepared for an audit in case one happens to you. Retail sales tax reporting is one of the major categories the department looks at during an audit. 

If your Washington States sales tax return is pulled for an audit, you will need to show documented proof of sales and use taxes, both paid and collected. The auditor may look at your returns for the four prior years in addition to your most current tax return. Having a Washington tax attorney represent you during a tax audit can save you a lot of stress — and possibly a lot of money, too.

What Happens if You Don’t Collect Sales Tax in WA

Not collecting and paying Washington sales when required can result in a tax evasion — or even tax fraud — conviction. These are serious offenses that may come with financial and/or criminal penalties. 

Information from various lawyers’ websites in Washington state that you may face a misdemeanor or felony charge if you fail to accurately report Washington sales taxes. You may also have your Washington business license revoked if you don’t collect the required sales taxes. If your business license is revoked, you will no longer have the ability to conduct business in the state. So, if you have determined you have sales tax nexus in Washington, you should follow the state’s tax guidelines very carefully.

Voluntary Disclosure Agreement

You may have already started doing business in Washington State without knowing all the tax laws. In that case, you don’t need to panic. Washington offers voluntary disclosure agreements. These agreements can help unregistered businesses comply with Washington tax laws going forward, even when the business hasn’t filed excise tax returns for the past four years. If you are approved for a voluntary disclosure agreement, you can even have penalties waived. 

Taking advantage of Washington’s voluntary disclosure agreement can save you a lot of money. That’s because you won’t be able to apply for the program if your non-compliant business activities are discovered by the state first. Here’s what could happen if Washington State discovers your failure to comply.

• You could face a 5% penalty for underpaid tax.
• You could face a 5% penalty for not having a Washington business license.
• You could face a 29% late payment of a return penalty.
• Washington could assess tax non-compliance penalties for the past seven years (compared to four years with a voluntary disclosure agreement).

Not every business is eligible for a VDA in Washington. Businesses already registered in Washington State are not eligible. If your business was registered in Washington at any time, you would not qualify. If Washington State has ever contacted you regarding tax compliance (i.e., the state already discovered your tax non-compliance), your application will not be approved.

You can apply for a Washington voluntary disclosure agreement online. If the department approves your application, it will send you a formal agreement that must be signed and returned within 30 days. The 30-day window starts on the date you filed your application, not the date you were approved. Failure to sign and return the document in this timeframe will result in a denial of your application.

Get Help with Washington Sales Tax

Whether you need to determine if you have nexus in Washington State, need help filing your Washington State tax return, or are facing a sales tax audit in Washington, working with a tax professional can make the process much easier. Due to the consequences of failing to comply with Washington sales tax laws, hiring a professional can be much less expensive than going it alone. 

It’s easy to find qualified Washington State tax professionals on TaxCure. You can filter by state agency, type of tax problem, and your zip code to find profiles for Washington tax attorneys, certified public accountants (CPAs), and enrolled agents (EAs).

Nevada: Relief Options and Consequences of Tax Problems

While Nevada doesn’t have a state income tax, the Nevada Department of Taxation (NVTaxDept) does collect other state taxes, including local sales tax, state sales tax, and gross receipts commerce tax. Understanding and budgeting for your business tax responsibilities is key to running your business well, and if you fall behind or underestimate your tax responsibilities, you could find yourself financially unable to pay. 

If you don't pay your taxes, you can face a range of very serious consequences ranging from tax liens to asset seizures. However, to help you out, the NVTaxDept offers a range of payment and relief options. This guide looks at resolution options for NV back taxes. It also discussed tax audits and how to amend your return. Then, it outlines what happens if you don't pay. 

Resolution Options for Nevada Back Taxes

Nevada offers several resolution options for businesses with unpaid taxes and unfiled returns. Here is an overview of the options you may want to explore.

Payment Plans for Nevada Back Taxes

The Nevada Department of Taxation approves tax payment plans on a case-by-case basis. If you cannot pay your back taxes because of financial hardship, you can apply for a monthly installment plan. The size of your payments and the duration of the repayment plan will depend on your financial condition. 

To apply for a plan, you will need to file all of your tax returns and complete the Payment Installment Plan Request Form. If you owe more than $50,000 in tax or are applying for a plan that will last more than 36 months, you will also need to complete a Financial and Other Information Statement for Businesses, plus the Financial Statement for Individuals forms. 

You should file your payment installation plan request with the Nevada Department of Taxation as soon as you realize that you cannot pay your tax liability. Once your payment plan is approved and finalized, you will need to file and pay all of your future returns by their due dates. If you don’t make those payments on time, you will default on your payment plan, and the collections process will resume. 

Offer in Compromise for Nevada Back Taxes

You may be able to request a compromise with the Nevada Tax Commission (NTC). The NTC may consider compromises for taxes, contributions, premiums, fees, interest, and penalties. If your compromise is approved, the NTC may settle your debt for less than the full amount that you owe. 

The NTC allows you to apply for a compromise for three reasons. 

• You feel that you are unable to pay the full tax amount. If so, you will need to complete a personal financial statement and a financial information statement for businesses with your request. 
• You don’t believe that you owe the total tax amount that the NTC has calculated. You will need to describe why you feel you don’t owe the tax liability and must identify the correct amount of tax, the penalty, and the interest that you believe you actually owe. 
• You have a hardship situation, such as exceptional circumstances that caused you to pay the incorrect amount or to not be able to pay the full amount of tax. Depending on your circumstances, you may need to complete the personal financial statement and financial information statement for businesses. 

You must apply for a compromise in writing using the department's OIC form and include a detailed explanation of why you are requesting the compromise. Once you apply, collections activity on your debt will stop until the NTC has accepted or rejected your offer. 

Generally, the Department requires you to pay offers in five months or less — if you take this option, you can make up to five monthly payments. However, you can apply to pay the offer over a longer period of time. 

Nevada Tax Penalty Waivers

The Nevada Department of Taxation may be willing to remove tax penalty, interest, or both if you can prove that your failure to file a return or make a payment on time was from circumstances beyond your control. To apply for a tax penalty waiver, you will need to show that your failure to file or pay occurred without your intent. 

For example, circumstances like natural disasters, fire, death, or serious illness of the taxpayer, or system issues that delayed electronic filing or payment may be considered valid reasons for failing to file or pay. If you believe that your circumstances qualify for a tax penalty waiver, you will need to complete the Request for Waiver of Penalty and/or Interest Form, briefly describing the reasons why you feel the penalty should be waived. 

Help With Unfiled Tax Returns in Nevada

If you have unfiled returns, you may want to look for an amnesty or voluntary disclosure program. At the time of writing, there isn't an active amnesty program, but there is a voluntary disclosure option. Here's an overview. 

Nevada Tax Amnesty Program

The last time Nevada had a tax amnesty program was in 2020. Nevada’s 2020 tax amnesty program was a one-time program for businesses or individuals doing business in Nevada with existing tax liabilities. 

Under the program, the department waives penalties and interest as long as the taxpayer's debt meets the program’s criteria as follows: 

• Tax was due and payable on or before 6/30/2020.
• Delinquent tax was paid in full for the period.
• Delinquent tax is paid during the upcoming amnesty period.

This program included many types of tax, like sales and use tax, liquor tax, cigarette tax, modified business tax, live entertainment tax, wholesale marijuana excise tax, and retail marijuana excise tax. It does not include lodging tax, real property transfer tax, and locally assessed tax. 

Voluntary Disclosure 

Voluntary disclosure is a program that allows people with unfiled tax returns to get into good standing with a minimum of penalties. Generally, you can only qualify if you haven't been contacted by the department about the tax. To apply, file an Application for Voluntary Disclosure of Failure to File Return.

For example, people often use the voluntary disclosure program for sales tax. Say that you're an online seller and you didn't realize that you were supposed to be collecting sales tax from your customers in Nevada. To catch up on your filing requirements, you may want to look into this program. 

Amending Your Nevada Tax Return

If you have discovered incorrect information on your original tax return, you can submit an amended tax return to correct that information. For example, if you realize that you forgot to claim all of your business deductions, amending your tax return to reflect those deductions could reduce your tax liability. 

The state of Nevada requires you to include an original copy of your return and write “AMENDED” on it in black ink in the upper right-hand corner. You can put a straight line through the original incorrect figures, then enter the correct figures next to or above the lined-through figures. You will also need to include a written explanation and any documents, like exemption certificates or adjustments, to identify why you are making those changes. 

Once you have completed the amended return, you can email it to nevadaolt@tax.state.nv.us or mail a hard copy to the Department of Taxation. 

If your amended return increases your tax liability, you will need to submit the payment and any penalty and interest. If you can't afford to pay in full, you will need to request a payment plan or other relief option. If you qualify for a refund or credit because the amendment reduces your liability, you will receive written notice when that credit is available. 

