Foreign Bank Account Reporting (FBAR): Delinquent Consequences & Options

The IRS requires taxpayers to report foreign bank accounts with an aggregate balance over $10,000. If you don't report your accounts, you can face significant penalties, but don't panic — in cases of a simple oversight, you can often get back into compliance with little trouble. 

To protect yourself, you need to understand the rules about foreign bank account reporting (FBAR). Ideally, if you're behind, you also need to take care of the situation before the IRS contacts you. Here is an overview of FBAR filing requirements and links to resources with more information. 

What Is FBAR?

What does FBAR stand for? FBAR stands for foreign bank account reporting. You will also see this acronym used after the phrase Report of Foreign Bank and Financial Accounts. That's the name of the form you need to file. 

How Do You File FBAR?

To report your foreign bank accounts to the government, you must file FinCEN Form 114 (Report of Foreign Bank and Financial Accounts). Don't file this form with your tax return and don't send it to the IRS. Instead, file it online with the Financial Crimes Enforcement Network (FinCEN).

When Does FBAR Need to Be Filed?

The FBAR is due the same day as your tax return — April 15th of the year following the year the balance in your foreign accounts exceeded $10,000. But, every year, you have an automatic FBAR extension until October 15th. As long as you file by October 15th, your FBAR is on time. 

What Information Do You Include on the FBAR?

When you file the FBAR, you will need your foreign account numbers, their highest balances during the year, and contact details for your financial institution. You should report all accounts that you have financial or signatory control over. 

FBAR Reporting Requirements

If the aggregate balance in your foreign bank accounts is over $10,000 at any time in the tax year, you must file FinCen 114 (Report of Foreign Bank and Financial Accounts). You can file this form online through the BSA E-filing system of the Financial Crimes Enforcement Network (FinCEN). 

For a look at who needs to file, the type of foreign accounts affected, and other details, check out the FBAR reporting requirements page. 

What Happens If You Forget to File FBAR?

If you forget to file FBAR, you may be able to file without penalties before the IRS notices. Once the IRS contacts you about an unfiled FBAR, you typically must undergo an examination. The examiner will gather detail about your accounts and why you didn't file. Then, they will decide which penalties to assess. The examiner may just issue a warning with no penalties in some cases.

How to Catch up on Delinquent FBAR

There are several ways to catch up on delinquent FBAR reports, but the filing process varies based on your situation. If you meet certain criteria, you can file as usual. You just need to note why you're filing late. You can generally avoid penalties as long as you have reasonable cause and aren't behind on other tax obligations. 

In other cases, you may need to use the IRS's streamlined FBAR procedures. This is generally the best option if you have unfiled tax returns or unreported foreign income in addition to the unfiled FBARs. The process varies slightly depending on if you live in the United States or abroad. 

Suppose you have committed tax evasion or are worried about criminal exposure due to wilfully not filing your FBAR. In that case, you may need to use the IRS's Criminal Investigation Voluntary Disclosure practice to catch up on delinquent FBAR. For more details on how to file delinquent FBAR, check out the above link.

FBAR Penalties

FBAR penalties are some of the harshest penalties imposed by the IRS. There is no tax due with your FBAR, so you don't owe any back taxes if you don't file. But as of 2022, the IRS can assess non-willful civil penalties of up to $12,921 and willful non-filing penalties up to the greater of $129,210 or 50% of the account balances. 

These penalties can be assessed per account or per unfiled FBAR form. Individual taxpayers with millions in their foreign accounts have been assessed penalties well into the millions. Learn more on the FBAR penalties page.

Appealing FBAR Penalties

You may have to appeal if you cannot negotiate a favorable agreement with the examiner working on your FBAR case. You can appeal both assessed and pre-assessed penalties. Keep in mind that they start to accrue interest once penalties are assessed. That is why it is often better to appeal pre-assessed penalties. 

You can pursue litigation if the appeals case does not go your way. Right now, there are several cases between taxpayers and the government related to FBAR penalties and filing requirements. These cases are shaping the FBAR landscape.

Payment Options for FBAR Penalties

In some cases, FBAR penalties can exceed the balance in your foreign accounts. In other cases, the penalties may be up to 50% of the balance in your account, but if the penalty is based on an old account balance, you may not have the funds anymore. 

Once the IRS assesses the penalties, the IRS expects you to pay them in full. But if you can't, you may be able to make arrangements on your FBAR penalties. Depending on your situation, the options can include payment plans, offers in compromise, hardship status, or penalty abatement.

Get Help With FBAR

The FBAR requirements can be complicated, and the stakes are high if you're under examination. Don't deal with FBAR on your own. Get help from a tax professional who is experienced with foreign bank account reporting requirements. 

A tax professional can take care of unfiled FBAR, provide guidance through an FBAR examination, appeal FBAR penalties, or help you make payment arrangements on FBAR penalties. Use TaxCure to search for a local tax professional who can help you with FBAR today. 