Nevada Tax Audits

During an audit, the NV Department of Taxation asks you to support the information on your tax return. Then, the auditor makes a determination of whether you owe back taxes by reviewing the facts of your return and any information that they may have received about your business operations. 

Upon failing an audit, you may be subject to pay penalties and interest in addition to the full amount of taxes due. However, you can appeal if you disagree with the taxes assessed during an audit.

Appealing a Nevada Tax Assessment

If you have a disagreement with the Nevada Tax Commission, you can request a hearing. The hearing is similar to a court of law, but it's a bit less formal. Generally, it happens around a conference table, and an Administrative Law Judge (ALJ) will issue a decision. 

You have the right to appeal the ALJ’s decision to the Commission. You must file your appeal within 30 days of the ALJ’s decision and must show that the decision: 

1. Violated constitutional or statutory provisions
2. Exceeded the agency’s statutory authority
3. Was unlawful
4. Was affected by other errors
5. Was clearly erroneous
6. Was arbitrary or lacked discretion

When you file your appeal, you will receive a letter from the Department acknowledging your appeal. The letter will request specific information and a list of documents that you need to submit to the Commission to consider. You will also receive a letter identifying the date, time, and place for your hearing before the Commission. 

During the hearing, you will have the chance to present your case to the Commission and explain why you feel the ALJ’s decision is incorrect. The Department will also have a chance to explain why they agree or disagree with the ALJ’s decision, and after hearing both sides, the Commission will decide to accept, reject, or modify the ALJ’s decision. 

Bankruptcy to Resolve Business Tax Debts?

Depending on your business’s financial situation and the amount of taxes that you owe, you may want to consider filing for commercial bankruptcy. When you file for commercial bankruptcy in Nevada, you may be able to minimize your business debt obligation, but you won't necessarily be able to eliminate all of your tax debt. To be on the safe side, you should always consult with a bankruptcy attorney before taking this path.

Chapter 11 bankruptcy lets you continue to operate your business while you create a reorganization plan and restructure your debt. Once you file for Chapter 11 bankruptcy, your creditors will be placed under an automatic stay, meaning they can’t seek foreclosure or repayment from your business. Your business will file a reorganization plan with the bankruptcy court, and once that plan is approved, you will be responsible for filing monthly operating reports, paying quarterly fees, and making all payments required by the reorganization plan. 

If you’re operating your business as a sole proprietor, you may be eligible to file for Chapter 13 bankruptcy, instead. To qualify for Chapter 13, you must have no more than $1,395,875 in secured debts, and no more than $465,275 in unsecured debts. 

Just like Chapter 11 bankruptcy, chapter 13 bankruptcy will require you to create and follow a repayment plan. Chapter 13 bankruptcy allows you to keep your property while typically giving you between three to five years to repay your debts. 

For businesses that are no longer viable, Chapter 7 bankruptcy may be an option. With a Chapter 7 bankruptcy, your business must stop operating, and its property and assets will be liquidated to pay off debts. 

How to Pay Nevada Taxes Owed

You can pay your taxes online through the Nevada Tax Center website. Once you register to use the website, you can make all of your payments online via Electronic Funds Transfer (EFT). You can also use the site to file your tax return and view financial statements. 

You can also print a paper return using the Nevada Tax Center. You can print those forms and mail them with your check or money order. If you don't have a printer, most libraries let you print tax forms for free. 

If you wish to make a payment with cash, you will need to visit your district tax office. District offices can also accept check or money order payments. If your payment is for $10,000 or more, The Department of Taxation requires that you make the payment electronically. 

During busy tax times, including April, July, October, and after January, it can take up to 15 days for your check to clear your account. 

Statute of Limitations on Tax Liabilities in Nevada

After you have filed a tax return in Nevada, the Nevada Department of Taxation has up to three years to audit your tax return. If you did not file a return, the statute of limitations is extended up to eight years. If you are found guilty of fraud or intentional evasion of sales tax, there is no statute of limitations. 

The Consequences of Owing Back Taxes in Nevada

Owing back taxes in Nevada can unleash a series of consequences that can affect your financial stability and personal peace of mind. From penalties to asset seizures, the scope of consequences reaches far. That’s why it’s so critical to know what you’re going up against if your business taxes slip. 

Whether you’ve fallen behind due to negligence, evasion, or just because you've been busy, there are a lot of penalties and consequences to unpack. Here's an overview of what can happen if you don't pay or file taxes in the Silver State. 

Nevada Department of Taxation Contact Information:

• Business Tax Assistance: (866) 962-3707
• General Tax Information: (866) 962-3707
• Collections: (866) 962-3707
• Website: Nevada Department of Taxation

Taxpayer Penalties in Nevada

If you don’t pay your Nevada business taxes in a timely manner, you’ll face a series of late penalties until you pay your account in full. The exact penalties depend on the tax delinquency in question – for instance, whether the offense is a late return, a returned check, a failed audit, a case of negligence, or outright fraud. 

Penalties for Returned Payments

If you pay your taxes using a check that your bank doesn’t honor, you’ll be charged a fee. You may be required to pay the NVTaxDept using other methods of payment in the future such as cashier’s checks, money orders, traveler’s checks, or cash. 

Penalties for Filing Late

If you don't file your tax return on time, the penalty can be up to 10% of the total amount you owe, including both taxes and fees. Until you pay your tax obligation, interest also accrues at a rate of 0.75% per month. 

Nevada sales and use tax returns are due by the last day of the month following each reporting period. Commerce tax returns are normally due August 14 or the following business day — the fiscal year for business returns in Nevada runs from July 1 to June 30. 

If your return isn’t submitted and postmarked on or before the due date, the penalty scales based on how many days late the payment is, and it can get up to 10%. For example, if you're less than 10 days late, the penalty is just 2%. It reaches 10% once you're a month late.

Penalties for Fraud or Evasion

The penalty for committing tax fraud or evasion in Nevada is 25% of the amount you’re determined to owe. You can be convicted of fraud or evasion if the Department determines that you intended to avoid paying taxes. 

Tax Liens in Nevada

If you don’t pay your business taxes in Nevada, you can be subject to a lien. A lien is a claim on your property representing the debt that you owe. For instance, the NVTaxDept can guarantee your tax obligation by placing a claim on your home or car until your tax debt is paid. After your account goes unpaid, the NRS has three years to bring a lien against you. 

Tax Levies in Nevada

If you fail to fulfill your tax obligations, the Department can issue a levy against any property you own that has value. A levy is a legal seizure of property that fulfills a tax obligation. If you own a business, a home, or a car, it can be taken to satisfy a tax debt in Nevada. The Department of Taxation can also seize most sources of income and the funds in your bank or retirement accounts. 

Revoked Business Licenses in Nevada

The Department of Taxation can also order a sheriff to lock and seal your business doors if it’s determined that you’ve sold taxable fuel without remitting taxes. The Department must provide notice by mail before carrying out the order. 

Tax Penalty and Collection Notices in Nevada 

A tax penalty or collection notice from the Department of Taxation might come by mail or email, or it might be served in person. A mailed notice will always come to your home or business address, not a PO box. You’ll only receive an email if you’ve agreed to receive notices in that manner. You may be served if you have a history of being unresponsive to notices. 

Some of the common collection notices in Nevada include: 

• Notice and Demand for Payment: This tax bill arrives after the Department makes a determination on your tax obligation. To avoid collection actions, you should respond – even if you can’t pay in full, you can arrange a payment plan. 
• Final Notice of Intent to Levy: The levy notice appears in your mailbox when you’ve neglected to answer a tax bill or arrange a payment plan. It gives 30 days advance notice before the levy can be carried out and your property gets seized. 
• Notice of Levy on Your State Tax Refund: This document usually makes its appearance around tax time, and indicates that the Department is seizing your tax refund to satisfy the debt. 
• Notice of Your Right to a Hearing: Most letters come with a copy of this notice, which informs you of the process to dispute a tax determination. 

• Advance Notification of Third-Party Contact: If you receive a third-party contact letter, it means the Department can contact other people and organizations while inquiring about your ability to pay the tax debt. 

Get Help With Nevada Back Taxes 

Even if you've ignored multiple notices or missed filing several returns, it’s not too late to get back into good standing with the Nevada Department of Taxation. Don’t risk losing your assets or having to lock and seal your business doors for good – talk to a professional who can help you. 

At TaxCure, we have a comprehensive directory of tax professionals who know from experience how to deal with the NVTaxDept, and they’ll work with you to find a solution with a peaceful outcome. Use our site to search for a Nevada tax professional today and narrow down your search results to find someone who has experience with your specific concern.