Alabama Back Taxes: Consequences and Tax Resolution Options 

The Alabama Department of Revenue (ALDOR) collects individual and business income tax, estate tax, excise tax, withholding taxes, sales and use tax, and business and license taxes in the state of Alabama. If you have unpaid back taxes, the Collection Service Division of the ALDOR has the right to collect them from you involuntarily. This in-house collection department can garnish your wages, issue tax liens on your assets, seize your bank accounts, or order your assets auctioned off for sale.

If you owe back taxes to the state of Alabama, this guide explains your options and then explores what can happen if you don't pay your taxes. To get help with Alabama back taxes, contact an Alabama tax professional today.

Resolution Options for Alabama Back Taxes

To protect yourself from harsh collection activities, you need to contact the ALDOR as soon as possible and make arrangements to take care of your unpaid state tax liability. Luckily, the state of Alabama has many options for taxpayers who can't afford to pay their taxes in full including the following:

Payment Plan for Alabama Back Taxes

The ALDOR may be willing to let you pay off your back taxes in monthly installments. To apply for a payment plan on Alabama taxes, submit an Installment Payment Request with a Collection Information Statement to the ALDOR.

The Installment Payment Request requires you to note the proposed amount of your monthly payment and sign an affidavit agreeing to the terms of the payment agreement. The ALDOR accepts payment plans on a case-by-case basis, and all payment plans may be considered balloon notes where the balance is due at the end of the agreement.

For instance, if you owe $7,200 and the state agrees to accept monthly payments of $100 for four years, you will owe a balloon payment of $2,400 at the end of the agreement. Note that this example uses sample numbers to show you how the balloon payment works. These numbers do not take interest or penalties into account.

Include your first monthly payment with your request. Note that your payment plan may go into default if you get behind on future tax filing or payment requirements. The ALDOR can also revoke your payment plan if your financial situation changes and you can pay your tax liability in full.

Offer in Compromise

An offer in compromise lets you pay off your taxes for less than you owe, but the ALDOR does not accept offers in compromise when taxes are legally due.

If you owe Alabama state taxes, you will not be able to settle them for less than you owe through this type of program. However, you may be able to use penalty abatement to reduce the portion of your outstanding tax liability related to penalties. Or, if you qualify, you may be able to reduce your tax liability through the innocent spouse program.

Alabama Innocent Spouse Relief

Typically, when a married couple files a return together, they are jointly responsible for the tax due. However, under Alabama state law, you may qualify for innocent spouse relief if the following statements apply:

• The tax bill was due to the unreported or misreported income of the other person on your joint return.
• You were unaware and did not have reason to know that the income was not reported correctly.
• You have proof that you didn't know about the issue.
• It would be unfair to hold you responsible for the tax liability.
• You were granted innocent spouse relief from the IRS.

Note that laws can change, and in some cases, Alabama does not keep pace with federal law. For example, in 2011, a woman who was granted innocent spouse relief from the IRS was denied that same relief in Alabama. The federal law had been updated in 1998, but the state law had not followed suit yet.

To avoid these types of risks, you should work with a tax resolution specialist who is experienced with Alabama state taxes and not exclusively focused on IRS taxes.

Alabama Injured Spouse Allocation

In Alabama, you can also apply for injured spouse allocation. This applies in cases where your Alabama tax refund will be seized by the government to cover debts only owed by your spouse.

For instance, if your spouse owes child support or back taxes, the state can keep your refund. However, through this program, you can ensure that the state only keeps the amount related to your spouse and not the amount related to you.

To apply, file Form AL8379 (Injured Spouse Allocation). You will need to include copies of both your and your spouse's W2s and 1099s so that the ALDOR can calculate which portion of the refund is due to you. Here are comprehensive instructions on how to complete this form.

Penalty Abatement in Alabama

The ALDOR may be willing to waive penalties if you can prove reasonable cause. Reasonable cause includes death, major illness, natural disasters, inability to obtain records, reliance on the advice of a competent tax advisor, or reliance on the incorrect advice of someone from the ALDOR.

You may also be able to claim reasonable cause if you made an honest mistake — typically, this has to be a one-time error, not a repeated issue. To apply for a penalty waiver, submit Form PWR (Request for Waiver of Penalty) to the ALDOR.

Appeals Process

If you disagree with an assessed tax, you have the right to appeal. You have 30 days from the date of the preliminary assessment to request a conference on your case. During the conference, you have the right to present your opinions and discuss your case with a designated hearings officer.

Then, the ALDOR will enter a final assessment. You can appeal a final assessment with the Alabama Tax Tribunal or Circuit Court. Additionally, if your preliminary assessment hasn't been finalized within five years of the date of entry, you can also appeal that assessment to these courts.