State Sales Tax Guide – Colorado

If you’re selling goods in Colorado, there’s a good chance you’ll need to collect a sales tax and send that money to the Colorado Department of Revenue. If you don’t, you could face monetary penalties, interest, and/or be subject to a tax lien. Paying the necessary Colorado sales taxes seems like a simple thing to do, but it can often be a complicated process. 

This guide is designed to shed some light on that process.

What Is the Colorado Sales Tax Rate?

The Colorado state sales tax rate is 2.90%. However, the effective sales tax rate is higher in most areas as county and municipal sales tax get added to this amount. 

For instance in Aspen, there’s the Aspen sales tax of 2.40%, the Pitkin County sales tax of 3.10%, the Roaring Fork RTA Snowmass and Aspen sales tax of 0.40% and the Pitkin County MTSD sales tax of 0.50%. This adds up to a total sales tax in Aspen of 9.30%.

If you’re curious about the total sales tax for a particular location in Colorado, the Colorado Department of Revenue has a handy Colorado Sales Tax Lookup tool.

Sales Tax Exemptions

Note that sales tax doesn’t apply to all products or services sold in the state. For example, there are various exemptions where there’s no state sales tax. Some of these include:

• Food sold from a vending machine.
• Medical and farm equipment.
• Residential energy usage.
• Components used to generate electricity from a renewable energy source.
• Wholesale sales.
• Most services.

Sales Tax Vendor Fees

A Colorado retailer may keep for itself a certain amount of the collected sales tax to help it cover the costs of collecting and paying the Colorado state sales tax. Not all businesses are eligible for this service fee (or vendor fee), but if you qualify, your sales tax due is reduced by the amount of the fee. You must file and pay on time to keep the fee. 

If a business is entitled to a service fee that exceeds $1,000 for the applicable filing period, then a special form (State Service Fee Worksheet) may be required.

Who Needs to Collect Colorado Sales Tax?

As a rule of thumb, only the sale of tangible goods results in a state sales tax. Three notable exceptions are commercial gas and electricity utilities for commercial use, hotel rooms, and intrastate telephone services. Also, some Colorado home-rule cities that administer their own sales tax have the option of imposing a sales tax on certain services.

This means most retailers located in Colorado or who sell to customers located in Colorado, must collect a sales tax. If a business is obligated to collect a Colorado sales tax, it will need to first obtain a Colorado sales tax license.

How to Pay and File a Sales Tax Return in Colorado 

Filing and paying the Colorado sales tax can be done with either a paper return or by with e-filing. If e-filing, there are several methods available, including:

• The Colorado DOR online portal.
• Using a sales tax software vendor that’s been approved by the Colorado DOR.
• Using an approved Microsoft Excel spreadsheet.
• XML (Extensible Markup Language).

Regardless of how you file your sales tax return in Colorado, there are two things to be aware of. First, if you have a Colorado sales tax license, you will need to file a sales tax return every applicable filing period, even if you have zero sales during that time (and therefore, collected no sales tax). If you don’t file this zero sales tax return, the Colorado Department of Revenue will file a return for you and estimate the amount of sales tax they think you generated.

Second, if your business pays more than $75,000 per year in Colorado sales tax, you must pay the necessary sales tax with an Electronic Funds Transfer, or EFT. If you’re not required to pay with an EFT, you have the option of using a check or money order, as well as a credit or debit card.

What’s the Due Date for Colorado Sales Tax? 

When and how often you must file a Colorado sales tax return depends on the amount of sales tax collected each month. If the collected sales tax is $300.00 or more each month, then a monthly sale tax return is needed. These are due on the 20th of the month following the reporting period. So if your business collected $325.78 in Colorado sales tax for July, then the sales tax return is due by August 20th.

If the collected sales tax is less than $300.00 per month, then sales tax returns must be filed quarterly, with the following deadlines:

• April 20 for the first quarter (for sales made from January to March).
• July 20 for the second quarter (for sales made from April to June).
• October 20 for the third quarter (for sales made from July to September).
• January 20 for the fourth quarter (for sales made from October to December).

If you collect an average of $15.00 or less each month, then you file a return once a year. These annual sales tax returns are due January 20 following the year of sales. 

For a seasonal business, which may only generate sales in Colorado for a few months of the year, it may request permission from the Colorado Department of Revenue to only send sales tax for the months that the business is in operation.

You’ll notice that the sales tax filing deadline is always on the 20th of a particular month, but this assumes this is a regular business day. If the 20th falls on a weekend or holiday, then the deadline moves to the next business day.

Are There Penalties for Filing a Late Sales Tax Return in Colorado? 

You could have to pay penalties and interest, in addition to any unpaid sales taxes if you fail to:

• File a sales tax return by the due date;
• Pay sales tax by the due date; or
• Properly account for all state and local sales taxes that are due.

Penalties and/or interest may apply even if you fail to do any of the above on accident, although they will be more severe if the sale tax infraction was deliberate or committed fraudulently.

If you get behind on sales tax payments, you may be able to set up a payment plan. The DOR reviews payments plan requests for sales tax delinquencies on a case-by-case basis. 

Colorado Penalties for Sales Tax Noncompliance

If you “neglect” or “refuse” to file a sales tax return or pay any sales taxes due, you could face a penalty which is the greater of $15.00 or 10% of any unpaid sales taxes, plus 0.5% for each month the tax goes unpaid. However, this penalty rate shall not exceed 18%.

Interest begins to accrue on any unpaid taxes starting from the original due date of the tax. The interest rate depends on the calendar year in which the interest accrues. For example, in 2022, the interest rate was 6%.

This interest rate may be reduced if you pay your past-due sales taxes quickly. Generally speaking, you will receive about a 3% reduction of the interest rate if you:

• Pay the tax bill in full before the Colorado DOR issues a notice of deficiency;
• Pay the tax bill in full within 30 days of the issuance of a notice of deficiency; or
• Enter into a monthly payment plan agreement within 30 days of the issuance of the notice of deficiency.

If you fail to pay taxes due to negligence or an intentional disregard for the tax laws and rules (but there’s no intent to defraud), then there’s an additional penalty of 10% of the total tax deficiency amount, plus interest.

If you try to commit fraud to avoid paying the sales tax, then the penalty is 100% of the tax deficiency amount. For example, if you owe $10,000 in sales tax, the fraud penalty would be $10,000. The penalty doubles your bill, and then, interest makes it even higher. 

Any unpaid taxes, penalties, and interest not promptly paid when due could also result in a tax lien being placed on your personal and real property. A tax levy on your property is also possible.

A tax lien is a legal claim in property to secure the government’s ability to collect a tax debt. In contrast, a tax levy is the actual taking or selling of property to pay off a tax debt.

Voluntary Disclosure for Unfiled Sales Tax Returns

If you have not filed your sales tax returns or registered your company, you may qualify for Colorado's voluntary disclosure program. Typically, you must contact the state before they contact you if you want to qualify. When you apply, the state generally limits the lookback period to four years, and you get waived or reduced penalties. This program allows you to catch up without worrying too much about excessive penalties or other consequences. Consider this program if you were supposed to collect sales tax but didn't, or if you have unfiled sales tax returns.

Amending a Colorado Sales Tax Return (Form DR 0100)

You can amend Colorado sales tax returns online. After signing in to your online DOR account, you’ll go to your home page and find your sales tax account. Then click on the “File/Amend and View Returns/Payments” link to access prior filings. 

On the right side, there should be a link that allows you to “View or Amend Return.” You will now be on the Sales Tax Return screen where you’ll see an “Amend” link toward the top of the screen. Follow the instructions and fill in the updated information, then click “OK.”

You may also need to make changes to all applicable retail locations or amend additional tax forms like the DR 0200 (Colrado Special District Sales Tax Return Supplement). Toward the end of the tax amendment process, you’ll end up at the ACH Debit payment screen. If you don’t owe additional taxes or wish to pay with a different payment method, click “No” at the “Would you like to make a payment?” prompt on the ACH payment screen. Then click “Next” to get to the Confirm and Submit screen, where you can officially submit your amended return. 

Finally, you’ll see a Confirmation screen, which allows you to pay the sales tax using a method other than ACH Debit. For example, you can follow the instructions to mail in a check. 

How to Claim a Refund After Amending

If you are due a refund after amending your sales tax return, you need to file Form DR 017 (Sellers/Retailers Claim for Refunds). You can file on paper or online. At the time of writing, the DOR is taking over a year to review refund requests, and generally, revenue officers request more information. To improve your chances of successfully requesting sales tax refunds, you may want to work with a tax professional. 

In the past, the CO DOR allowed you to roll overpayments from amended returns onto the next filing period. However, the agency changed this rule during the COVID pandemic. Now, you must request a refund if amending your return leads to an overpayment. However, you can use the overpayment line if you simply send in extra money with your tax return. This change has created excessive delays for many Colorado business owners who've requested refunds due to filing errors or other issues with their originally filed sales tax returns. 

It's also important to note that if you request a refund, your online sales tax account will show the requested refund as a credit. This can be very confusing. Even if a credit shows up on the home page of your account, you must still pay the amount due for the current filing period. 

For instance, say that you have requested $10,000 in refunds from tax year 2022, and you have a sales tax return for $1,000 due on April 20, 2023. You must pay the $1,000 bill. Although the credit appears on your online account, it is still pending. 

That said, if you see a credit for the tax return due on April 20, 2023. Then, you can apply that credit to your bill for that period, as long as the credit applies to the location for which you are filing. 

How to Avoid Sales Tax Penalties

The best way to avoid penalties is to file a sales tax return by the deadline and pay the full amount of sales tax due. But this can be a lot easier said than done, especially given the complex rules and requirements concerning not just a state sales tax, but local sales taxes, too. 

This is why it’s important to consult with a Colorado tax professional if you have any questions or need guidance on fulfilling your sales tax obligations. If you’re not ready to talk to a Colorado tax professional, there are online resources that may answer any questions you have concerning sales tax collection in Colorado.

One such resource is the Colorado Sales Tax Guide, which has detailed information about how sales taxes work in the state. Even if this guide can’t answer your questions, it can offer solid background information that can help you ask more pointed questions when you do speak with a tax professional or someone from the Colorado Department of Revenue.

Colorado Sales Tax Audit

As you might imagine, the Colorado Department of Revenue may audit your business or organization to ensure that you’re paying the proper amount of state sales taxes. Because of this, Colorado law requires retailers and other sales tax collecting organizations to keep at least three years’ worth of records and accounts relating to sales tax transactions.

The exact records required will vary based on the business, but there needs to be enough information to confirm the correct state sales tax amounts. Retailers located outside the state are also subject to sales tax audits by the Colorado Department of Revenue. Colorado retailers may also be subject to sales tax audits from localities, such as home-rule cities.

Special Rules for Online Sales Tax

A retailer not located in Colorado may still need to collect and pay Colorado sales taxes if they are deemed to be “doing business” in the state. A retailer is doing business in Colorado if it solicits business or receives orders from residents of Colorado. This sales tax requirement is subject to at least two exceptions.

1. The small retailer exception. A retailer that doesn’t have a physical location in the state is exempted from sales tax collecting requirements if their sales tax-eligible transactions for the current and prior year amount to less than $100,000.
2. If the online seller uses a marketplace facilitator. Then, it’s the marketplace facilitator that’s required to collect and pay the Colorado sales tax. A marketplace facilitator can include an Internet website or other electronic forum such as Etsy that enters into a contract with the seller to carry out a transaction in return for a fee or collects payments from the buyer and sends it to the seller. 

Special Sales Tax Disclosures to the Consumer

A Colorado retailer that collects a Colorado sales tax may not tell the consumer that the sales tax will be:

• Assumed by the retailer;
• Not added to the final selling price of the product sold; or
• Refunded to the consumer.

The retailer is also obligated to communicate the sales tax dollar amount to the consumer as a separate line item. In other words, the retailer may not simply tell the consumer what the sales tax rate is or include a single total amount on the transaction receipt or invoice. 

Do You Need Help With a Colorado Sale Tax Issue?

Dealing with Colorado sales taxes can be complicated. With so many exceptions, filing periods, and sales tax rates to keep track of, complying with Colorado state (and local) sales tax laws can seem overwhelming. Whether you’re facing an audit, trying to figure out how much sales tax to collect, or have missing sales tax returns, find a tax professional with experience resolving Colorado sales tax problems. 

Use TaxCure to search for a pro with Colorado-specific experience. Most of these professionals offer free consultations to help you decide what your next steps should be.

North Carolina Tax Garnishments

If you don't pay your taxes in Noth Carolina, the NC Department of Revenue (DOR) can garnish your wages, bank accounts, and payments from third parties. Garnishments can be professionally embarrassing, and they can also cause financial distress. Here's an overview of how they work and what to expect.

Bank Garnishment

The NC DOR can garnish 100% of the funds in your bank account up to the amount of your tax debt. Generally, the bank freezes the funds for a certain number of days to give you a chance to respond, but typically, the garnishment starts before you even receive the notice from the DOR. 

The bank must garnish all of the available funds when it receives the garnishment order. If you have outstanding checks or automatic payments, they will bounce or make your account negative unless you make a deposit. If you don't take action by the deadline, the bank will send the frozen funds to the DOR — timing varies, contact your bank for more details. 

Wage Garnishment

A wage garnishment is when the state sends a notice to your employer to withhold the delinquent tax from your paycheck. For tax debts, the state will instruct your employer to withhold 10% of your gross wages. However, your employer can garnish up to 25% of your wages for other types of debt. If your wages are already being garnished, the tax garnishment will usually be on top of the other garnishment. 

Your employer will send the withheld amount to the DOR, and they will continue to do so until your liability is paid in full. The garnishment also applies to commissions, bonuses, and any other payments you receive from your employer. 

Garnishments on Other Income Sources

The NC DOR can also garnish other types of income, such as rents, royalties, and contract payments. As indicated above, the state can only take 10% of wages reported on a W2, but there are no limits for these payments. The DOR can take 100% of these payments. 

Vendor Garnishment

The state can also garnish 100% of payments paid to state vendors. Vendors are individuals or businesses who provide services to the state, and before issuing payments, the state runs your tax ID through a computer system. If you have an outstanding tax bill, the state must send the payment (up to the amount of your tax due plus interest and penalties) to the DOR. 

One-time Vs. Continuous Garnishments

There are two types of garnishment: one-time and continuous. For instance, when the state garnishes the funds in your bank account, it is a one-time garnishment. The state must issue an additional garnishment if it wants to take more money from your account. 

A wage garnishment, in contrast, is a continuous garnishment. It continues until the tax debt is paid in full. 

How to Release a Wage Garnishment

The DOR will release the wage garnishment once you have paid your taxes in full. Your employer must continue garnishing your wages until they get a notice from the state. If you believe that you have paid in full, you can call the DOR at (877) 252-3252 to request a garnishment release letter. 

In some cases, the state may consider removing or reducing a wage garnishment if you prove that you're suffering financial hardship. You may also be able to convince the state to release a garnishment if you set up a payment plan, but this is not a guarantee. 

How to Avoid an NC Tax Garnishment

To avoid a tax garnishment, you need to make arrangements to take care of your tax liability before the state moves forward with enforced collections. In North Carolina, you may be able to make monthly payments, set up an offer in compromise, or take advantage of other programs. 

Depending on the situation, you may be able to appeal the tax due or apply for innocent spouse relief. The right solution varies based on your situation. But in all cases, the sooner you deal with your tax debt, the easier it will be.

Get Help With NC Tax Garnishments

Struggling with an NC tax garnishment? Worried that the state is going to start garnishing your payments or bank accounts? Then, reach out to a tax professional today. 

Using TaxCure, you can search for local CPAs, enrolled agents, and tax attorneys based in North Carolina. You can narrow down your search to find a local pro with the exact experience you need, and you can review multiple profiles until you find the best fit for your situation.

Overview of the Power of the Taxcure Pro Membership

Discover the benefits of TaxCure Pro Membership, designed to help tax resolution professionals effortlessly grow their practice and boost their revenue. Take advantage of our unique features and resources to unlock your business's full potential.

First, do you see the professionals listed in the right column if you are viewing on a desktop? (bottom of the page if viewing on a mobile device) Well, these professionals are the tax pros that show to taxpayers in your area based on the tax problems or solutions they can help with (The selection used for this page is for a general topic on Unpaid IRS Taxes. The results vary based on the page being viewed. Yes, we have a complex algorithm to help paid pros get seen for only the topics they help with!). You can only be seen on content pages if you are a paid member. These pages get 10s of thousands of visits a month and we are always expanding on content based on the problems and solutions that our TaxCure Pro members offer.

Benefit #1: Increased Visibility with Unique Algorithm

TaxCure Pro Membership promotes your profile to taxpayers who are most likely to hire you based on our unique algorithm and search criteria. Experience a significant advantage in attracting new clients with an impressive 1045% more inquiries compared to free members.