Alabama Tax Amnesty Program

A tax amnesty program allows qualifying people with unpaid taxes and unfiled returns to come forward voluntarily without facing persecution. Tax amnesty programs tend to be very infrequent. Alabama last had a three-month amnesty period in 2018.

Bankruptcy

In very specific cases, you may be able to discharge some state taxes through a bankruptcy case. However, some state taxes absolutely cannot be discharged through bankruptcy. Talk with your bankruptcy attorney for details.

Note that when you file for bankruptcy, the courts issue a temporary stay that prevents creditors (including the ALDOR) from taking collection actions against you. If you receive a Final Notice Before Seizure from the ALDOR while you are in the midst of a pending bankruptcy case, call the Collection Services Division at (334) 353-8096 as soon as possible. Make sure to have the details of your bankruptcy case nearby.

Tax Collection Enforcement Actions in Alabama

The ALDOR can use a wide range of tactics to collect unpaid state taxes. In many cases, once these collection actions have been started, they can be difficult or impossible to reverse. That is why you should contact the ALDOR and make arrangements on your unpaid tax bill as soon as you can.

If you ignore Alabama state taxes, you may end up facing the following collection actions.

Tax Liens for Unpaid Alabama Taxes

The state of Alabama can file a tax lien in the Office of the Judge of Probate in the county where you live or own property. You will not be able to sell or transfer your property until the lien has been removed.

The ALDOR does not send a record of the lien to the credit reporting agencies, but the lien is public information and the credit reporting agencies have the right to obtain this info from the county courthouse. If the credit bureaus access this information, the lien will appear on your credit report for seven to 10 years, and it can seriously impair your ability to take out loans or access credit.

Tax Levy for Alabama Back Taxes

A tax levy is when the government levies or seizes your assets to cover your unpaid tax liability. In Alabama, the ALDOR uses the following tax levies:

• Wage garnishment — The state can levy up to 25% of your gross wages.
• Bank levy — The state can seize the full amount in your bank account up to the tax bill.
• Garnishments of third-party holdings — The state can seize insurance proceeds, rental income, or other third-party holding property owned by you.
• Tax refund offsets — The state can seize your state tax refunds, and it can use the federal offset program to take your IRS refunds as well.

The state can also use a writ of execution to seize and sell your real or personal property.

Writs of Execution

If you have unpaid taxes in Alabama, the ALDOR can ask the sheriff to auction off your property on the courthouse steps to the highest bidder. For real property, you can redeem your property if you pay the total tax liability, the cost of the sale, and the accrued interest. You cannot redeem personal property.

Tax Penalties Charged

If you file a return late, the late-filing penalty is 10% of the tax due or $50, whichever is higher. If you file but don't pay, the late penalty is 1% of the tax due every month, up to a total penalty of 25%. For instance, if you owe $1,000 and pay a day late, your penalty is $10. The next month you pay late, you incur another penalty for 1% of the balance, and so on until you pay the tax or reach the 25% limit.

For business taxes due monthly or quarterly, the late payment penalty is 10% of the tax due. This penalty applies to sales, gas, motor fuels, tobacco, dog race track fees, and several other business taxes.

Loss of Liquor License

If your business taxes are seriously delinquent, the ALDOR can petition the ABC Board to revoke your liquor license. You will not be allowed to sell liquor until you have paid the tax or made other suitable arrangements with the state.

Notices About Delinquent Taxes in Alabama

When you file a state tax return and don't make a payment, the ALDOR will send you notices about the unpaid taxes. The state will also send notices about taxes it has assessed against you. You should receive a notice about preliminary assessments, written information about how to appeal an assessment, and notices about collection actions the state is going to take against you.

One common notice is the Final Notice Before Seizure. This notice means that the ALDOR has gotten serious about collecting the debt, and it will pursue advanced collection actions if the tax bill is not paid in full within 10 days of the date on the letter.

Statute of Limitation on Tax Debt

Generally, there is a six-year statute of limitations on collecting delinquent taxes in Alabama. However, the statute can vary based on the situation. If you omit more than 25% of your income or if you commit state tax fraud, the state may be able to assess and collect taxes owed for an indefinite period of time.

However, this is a civil statute of limitations. The state has just six years to bring criminal tax fraud charges against you. The clock for that crime starts ticking on the date of the last act related to the attempt to evade.

Get Help Dealing With Alabama Back Taxes

You don't have to deal with Alabama back taxes on your own. Whether you have unfiled state returns, unpaid state taxes, assessments that you want to appeal, or other tax issues, a tax pro can help you. To learn more, contact a tax professional experienced with the ALDOR today.

Louisiana State Offer in Compromise: How to Pay Less

The Louisiana Department of Revenue (LDR) has the ability to settle state tax liabilities up to $500,000 for less than you owe. The LDR will only settle tax bills when there is serious doubt of liability or doubt of collectibility. In other words, the state will only approve an offer in compromise if it believes that you are unlikely to owe the tax or unlikely to be able to pay the tax.