Benefit #2: Top Placement in Search Results

Appear at the top of search results and enjoy increased visibility, as 80% of taxpayers choose to reach out to professionals listed at the top. As a Pro Member, you'll be displayed above organic results, often appearing twice if you qualify for a top spot. Just search yourself for your area. Here is a sample search for a taxpayer looking for help for professionals that help with an IRS garnishment, unpaid taxes, & tax penalties. Take note of the top two professionals that display, that is where you would be when upgraded to the pro membership, and you would have two listings on the page (one that says Ad, other that is organic). 

Benefit #3: Exclusive Visibility on Content Pages

Gain additional exposure to potential clients with exclusive visibility on content pages related to various tax problems and solutions. With over 50,000 visitors viewing these pages in the past month, only paid Pro Members are listed, giving you an edge in attracting new leads. For example, if you view one of our content pages on unfiled tax returns, which drives clients that have multiple years of unfiled returns to the site, you can see the listings of the paid members on the right-hand column when viewing on a desktop or at the bottom of the page on mobile. 

We are constantly investing in our content to help drive prospects to our pro members. Suppose you help with a specific state tax agency as well. In that case, we are consistently putting out new content on state issues and solutions that target problems and solutions a taxpayer needs help with based on the agency experience our pro members have. You can navigate to our state guide section here, and when you become a pro member, we will work to optimize our site to serve you more targeted prospects. 

Benefit #4: Click-to-Call Button for Easy Contact

Provide potential clients with a convenient click-to-call button on your profile. Cater to those who prefer calling over messaging, making it easier for them to get in touch with you and increasing your chances of securing new clients. Click-to-call leads makeup over 50% of all inquiries on TaxCure and not having a call button means you are potentially missing out on potential clients. 

Benefit #5: Instant Notifications for Prospect Information

Stay on top of new leads with instant notifications of prospect information via email and text messages. Respond quickly without needing to log in to the TaxCure platform, maintaining a competitive edge in the fast-paced tax resolution industry. Once you upgrade, a simple change in your settings will send text messages directly to your phone when someone reaches out. Responding quickly increases close rates significantly.

Benefit #6: Access to Webinars and Premium Content

Expand your knowledge and stay updated on industry trends with exclusive access to webinars and premium content. Enhance your practice and gain a competitive edge with valuable insights and best practices designed to help tax professionals grow their businesses.

Benefit #7: Profile Analytics and Social Media Integration

Track your success with profile analytics, providing data on views, messages, website clicks, and click-to-calls. Boost your online presence with public social media links, allowing potential clients to easily learn more about you and your practice.

Benefit #8: Removal of Similar Profiles from Your Profile Page

Ensure that potential clients focus on your unique offerings by removing similar profiles from your profile page. This way, when a taxpayer views your profile, they won't be distracted by other suggested professionals.

Benefit #9: Custom Byline for Enhanced Branding

Stand out from the competition with a custom byline that you can edit and use as an ad for yourself in the search results. This personalized touch can make your profile even more appealing to potential clients. You can check out this search for what your local competition includes in their bylines. Just look for the profiles with the orange click-to-call button as they are paying members and likely have updated their byline.

Experience Growth With Little to No Maintenance

TaxCure Pro Membership offers a low-maintenance solution for tax resolution professionals looking to grow their practice and increase their revenue by $10,000 to $30,000 a year. With exclusive features and resources designed to optimize your visibility, attract new clients, and showcase your unique brand, TaxCure Pro Membership is the perfect platform for your business's success. Sign up today and experience the difference for yourself!

Oregon Back Taxes: Consequences and Resolution Options

The Oregon Department of Revenue (DOR) collects and administers personal and business income tax in the state. If you don't file or pay your state taxes, the DOR can take collection actions against you. However, the DOR also has several programs to help taxpayers get out of tax debt. 

To help you out, this guide provides an overview to Oregeon's tax resolution programs. Then, it outlines what can happen if you don't pay taxes in Oregon. To get help now, reach out to a tax pro from Oregon today.

Tax Relief Programs in Oregon

If you can't afford to pay your Oregon state taxes, don't despair. The DOR offers several different options to help taxpayers get caught up on their back taxes. There are also relief programs for people experiencing financial hardship or dealing with taxes incurred by their spouse without their knowledge. Here are the main options. 

Payment Plan on Oregon Back Taxes

The Oregon Department of Revenue offers payment plans to people who can't afford to pay their tax liabilities in full. You can set up a payment plan with Revenue Online, or contact the Department of Revenue directly to request payments. If your account has been assigned to a private collection agency, you need to contact them to request a payment plan. 

Generally, if you can pay off the balance within 36 months, the Department will approve your payment plan request. If you need more time, you will need to complete Form OR-SFC (Statement of Financial Condition). The OR DOR website doesn't outline conditions for the payment plans, but in most states, you need to stay compliant with filing and paying taxes to get a payment plan approved. 

Oregon Settlement Offer

If you can't afford to pay your tax bill, the state may be willing to settle it for less than you owe. This is similar to the IRS's offer in compromise program. However, unlike the IRS, the OR DOR will only let you have one settlement offer in your lifetime — the DOR is very strict about this. Because you only have one chance to take advantage of this program, talk with a tax professional to make sure that this is the right choice for your situation. Generally, you will only qualify if you don't have disposable income to make payments or assets to liquidate.

You must be an individual to apply for a settlement on your tax debt. Unlike the IRS, the Oregon DOR doesn't let businesses settle taxes. To apply, use Form OR-SOA (Oregon Settlement Offer Application). This form requests detailed information about your income, assets, bills, and debts. According to the Oregon Department of Revenue, the application process takes about three hours, but it can take longer. You will also need to send in supporting documentation, and you can only qualify if you're compliant with tax filing and payment regulations. You must also meet the following requirements:

• You must offer something — you cannot make a $0 settlement offer.
• You must make a non-refundable good faith payment of 5% of the amount offered. 
• Your appeal rights for the tax debt must have expired.
• You cannot be involved in an active bankruptcy case or in litigation. 
• When you apply, you agree that the DOR can contact third parties to verify the information presented in the settlement offer.

If accepted, you must pay the offer in full within 30 days or set up a 12-month payment plan. Additionally, you must stay compliant with filing and paying your state taxes for three years following the date that the offer is paid in full, and if the DOR has issued a lien for your tax debt, it will only be removed after you have stayed compliant for three years.  

Unfortunately, if the DOR denies your settlement offer, you cannot appeal. There are no appeal rights to this decision. That's why it's critical to work with a professional to ensure that you take the best approach with your application.  

Innocent Spouse Relief

When you file a joint tax return with your spouse, you are jointly responsible for the tax liability. However, in rare cases, you can get relief from your spouse's portion of the tax liability through the Oregon innocent spouse relief program. To qualify, you must meet the following criteria:

• You and your spouse filed a joint return. 
• Your spouse understated tax on the return. 
• When you signed the return, you didn't know that your spouse had underreported the tax. 
• It would be unreasonable for the state to hold you responsible for your spouse's tax liability. 

An understatement of tax occurs when someone underreports their income or claims deductions or credits that they aren't entitled to. For instance, if your spouse was running a side business without your knowledge and they didn't report any of the income, you might qualify for this type of relief. 

Temporarily Uncollectible Status

You can apply for temporarily uncollectible status if you're experiencing a temporary hardship such as a job loss or short-term disability. If you qualify, the state will stop collection actions against you. However, the DOR can still seize your tax refund to cover your tax debt, and it may issue a lien against you. 

When the state marks your account as temporarily uncollectible, it expects you not to incur any additional tax debt. If you file a new state return that shows you owe tax, you will be removed from this program if you don't pay the bill in full by the due date. If that happens, the DOR will expect you to pay the full amount that you owe, and if you don't, they will pursue collection actions against you.  

Suspension of Collection Activity Due to Hardship

The above program just offers temporary relief, but the if the following are true, you can get the DOR to suspend collection actions until your situation changes:

• Household income under 200% of the poverty line.
• Less than $5,000 in assets.
• Only income is exempt from garnishment. 

To put this into perspective, a family of three is below 200% of the federal poverty line if they earn $46,060 or less. As of 2022, Oregon doesn't include your home and one vehicle in your asset count. 

If you qualify for this hardship program, the state may still issue a lien against you, and interest will continue to accrue on your debt. Additionally, the DOR can seize state and IRS tax refunds to cover your tax bill, and if you incur any new tax debt, collection actions will resume on your account. 

Penalty Abatement

If you incurred penalties on your account, you may be eligible for a penalty waiver. Write a letter to the DOR explaining why you paid or filed late, and if the state thinks you have a reasonable cause, it may waive the penalties. In most cases, the state will not waive interest from your account. 

What Happens If You Don't Pay Oregon Taxes?

If you don't pay your state taxes, the Oregon DOR can enforce collection actions against you. The state can garnish your wages, seize your assets, and more. Here is an overview of what happens when you don't pay taxes in Oregon.