Typically, only a small number of taxpayers qualify for this program, and to get approved, you need to complete the application carefully and correctly. To learn more and to get help applying, contact a Louisiana tax professional today.

How to Apply for a Louisiana Offer in Compromise

To apply for an offer in compromise, individuals must complete Form R-20223 (Statement of Financial Condition for Individuals). Corporations, trusts, and estates should use Form R-20222 (Statement of Financial Condition for Businesses). Sole proprietorships and partnerships should submit both forms.

If you're applying based on doubt as to collectability, you also need to include all of the documents listed on Form R-20211 (Document Checklist for Offer in Compromise Based on Serious Doubt as to Collectability).

You can find all of these forms plus instructions in the Louisiana Department of Revenue: Offer in Compromise Program booklet. If you have applied for an IRS offer in compromise in the last three months, you can send that form to the LDR instead of the state forms. `

How to Fill Out the LA OIC Application

When filling out the offer-in-compromise application, you must include your name, business name, contact details, type of delinquent taxes, and the amount due. Then, you must make an offer and explain why you are requesting an offer in compromise.

Again, you can request an offer in compromise for the following two reasons:

• Doubt as to collectibility — you can't afford to pay the tax.
• Doubt as to liability — you don't believe you owe the tax.

Regardless of the reason you choose, you must write out a detailed explanation. Note that you cannot apply based on doubt as to liability if the tax has already been judged as final by a court or the Louisiana Board of Tax Appeals LaBTA. If you apply based on doubt as to collectibility, you must include detailed financial information about yourself and/or your business as well as a long list of financial documents with your application.

Finally, you must sign a document certifying that you understand the terms of the OIC program. Your signature also allows the LDR to pull your credit report and request financial documents from your bank or the IRS.

How Much Should You Offer When Trying to Settle LA Taxes?

The perfect offer is the lowest amount that is likely to be accepted by the state. But determining this number is tricky. To narrow in on the optimal offer, you need to understand what the LDR considers when assessing your offer.

To determine whether or not to accept your offer, the LDR looks closely at the details in your financial statement. If the state believes that your offer represents the most the state is likely to be able to collect, the LDR will accept your offer. If the state believes that you can pay more, your offer will be rejected.

This is why it can be critical to work with a tax professional. They understand exactly what the state is looking for. They can help you present your financial details and your offer in the most advantageous way possible.

Application Fees and Down Payments for the LA OIC

As of 2022, you must include a $186 application fee plus a down payment of 20% of the offer.

For instance, if you offer to pay $10,000, you must send $2,186 with your OIC application. That is 20% of the offer plus the application fee.

Financial Documents to Include with Your OIC Application

When you submit the OIC application to the LDR, make sure you include the following supporting documents:

• Federal tax return for the last two years.
• Bank statements for the last six months.
• Statements for retirement accounts and pensions for the past six months.
• List of securities you own and their market value.
• Life insurance policy statements.
• List of all items in safe deposit boxes.
• Statements for loans and lines of credit.
• Copies of all judgments from the last six years.
• Proof of employment or other income for taxpayer and spouse
• Denials of loan requests by two or more financial institutions.

What to Expect When You Apply for a LA OIC

When you apply for an offer in compromise, interest and penalties will continue to accrue on your account. If you are in a payment plan, the LDR expects you to continue making payments as usual. State tax liens will stay in place until your offer is accepted and paid in full.

If the LDR seizes your federal or state tax refunds, those amounts will not be included in your offer. Similarly, any amounts collected by the LDR while the offer is pending will not be included.

Here's a quick example. Imagine that you owe $20,000 in LA taxes. You offer $10,000 to settle your tax bill. While reviewing your OIC application, the LDR intercepts an IRS tax refund for $1500 and garnishes your $1000 of your wages. Those payments reduce your tax liability to $17,500, but they don't affect your offer. If the LDR accepts your offer, you still pay the full $10,000.

What Happens if the LDR Rejects Your Offer in Compromise

If the LDR rejects your offer, the tax liability is due in full, and the state has the right to start collection actions on your account. Your down payment will not be refunded. It will be applied to your account.

The LDR may reject your OIC application if any of the following apply:

• You're under criminal investigation or pending prosecution.
• You're filing bankruptcy.
• The application was missing details.
• The application didn't have the right signatures.
• Your offer was zero.
• Your offer includes an amount already collected.
• You have used the OIC program in the last 10 years.
• You didn't include all of the required financial statements.
• You forgot to include the power-of-attorney (POA) form if required.
• You didn't include the application fee or the down payment on the offer.
• Your offer is less than the LDR believes it will be able to collect on the tax liability.

You cannot appeal a rejected offer. To improve your chances of approval, you need to ensure you fill out your application carefully, and you may want to work with a tax pro.

What Happens If the LDR Accepts Your OIC Application

The LDR will notify you by mail if your offer is accepted. You must pay off the remaining balance by the date specified in the letter. If you fail to make the payment or if your check bounces, the state will void your OIC agreement.