Tax Liens for Oregon Tax Debts

The OR DOR can file a tax lien against you if you have unpaid taxes. First, the state issues a Distraint Warrant. Then, if you still don't pay, the state issues a tax lien.

The lien attaches to all of your current and future assets. The state can also issue a Uniform Commercial Code (UCC) lien which attaches to your business assets. Once the state issues a UCC lien, it has the right to seize your business property to recoup your unpaid tax bill. You can generally avoid a lien by setting up a payment plan. 

Garnishment

If you don't pay your taxes, the state can garnish your wages, bank accounts, or third-party payers. Take a look at the details:

• Wage garnishment — The state can send a notice to your employer requesting them to withhold up to 25% of your take-home pay.
• Bank garnishment — The state sends a notice to the bank to seize all of the funds in your account, up to the amount of your tax debt plus interest, penalties, and fees. 
• Third-party garnishment — The state sends a garnishment notice to a third party that holds your assets. This may include stocks, securities, and rental income. It can also include payments you receive from processing credit cards at your business and accounts receivables for your business. 

If you disagree with a wage garnishment, you have 120 days to submit a Challenge to Garnishment. You have 30 days for all other garnishments. Then, the DOR will review the situation. If the DOR upholds the garnishment, you have 90 days to request a Garnishment Challenge Denial Hearing Request. 

Oregon Department of Revenue Contact Information

• Individual Tax Inquiries: 503-378-4988
• Business Tax Inquiries: 503-378-4988
• General Information: 503-378-4988
• Collections Department: 503-378-4988
• Website: Oregon Department of Revenue

Tax Levy

The state also has the right to seize your assets for unpaid taxes. The DOR can seize RVs, motorcycles, and other personal property, but it will not take your primary residence. If you own a business, the state can seize your safe deposit box and money from your cash registers.

Tax Penalties Charged

The state assesses the following penalties when taxpayers don't pay or file:

• 5% failure-to-file penalty for missing the filing due date. 
• 5% failure-to-pay penalty for not paying the tax on time. 
• Additional 20% failure-to-file penalty if you haven't filed within three months of the due date.
• Additional 25% failure-to-file penalty if you don't file within 30 days of receiving a Notice of Assessment for failure to file. 
• 100% failure-to-file penalty when returns aren't filed for three consecutive years.
• $100 penalty for not filing annual reports such as Form WR or the transit tax annual report by the due date.
• 5% underpayment penalty if you underpay quarterly commercial activity estimated quarterly taxes.
• 5% non-qualified withdrawal penalty for unqualified withdrawals from first-time homebuyer savings accounts. 

The penalties apply the first day you are late. For instance, if you file a return a day late, you incur a failure-to-file penalty of 5% of the balance.

Professional License Suspension

The DOR can suspend your professional license if you don't pay your taxes. This can make it impossible to run your business. To avoid these types of collection actions, you need to be proactive about contacting the DOR and making arrangements on your tax debt. 

Common OR DOR Collection Notices

Have you received a notice from the DOR in Oregon? Wondering what it means? Here is an overview of the department's most common notices:

• Notice of Assessment — You have late unpaid taxes. The full amount is due.
• Notice and Demand for Payment — This is a reminder that you have an unpaid tax bill. 
• Notice of Distraint Warrant — The state is issuing a tax warrant against you. You will not be arrested. The warrant notes the state's legal claim to the tax debt, and if you still don't pay, the state will issue a tax lien. 
• Notice of State Tax Lien — The state has issued a tax lien in the county where you live. This is a legal claim to your assets, and it acts like a judgment against you. 
• Notice of Intent to Offset Federal Income Tax Refund — The OR DOR participates in the federal offset program, and if you earn a federal tax refund, the IRS will send it to the state to cover your tax debt. 
• Notice of Intent to Offset Federal Payments — The state is planning to claim other federal payments through the offset program. This doesn't apply to Social Security payments, but it may apply to payments you receive as a federal contractor. 
• Statement of Account — This just shows an overview of your tax debts and the amounts that you owe. 

The Appeals Process in Oregon

You have the right to appeal determinations from the Oregon DOR. For instance, if the DOR audits your return and says that you owe money, you can appeal. You can also appeal decisions about collection actions such as wage garnishments. When the state notifies you about determinations, the notice will outline your appeal rights. 

Typically, you must appeal within 30 days of receiving a determination. If you miss the 30-window for appeals or if you disagree with the response to your appeal, you can appeal to the Magistrate Division of the Oregon Tax Court. You have 90 days from the day of the notice to do so. You can appeal most determinations aside from penalty determinations. 

If you miss the 90-day deadline, you can appeal to the Magistrate within two years of paying the tax, penalties, and interest. If you disagree with the Magistrate's decision, you can appeal to the regular division of the Oregon Tax Court. 

Voluntary Disclosure Program

The OR DOR offers a voluntary disclosure program for businesses that are behind on their filing obligations. This program allows you to get back into compliance, and it minimizes the penalties you incur on your account. To qualify, you must not have been contacted by the OR DOR or the Multistate Tax Commission (MTC), and you must make a written request to the DOR. 

Individuals can also make a voluntary disclosure to the state if they want to get caught up on state income tax returns. When you apply, you must explain why you didn't file your OR returns. You must also explain any specific requests or proposals that you're making and include a statement indicating if you've been contacted by the DOR or MTC. 

Does Bankruptcy Eliminate Oregon Tax Debt?

Generally, you shouldn't turn to bankruptcy if you're just dealing with tax debt, but if you have a lot of other debts that you can't afford to pay, it can be an option to explore. When you file for bankruptcy, the courts will issue a stay, and the DOR will stop collection actions against you. For instance, if your wages are being garnished for taxes, the garnishment will stop. 

Unfortunately, not all tax debts are eligible to be discharged in bankruptcy. Talk with your bankruptcy attorney or reach out to a tax pro to see if your tax debts qualify to be discharged. After you finish your bankruptcy case, you can set up a payment plan for any taxes that you still owe. 

Oregon Statute of Limitations on Tax Debt Collection

In Oregon, there is no statute of limitations on tax debts that are collectible by warrant. However, once filed, liens expire after 10 years, but they can be renewed without losing any priority. 

Get Help With Oregon Back Taxes

If you're struggling with personal or business tax debts in Oregon, you should reach out to a local tax professional. A CPA, enrolled agent, or tax attorney based in Oregon can help you deal with the Oregon DOR and the IRS. Use TaxCure to search for a tax pro today, and then, narrow down the results based on your tax program or the relief program that you want.

Washington State Taxes: Resolution Options and Consequences

The Washington Department of Revenue (WA DOR) administers and collects a range of taxes. You will incur penalties and interest if you get behind on your taxes. The state can also enforce collection actions against you, including revoking your business license. This guide looks at your options and explores the consequences of unpaid state taxes. 

Taxes in Washington State

In Washington State, businesses may need to pay business and occupational tax, public utility tax, and a handful of other industry-specific taxes. Individuals must pay sales tax, but that's collected and remitted by businesses. In cases where individuals or businesses don't pay sales tax on a taxable purchase, they may owe use tax to the state. Both individuals and businesses may need to pay capital gains tax as well. 

Tax Debt Relief Options in Washington State

The WA DOR takes business taxes very seriously. However, the state is often willing to work with business owners who get behind on their taxes. In particular, you may be able to set up a payment plan, and in very rare cases, the state may settle your taxes for less than you owe. Keep reading for a look at the options. 

Important Contact Information:

• Washington State Department of Revenue (WA DOR)
  • Individual and Business Inquiries: 360-705-6705
  • Collections Inquiries: 360-664-1388
  • Website: https://dor.wa.gov/

Payment Plan on Washington Back Taxes

The WA DOR may be willing to accept a payment plan on your back taxes. To apply, you need to contact your local DOR office, or you can have a tax pro take care of the process for you. There are local offices in Bellingham, Bothell, Kent, Porta Angles, Richland, Seattle, Spokane, Tacoma, Tumwater, Vancouver, Wenatchee, and Yakima. 

Typically, you can only get into a payment plan if the WA DOR has already issued a tax warrant against you. When you apply, you must submit a financial statement with details about your income, expenses, assets, and debts. The DOR uses this information to determine if you qualify and to set the number of your payments. 

You can only set up a payment plan in Washington if you agree to have the payments electronically debited from your bank account. Additionally, you must stay current on your tax filing and payment obligations. If you don't, the WA DOR can rescind the payment agreement. 

Offer in Compromise: Rule 100 Settlements

A settlement is when the DOR agrees to accept less than the full balance on your tax debt, and the department "settles" or eliminates the remaining amount. In Washington State, this is called a Rule 100 Settlement. 

Unfortunately, you cannot get a Rule 100 Settlement if you cannot afford to pay. Your business, however, may be able to get a Rule 100 Settlement if any of the following apply:

• You received written instructions from the DOR that conflict with state statutes. 
• Strictly applying the law would have harsh consequences.
• If the issue went to court, the outcome would be uncertain. 
• The issue is not recurring. 

You cannot get a Rule 100 tax settlement if the department is litigating the same issue or if you're dealing with an issue where relief doesn't apply, such as the cost of litigation. Additionally, you cannot use this tax settlement option if you think a tax law is unconstitutional. 

Penalty Waivers

Sometimes, the DOR may be willing to waive penalties on your account. You must reach out to the department and explain why you think you deserve a penalty waiver. Generally, you should apply in writing, but you may be able to make a verbal request at the department's discretion. 

You must request the penalty waiver within 30 days after the notice of the amount due or by the extended due date if applicable. There are two main situations where you may be able to get penalty abatement in Washington State.

Waivers for Reasonable Cause

The DOR will only waive penalties if you incurred the penalties for situations out of your control. Waiving penalties typically applies to circumstances such as the following:

• You mailed the payment on time but to the wrong agency.
• You received incorrect written advice from a DOR agent that lead to your late payment. Incorrect information from a tax professional does not qualify you for a waiver.
• You or an immediate family member died, or your accountant or their immediate family member died.
• A fire or other casualty destroyed your place of business or your business records.
• You paid or filed late due to fraud, theft, or embezzlement from your employees. 
• You requested a tax return or other form, and the department did not provide it in a reasonable amount of time. If you had received the form on time, you would have been able to file and pay on time. 

You cannot get a penalty waiver due to financial hardship or because you didn't understand the tax laws. You also can't get a waiver if you relied on written advice that the WA DOR provided to another taxpayer. 

Waivers of Penalties on Late Payments of Returns

Even if you don't have reasonable cause, you may be able to get a penalty waiver if you normally pay on time. To qualify, you must be dealing with taxes reported on a combined excise tax return, oil spill response taxes, enhanced food fish taxes, leasehold excise taxes, timber and forest land taxes, or tax on telephone access line use. 

You also must have paid and filed on time for the last 24 months. If you haven't been in business for 24 months, you must have been on time for the entire time you have been in business. 

Interest Waivers

In most cases, the department will not waive interest that accrues on your Washington State tax debt. However, you may be able to get interest waived if the failure to pay was based on direct, incorrect written advice from the department. You can also get a waiver if the majority owner of the business is on active duty in the military in armed conflict outside of the United States or its territorial boundaries, and the business's gross income in the last year was $1 million or less. 

Hardship 

Sometimes, the WA DOR will offer you relief if your tax liability or the state's collection actions are causing financial hardship. This can apply to business taxes, property taxes, and estate taxes. The DOR publishes a very limited amount of information on hardship programs and procedures. To get help, you need to reach out to the DOR directly or contact a tax professional who has experience dealing with the WA DOR. 

Taxpayer Rights Advocate in Washington

If you cannot resolve your concerns with the WA DOR, you may be able to get help from a taxpayer rights advocate. An advocate can answer your questions and help you understand your rights and obligations as a taxpayer in Washington state. They cannot, however, change the law or get you relief from taxes that you owe. 

Washington State Voluntary Disclosure Program

The Washington State DOR runs a voluntary disclosure program to help businesses that have not been paying taxes. To apply, you need to submit an application online. Here are the qualification criteria:

• Your business has never registered with the DOR or reported taxes to the DOR.
• Your business has never been contacted by the DOR. This includes phone calls, written correspondence, requests to complete a Washington Business Activities Questionaire, or audit/examination notices.
• Your business is not involved in tax evasion.

If you meet these requirements, the DOR will only look back four years plus the current year. The department will also waive some or all of your penalties. In contrast, if you don't come forward voluntarily and the DOR finds you, the look-back period is seven years plus the current year, and the penalties can be up to 39% of your unpaid tax liability. 

The DOR should automatically approve you if you meet the criteria. At that point, the DOR will send you a Voluntary Disclosure Agreement. You must sign and return this within 30 days, or your application will be denied. If the DOR denies you, you may be subject to all interest and penalties, and you will face a look-back period of seven years plus the current year.

After being accepted, you must register your business by completing a Business License Application. You will also need to pay the registration fee and stay current with future tax filing and payment obligations. Additionally, you will need to submit details about your gross income, a Washington Business Activities Questionnaire, a Confidential Tax/Email Authorization form, and any other information as requested. Finally, you must pay the tax and interest by the due date.

Consequences of Unpaid Taxes in Washington State

The state will send you a tax bill if you don't pay your taxes. If you don't pay by the date on the notice, the Washington Department of Revenue can enforce collection actions against you. Here is an overview of what can happen if you don't pay taxes in Washington.

Penalties for Filing and Paying WA Taxes Late 

Here are the penalties assessed by the WA DOR:

• If you underreport tax by 20% or more — 5% of the underreported tax. Increases to 15% or 25% if the tax does not get paid by a certain deadline. 
• Penalties for filing paying late — 9% of the tax liability. Increases to 19% if not paid by the last day of the month following the due date and increases to 29% if not paid by the last day of the second month following the due date.
• Warrant — 10% penalty if a warrant is filed.
• Disregard of specific instructions — 10% penalty.
• Intentional effort to hide underpaid tax — 50% of the tax.
• Failure to register — If the DOR discovers that you are not registered, the penalty is 5% of the unpaid tax.
• Misuse or resale certificates or reseller permits — 50% of the unpaid sales tax. 
• Failure to remit sales tax to a seller — 10% of the unpaid sales tax.
• Disregarded transaction — 35% of the tax due.

In addition to penalties, you will also accrue interest on your unpaid tax debt. The longer you ignore a tax debt, the more it will grow. To protect yourself, you should deal with your tax debt as soon as possible. 

Washington State Tax Warrants

The Washington Department of Revenue can issue a tax warrant if you have unpaid taxes. If you don't pay the warrant within ten days, the department will file it with the County Superior Court. The tax warrant also gives the department the right to levy (seize) your assets. 

A tax lien is a legal claim to your real and personal assets. To explain, imagine that the WA DOR has filed a lien against you, and you sell a piece of property you own. By law, the proceeds from the sale (up to the balance on your tax account) will go to the DOR. If another entity such as a mortgage company, also has a lien against the property, they will also get the proceeds of the sale. Generally, priority is established by the order in which the liens were filed. 

Having a lien against your property makes it nearly impossible to take a loan out against the property. A lender won't let you use your property for collateral if it knows that the DOR already has a lien against that property. However, in cases where you want to take out a loan to pay your state tax debt, the DOR may be willing to subordinate its tax lien. This just means that the DOR agrees to let the other lender take priority, with the caveat that you use the loan to pay off your state back taxes. 

Property Levies for Unpaid Washington State Taxes

Once the WA DOR files a warrant against you, it has the right to levy your assets. In this situation, the word levy means to seize your assets. The DOR can garnish your paycheck, seize the funds in your bank account, and/or seize and auction off your real or personal assets. If this happens, you may be held responsible for collection costs, tax, interest, and penalties.

Business License Revocation

If you don't pay your tax bill within 30 days of a warrant being issued, the DOR will schedule a hearing to revoke your business license. If your license is revoked, you will not be able to do business legally in Washington State. This is one of the worst things that can happen if you don't pay your state taxes. When you lose your ability to earn income, it becomes even harder to pay your WA tax debt. To protect yourself, reach out for help from a WA tax pro before this happens.

Statute of Limitations on WA Tax Assessments

Normally, the WA Department of Revenue has four years after the end of the calendar year in which the tax was incurred to assess a tax. This is the Washington statute of limitations for tax assessment. There is no time limit on tax assessments if you don't register to pay taxes as required, you committed fraud, or you collected sales tax but never paid it to the DOR.

Get Help With Washington State Taxes

If you're behind on filing or paying taxes in Washington, get help today. The TaxCure search feature can help you find high-quality local tax professionals who have experience helping clients deal with the Washington DOR and the IRS. Use TaxCure to find a local WA tax pro today. 

How to Avoid and Resolve Trust Fund Recovery Penalties: Guide for Employees and Third Parties

The IRS Can Assess Trust Fund Recovery Penalties Against Employees, Accountants, and Other Third-Parties. If the IRS contacts you about a trust fund recovery penalty, you need to respond carefully.

The IRS is extremely serious about payroll taxes — if a business fails to pay these taxes, the agency may assess trust fund penalties equal to the amount of the tax as well as other penalties and interest. 