A LA OIC gives you a fresh start. The state expects you to stay compliant with filing obligations after this date. If you fail to file a return or pay a tax owed in the next 10 years, the state can void your offer and demand full payment.

Contact a Louisiana Tax Pro for Help Today

An offer in compromise can help you save money on your state tax bill, but it isn't the right solution for everyone. To get help identifying the best resolution method for your LA state taxes, you need a tax professional experienced working with the LDR. Check out this list of LA tax pros in your area and get help today.
 

LA State Tax Payment Plan: How to Apply for an Installment Agreement

The Louisiana Department of Revenue (LDR) may be able willing to let you make payments if you cannot afford to pay your tax liability in a lump sum. LDR offers payment plans for both individual and business taxpayers.

To help you decide if an installment agreement is right for your situation, here is an overview of the rules and the application process.

Payment Plan Terms

Individuals can request payment plans ranging from six to 36 months. If you can pay off your tax liability in less than six months, you don't need to apply for a payment plan. Taxpayers who need longer than 36 months should contact a tax professional to talk about alternative options.

The state allows businesses to request payment plans on employer withholding tax, sales and use tax, corporate income tax, corporate franchise tax, and other business taxes. The installment agreement application for businesses does not specify a time limit for payment plans.

Application Fees for LA Tax Payment Plans

The application fee for payment plans on individual income tax is $105. You don't have to pay the fee if your adjusted gross income (AGI) is less than $25,000.

If the LDR accepts your request for a payment plan, the $105 will be applied to your tax bill. If the state denies your request, you will not get the $105 back.

Businesses also must pay a $105 application fee. This amount is non-refundable and will not be applied to your tax bill.

Down payment on Louisiana Payment Plans

The state requires individuals to make a 20% down payment when they apply for a payment plan. For instance, if you owe $10,000, you should send a $2,000 down payment with your application.

The LDR encourages businesses to remit a 20% down payment, but it is not always required. If you are applying for a payment plan on LA business taxes, you may be able to get approved without making a down payment.

Who Should Apply for a Payment Plan?

If the following statements apply to your situation, you may want to apply for a payment plan on your LA back taxes:

• You agree with the tax bill.
• You cannot afford to pay the tax bill in full in the next six months.
• You can afford to make monthly payments.
• You are unlikely to qualify for other resolution options such as reducing your tax bill through an offer in compromise or innocent spouse relief.

When you apply for a payment plan, you are agreeing with the tax due. Once you apply, you lose the right to dispute the tax or ask for a refund of your payments.

What to Expect When You Have a Payment Plan in Louisiana

When you have a payment plan, your payments will be automatically debited from your bank account. Individuals must pay monthly, but businesses can make weekly, bi-weekly, or monthly payments.

While making payments, you may still receive billing notices from the LDR. Interest and penalties will continue to accrue on your account, and the state may also place a lien on your assets. The LDR will also take your federal and state tax refunds and apply them to your balance due.

The state expects you to stay compliant with filing and payment obligations. If you don't file your state tax returns or if you miss tax payments, your payment plan may go into default.

What Happens If You Miss a Payment?

If you miss a payment, your LA installment agreement will go into default. The balance will be due immediately, and the state has the right to start collection actions including wage garnishments and asset seizures.

You have 60 days to request a reinstatement of your payment plan, but there is a $60 fee.

How to Apply for a Payment Plan in Louisiana

To apply for a payment plan on LA back taxes, individuals can apply online or by mailing Form R-19026 (Installment Request for Individual Income Tax) to the LDR.

Businesses can apply online or they can mail or email Form R-19027 (Installment Request for Business Tax) to the LDR. To apply for a payment plan over email, send the paperwork to Business.Tax@LA.GOV.

Both the individual and business applications are relatively short and straightforward. Individuals must note their contact details, tax owed, and gross wages. Businesses need to note all of their tax account numbers and the amount due for each type of tax.

To authorize direct debit, you need to include your bank account details and attach a voided check to your application. Your application will not be approved without these details.

In some cases, the LDR may want additional information about your financial situation. Make sure to respond to these requests promptly or your application may be rejected.

Get Help With Louisiana Back Taxes

If you have unfiled returns, unpaid tax liabilities, or other issues with the Louisiana Department of Revenue, a tax pro can help you. At TaxCure, we provide you a means to find local tax professionals who have experience working with the LDR, and when you search on our site, you can look at each professional's experience and ratings to ensure they meet your needs.

Don't let tax issues stress you out. Instead, get help finding the best resolution option for your situation — contact an LA tax pro today to talk about payment plans and other options for LA back taxes.

Louisiana: Consequences and Resolution Options for Back Taxes

The Louisiana Department of Revenue (LDR) collects income tax, sales tax, and other personal and business taxes in this state. If you owe back taxes, the LDR has the right to forcibly collect the amount due using wage garnishments, bank account levies, and assets seizures.

But this doesn't mean you need to be scared about your Louisiana tax bill — the agency is willing to work with taxpayers and offers a number of resolution options. Here's what you need to know if you owe delinquent taxes in Louisiana.

Resolution Options for Louisiana Back Taxes

If you owe back taxes in Louisiana, you may be able to set up one of the following arrangements with the state. The right option depends on your tax bill and your financial situation. A Louisiana tax pro can help you decide what to do.

Payment Plan

The Louisiana Department of Revenue offers payment plans to qualifying taxpayers. Payment plans let you pay your tax bill in monthly installments, and the LDR allows you to take up to 36 months to pay off your bill. Businesses may be able to take longer.

To apply, individuals should use Form R-19026 (Installment Request for Individual Income Tax) and businesses should be Form R-19027 Installment Request for Business Tax). If you have a LaTAP online account, you can request a payment plan online. You can request more about Louisiana's state tax payment plan option here. 

Offer in Compromise

If you are unable to pay your tax bill in full, the state may be willing to settle for less than you owe. Typically, this option is only available if the state believes that your offer represents the most amount of money it is likely to be able to collect on your tax bill. You can read more details about Louisiana's State Offer in Compromise option here. 

To apply for an offer in compromise, individuals should use Form R-202121 (Offer in Compromise Application) and businesses should submit Form R-20212B (Statement of Financial Condition for Businesses).

Innocent Spouse Relief

You may qualify for innocent spouse relief under Louisiana Revised Statute 47.1584 if your spouse or ex-spouse was exclusively responsible for the tax liability. To get innocent spouse relief on Louisiana taxes, you must not have known and had no reason to know that your spouse failed to file a return or failed to pay tax. Or, you must have been physically or mentally coerced into silence.

Typically, you have to apply for innocent spouse relief within two years of the start of the collection actions. But if you apply after that window, you may still be able to get innocent spouse relief if the state feels that it would be unfair to hold you responsible.

Hardship Status

If you're experiencing financial hardship due to your Louisiana tax bill, the state encourages you to apply for an offer in compromise. The IRS has a hardship program (also called currently not collectible) where the agency will pause collection actions if you prove that you cannot afford to pay. Louisiana does not advertise a similar program.

Penalty Abatement

If the LDR has added penalties to your account, you can apply for a penalty waiver online using Form R-20128 Electronic Submission. Before applying, you must file all delinquent returns and pay all your state back taxes, interest, and penalties not included in the waiver request. The state will not waive penalties if you are behind on filing or payment obligations.

Interest Waivers

In very rare situations such as when the state caused an error or delay, the LA DOR may be willing to waive interest. You can request the state to waive the interest on your account using Form R-20130 (Request for Compromise of Interest).

Appeals Process

You have the right to appeal if you disagree with a Louisiana tax assessment. To apply, you should write out a petition explaining why you disagree with the assessment and outlining what kind of relief you want. Then, you should send it to the Louisiana Board of Tax Appeals (LaBTA).

Most appeals can be resolved without a hearing, but in some cases, you may have to attend a hearing with the LaBTA in person or over the phone. You have the right to represent yourself, but due to the complex nature of Louisiana tax laws, you may want to work with a tax attorney. Note that you must appeal by the date on your notice or you may lose your chance to appeal.

Consequences of Unpaid Louisiana Taxes

The LA DOR can use numerous tactics to collect unpaid taxes. If you want to avoid collection actions, you need to be proactive about negotiating an arrangement for your unpaid taxes. The sooner you contact the state, the better. Here's what can happen if you have delinquent taxes in Louisiana.

State Tax Liens

If you have unpaid LA taxes, the state can issue tax liens in any parish where you own real or personal property. A lien means that the lienholder has a right to the proceeds if you sell the asset. Liens can make it hard to sell or transfer assets, and they can also impair your ability to get a loan.

The state will only release the lien if you pay the tax in full, and the state will add the cost of recording the lien to your tax bill. To get a pay-off amount and request a lien release, file Form R-19023 (Request for Louisiana Tax Assessment & Lien Payoff). Generally, the state takes four to five business days to respond to the request for a payoff amount. If you need information faster, you can fax your request to the Special Collection Unit at (225) 219-2256.

In some cases, the LDR may place liens on multiple properties. If some of these properties cover the full amount of your tax liability, you can request a partial lien release to have the state remove excess liens from your other properties. The LaBTA must approve these requests.

Tax Levy

The LDR has the right to seize stocks, securities, bank accounts, wages, real estate, and all other types of property if you have unpaid tax liabilities, penalties, or interest. Generally, the state only takes wages and bank accounts, but it has the right to take nearly all of your personal or real property.

If the state garnishes your wages, it can take up to 25% of your pay. Typically bank account seizures are for the full amount in your account, up to the amount owed.