The trust fund recovery penalty is unique because it isn't just assessed against the business or its owners. The IRS can assess this civil penalty against any responsible person, including employees and even third parties that have been contracted to take care of payroll. If you're liable for unpaid payroll taxes, you can also face criminal penalties.

Key takeaways

• If a business doesn't pay payroll taxes, the IRS may assess a Trust Fund Recovery Penalty.
• The TFRP is equal to 100% of the taxes withheld from employees' paychecks but not remitted to the IRS.
• The IRS assesses TFRPs against individuals, including employees of the company. 
• If the IRS thinks you're responsible, they'll send a request to schedule a Form 4180 interview. 
• If the interview indicates that you're responsible, the agency will send Letter 1153. 
• Then, you have 60 days to appeal. Or, if you agree with the penalty, you can contact the IRS to pay it or make payment arrangements. 

If the IRS is investigating your involvement in unpaid payroll taxes, do not take this issue lightly. Get help from an experienced tax attorney or another tax professional licensed to represent you in front of the IRS. 

Why Is the IRS So Aggressive About Trust Fund Recovery Penalties?

The IRS is serious about this penalty because it's related to taxes that were withheld from an employee's paycheck but never handed over to the IRS. Essentially, the IRS sees unpaid employee payroll taxes as theft. Employers have withheld the funds from their employees' pay, and if they pocket the funds or use them for other purposes instead of sending them to the IRS, they are ostensibly stealing from both the employee and the government. If you, as an employee, get caught in the crossfire of an employer's unpaid payroll taxes, you can face serious financial and legal consequences. 

Payroll taxes include Social Security contributions, Medicare premiums, and federal income tax paid by employees through their paychecks. By law, employers must withhold these taxes from their employees' paychecks and send these amounts to the IRS, as well as matching amounts for the employer's contribution to Social Security and Medicare. The trust fund recovery penalty is only based on the withheld taxes; it is not based on the employer's matching portion of the taxes. 

 

Who Is Liable for Trust Fund Recovery Penalties?

The IRS may hold anyone liable who was responsible for paying the taxes and who willfully failed to do so. That may include business owners, corporate officers, partnership members, trustees, directors, shareholders, but it can also include employees and even third parties such as accountants, payroll service providers, personal representatives, lenders, creditors, bookkeepers, employees of payroll companies, and attorneys.  

To be held liable for a trust fund recovery, you must have willfully failed to pay the tax. But what does this mean? How does the IRS assess that you were responsible and that you willfully ignored your obligation? Keep reading for an overview of the process. 

Determining Liability for Trust Fund Recovery Penalties

Wondering if you might face personal liability for the Trust Fund Recovery Penalty? Then, use this tool to check out your risk. Note that this is not the only way that you may face personal liability for business taxes.

To assess responsibility for trust fund taxes, the IRS revenue officer doesn't just look at the person's job title. They take several factors other factors into account, and they assess whether or not the person does the following:

• Manages day-to-day company affairs.
• Signs checks for the business. 
• Refuses to sign checks and thus prevents the payment of the tax.
• Makes financial decisions. 
• Controls payroll disbursements. 
• Makes withholding deposits. 
• Prepares payroll tax returns. 
• Decides which bills get paid first.
• Hires or fires employees. 

Trust fund recovery liability has gone through multiple court cases, and while the courts pay close attention to the person's role in the company, they tend to pay particular attention to the issue of prioritization. If you decided that the company should pay other bills instead of payroll taxes, you may be considered liable. 

To assess liability, the revenue officer will request financial documents such as canceled checks or business records that may indicate who is responsible. If the business doesn't provide the information voluntarily, the IRS can issue a legal summons. 

What Is Willful Failure to Pay Payroll Tax?

To be held liable for payroll taxes and trust fund recovery penalties, you must have acted willfully. This doesn't mean that you must have demonstrated malicious intent to defraud the government. Willfulness just means that you made a voluntary and conscious decision not to pay the trust fund taxes. 

For example, if you decided to pay the electric bill instead of covering withholding, you may be held responsible. 

What Should You Do If the IRS Thinks You're Liable for a Trust Fund Recovery Penalty

If the IRS contacts you and says that you might be held liable for this tax, do not take the issue lightly. Again, these penalties are severe, and they can cost a lot of money. 

Ideally, you should retain legal counsel as soon as possible. If multiple people might be considered liable, they should each get their own lawyer. Otherwise, conflicts of interest may arise. 

What to Expect If the IRS Thinks You're Liable for Trust Fund Recovery Penalties

If the IRS thinks you might be liable for a trust fund recovery penalty, the agency will request an interview with you. The purpose of the interview is to get you to admit liability or reveal information that will establish your liability. 

You can go to the interview on your own, but to protect yourself, you should strongly consider bringing legal representation. If you don't voluntarily respond to the interview request, the IRS can summon you. At that point, failure to appear can lead to contempt of court. 

What Happens at a Trust Fund Recovery Interview?

Also called a Form 4180 interview, the trust fund recovery interview consists of a variety of questions designed to assess your role in the company and your potential liability for the trust fund recovery penalty. 

You will not receive this form in advance. Instead, the revenue agent will bring the form to the interview and fill it out based on your answers. The length and breadth of the interview can vary based on the situation. 

For example, the first page of Form 4180 helps the revenue officer decide if they should go forward or abandon the inquiry. The interviewer may also ask questions from different parts of the form depending on if you are an employee of the company or an employee of a third-party payroll service. 

In general, the questions are designed to determine your level of responsibility and decision-making in the company. Do you have the authority to decide how the company's money gets spent? Did you contribute to decisions that lead to the payroll tax not being paid? Did you know about the unpaid tax? Could you have done anything to change the issue? Here are some tips on how to avoid a trust fund recovery penalty interview. 

What to Expect After the 4180 Interview

If the IRS determines that you are liable for the Trust Fund Recovery Penalty, they will send Letter 1153 proposing a TFRP assessment against you. If you agree, you can sign Form 2751 saying that you consent to the penalty, and then, you can make payment arrangements to take care of the penalty. You may be able to set up an installment agreement or qualify for a settlement, but if the IRS believes you can pay in full, they may require that. If you don't pay, they can file a tax lien and potentially levy (seize) your personal assets. 

What Happens If the IRS Assesses a Trust Fund Recovery Penalty Against You?

If the IRS decides to assess a trust fund recovery penalty against you, the agency has 10 years to collect it. The IRS has the power to use a vast range of collection actions, including issuing federal tax liens, seizing your wages and other income, and levying your bank account or other personal and business assets. 

You cannot discharge a trust fund recovery through bankruptcy. If you have the assets to cover this penalty, the IRS will use any measures it can to reclaim the penalty. 

Bottom Line — What to Do If the IRS Thinks You're Liable for a Trust Fund Recovery Penalty

If the IRS contacts you about a trust fund recovery penalty, consult with a tax attorney or another tax professional experienced with this penalty. Talk with your tax professional before responding to the IRS's requests for information or interviews. Bring your tax professional to the interview and consider having them respond to the IRS's information requests. 

A tax professional can help you understand your liability, and they can minimize your risk exposure. If you are held liable for this penalty, they can help you negotiate arrangements with the IRS. 

Penalties for Unpaid Payroll Taxes

The trust fund recovery penalty is 100% of the unpaid payroll tax. For example, if the business failed to deposit $20,000 that it had withheld from employee paychecks for federal income tax, Social Security, and Medicare, the trust fund recovery penalty would be $20,000. If the unpaid withholding tax was $1 million, the trust fund recovery penalty would be $1 million. 

Additionally, there is a civil penalty (called the failure-to-deposit penalty) of 2 to 15% of the tax for making a late deposit. If you don't file the returns, the penalty for filing late is 5% of the tax per month, up to a total of 25%. Luckily, employees cannot be held responsible for all of these fees. Liability for late and unpaid taxes generally only applies to the business or its owner. 

Can You Go to Jail for Unpaid Payroll Taxes?

Generally, jail time only comes up in serious cases of tax fraud or evasion. But with payroll taxes, jail time can be a serious risk. There are many cases of business owners and other people going to jail for unpaid payroll taxes and trust fund recovery penalties. The standard jail sentence is up to five years. 

Jail time is not restricted to people directly involved with the company. For instance, a banker faced a possible jail sentence because he continued to give loans to a payroll company even though he know the company was not paying the payroll tax for its clients. 

Get Help With Trust Fund Recovery Penalty Cases

If you've been accused of being responsible for unpaid payroll taxes, you need to protect yourself. The trust fund recovery penalty is one of the IRS's harshest civil penalties, and you should not navigate this on your own. 

To get help, use TaxCure to search for a tax professional based in your local area and experienced with this penalty.