Tax Penalties Charged

The LDR assesses penalties and interest if you file or pay your taxes late. If you file your return late, Louisiana assesses a failure-to-file penalty of 5% of the balance due. This penalty applies immediately, and another 5% penalty applies every additional month, up to a maximum penalty of 25%.

The state also assesses a failure-to-pay penalty. For individual income tax, the penalty is 0.5% of the tax due every month, up to 25%. For all other taxes, the late-payment penalty is 5% of the amount due every month, up to 25%.

As you can see, the failure-to-file penalty is much higher than the failure-to-pay penalty on individual taxes. To minimize your penalties as much as possible, you should always file your return on time or as close to on time as possible, even if you cannot afford to pay the tax due.

Note that requesting an extension only extends the amount of time you have to file. It does not extend the due date for your tax return.

Interest on Louisiana Back Taxes

As of 2022, the interest rate on unpaid Louisiana state taxes is 0.5417% per month or 6.5% per year. The rate adjusts annually.

Seizing State and Federal Tax Refunds

When you owe back taxes to Louisiana, the state can take your IRS tax refunds through the federal offset program. Similarly, if you owe federal back taxes, the Louisiana Department of Revenue will send your state refund to the IRS.

Refusing to Let You Have a Driver's License

The State of Louisiana may revoke, refuse to issue, or deny the renewal of your driver's license if you owe more than $1,000 in state taxes. To get your driver's license back, you must pay the tax due or set up a payment plan. If you have not filed the return related to the tax due, you also must file the return.

Once you meet the requirements, the state will send you a clearance letter. To get your license back, take the letter and a $60 reinstatement fee to the Department of Public Safety.

Taking Your Hunting License

If you owe more than $500 in Louisiana taxes, penalties, and interest, the state also has the right to take your hunting licenses. When you go to apply for a hunting license, the state will reject your application if you have a final determination for more than $500 in unpaid state taxes.

Get Help With Unpaid Taxes in Louisiana

The state of Louisiana has a lot of power to collect unpaid taxes, and even if you only owe $1,000, you risk losing your driver's license and facing other serious collection actions.

To protect your assets, you should work with a tax professional who is experienced in dealing with the LDR. They can look at your situation, help you identify the best resolution option, and negotiate with the LDR on your behalf. To get help, search for a LA state tax pro using TaxCure today.

How to Qualify for a Mortgage With Unfiled Tax Returns

Qualifying for a mortgage can be challenging, but it's even harder if you have unfiled tax returns. Here's the truth — most lenders won't give you a mortgage if you have unfiled tax returns, but it can be possible. 

Ready for homeownership but worried about your unfiled returns? This guide is for you. It explains why you generally need a tax return to get a mortgage, how to get a mortgage with unfiled tax returns, and what to do if your lender requires a tax return.

Why Mortgage Lenders Ask for Your Tax Return

A mortgage is the biggest loan most people will ever take out, and your lender needs to feel confident that you can repay this large sum of money. To learn about your financial situation, the lender looks at your proof of income, tax returns for the last year or two, credit report, and other financial documents. 

You may send your tax returns directly to the lender, or they may use the Income Verification Express Service to get your information from the IRS. If you cannot provide this information, most lenders won't approve your mortgage application.

Mortgages You Can Get Without a Tax Return

A very small handful of lenders may be willing to give you a no-tax-return mortgage. They generally fall into the following two categories:

Institutional No Tax Return Mortgage Lenders

Instead of looking at your tax returns, these lenders take a close look at your income documents and your bank account statements. Because they work with high-risk clients, they typically charge higher interest rates than other lenders.

Additionally, you cannot get an FHA loan or a VA loan without a tax return. These loans have low down payments of 0 to 3% which can save you a lot of money when you're buying a home. In contrast, if you get a no-tax-return mortgage, you should expect to pay 10 to 20% or more as a down payment. 

Owner-Carry Mortgage Lenders

In some cases, you may be able to make payments directly to the property owner. These are called owner-carry mortgages, and because they are handled between individuals, they don't have the same stringent requirements as traditional mortgages. 

You need to navigate these loans very carefully — before signing anything, you should consult with an attorney. Owner-carry loans can be useful in some situations, but they can be risky or even predatory in others. 

Also, keep in mind that many owner-carry arrangements come with a balloon payment. You make monthly payments for anywhere from a year to a decade. Then, you have to pay off the remaining value of the property in a lump sum called a balloon. 

To cover the balloon payment, you typically have to go to a traditional lender, and you may struggle to obtain a loan if you have unfiled returns. 

What to Do If You Want a Mortgage and Have Unfiled Returns

You're ready for homeownership but you have unfiled returns… what should you do? You can explore the options above, but they will likely cost you more money in the long run. The best option is to deal with your unfiled tax returns. A tax pro can help you file your unfiled returns.

If you have a refund, you can claim that three years after the filing due date. Other consequences for unfiled returns also vary depending on the year. So, in some cases, addressing unfiled returns puts extra money in your pocket. If you owe tax, however, you will need to make arrangements with the IRS or your state tax agency. A tax pro can help you apply for penalty waivers and negotiate a payment arrangement on your account.

Can You Obtain a Mortgage If You Have Unpaid Taxes?

If you file your returns and owe tax, that won't necessarily prevent you from qualifying for a mortgage. However, your mortgage lender will want to see proof of your payment arrangement, and they will take these payments into account when calculating your debt-to-income ratio. 

Most mortgage lenders want to see that you've been making payments for a few months. If you're in the first or second month of your installment agreement, you may want to wait a bit before applying. 

Don't be afraid to ask the loan officer about your situation — they deal with all kinds of borrowers, and they can give you advice on what to expect during the home-buying process if you have unpaid taxes.

Applying for Mortgages When You Have a Tax Lien

Sometimes, even if you set up a payment arrangement, the IRS will still place a lien on your assets. A lien is the government's legal claim to your assets. If you sell assets while a lien is in place, the government has the right to take the proceeds of the sale. 

The IRS can also place a lien on your assets if you have unfiled returns. When you don't file your returns, the agency can assess how much you might owe and send you a bill. Usually, this bill is more than you actually owe, and if you don't respond, the IRS can issue a tax lien. 

For best results, you should work with a tax pro to get the lien removed. If the IRS refuses to remove the lien, you need to get it subordinated. By subordinating the lien, the IRS agrees that your mortgage lender has priority if your property ever goes into foreclosure.

Get Help Applying for a Mortgage When You Have Unfiled Returns

If you have unfiled returns, unpaid taxes, or a tax lien, you should contact a tax pro to help you. They can help you file returns, set up payment plans, or deal with tax liens so that you can confidently apply for a mortgage. 

Don't let tax issues stop you from becoming a homeowner. Instead, get help today. Search our directory to find a tax pro in your local area who is experienced with these issues. You can use the search box below.

Offer in Compromise on Colorado State Taxes

In rare situations, the Colorado DOR allows taxpayers to settle their tax liabilities for less than they owe through the offer-in-compromise program. To qualify, taxpayers must meet strict criteria. 

Here's an overview of the Colorado offer-in-compromise program and an explanation of what to expect if you apply.

How to Apply for an Offer in Compromise in Colorado

Before applying for an offer in compromise in Colorado, you must apply for an offer in compromise with the IRS. The CO DOR will not accept an offer in compromise unless the IRS has already accepted an offer for the same period and the same type of tax.

Once the IRS accepts your offer, you will need to send copies of your IRS application materials and several additional documents to the state. Here is what you need to send to the CO DOR:

• IRS Form 656 stamped with the IRS Received Date. 
• IRS Form 433-A (Collection Information Statement for Wage Earners and Self-Employed Individuals)
• Proof that the IRS accepted an offer-in-compromise proposal on your federal taxes.
• Proof that you paid your IRS offer in compromise.
• A Record of Account from the IRS.
• CO DOR Form DR 6596 (Statement of Income and Expenses).
• A written statement describing any special circumstances about your offer.
• Written disclosure of any real or personal property you've transferred, including vehicles, cash, and property title transfers.
• Marital and filing status.
• Signed copy of the Offer in Compromise of Tax Liability Terms and Conditions — note that you must initial every term on this form in addition to signing at the bottom. 

You should also include any other relevant information from the offer in compromise accepted by the IRS. The state has the right to request additional details as needed. 

Qualifications for a Colorado Offer in Compromise

The CO DOR will only consider accepting an offer in compromise if the following conditions have been met:

• You have filed all required tax returns.
• The IRS has accepted an offer in compromise for the same year and tax type. 
• You have not used the Colorado offer-in-compromise program before. 
• You have not discharged tax liabilities through bankruptcy in the past. 
• You have not had state taxes written off due to the expiration of the statute of limitations. 
• You have not previously received innocent spouse relief. 

Most importantly, you must prove to the state that you cannot afford to pay all of your outstanding tax delinquencies. The DOR will require you to submit detailed financial information. Still, the DOR also has the right to review the documents you submit and perform an independent examination of your financial situation. 

While the state is reviewing your offer, it will continue any collection actions it has initiated on your account, but typically, the CO DOR will not start any new actions. For example, if your wages are being garnished, the garnishment will stay in place while the state reviews your application. 

Acceptance of Colorado Offer in Compromise

The CO DOR will notify you in writing if your offer is accepted. At that point, you must pay the full offer within 15 days of the date on the notice. If you don't make the payment on time, the offer will be rescinded. Similarly, if your check doesn't clear, you will also lose your offer. 

The state will keep any tax over-payments and apply them to your balance for the next three years. During this time, you are not allowed to reduce your quarterly estimated payments or the amount of withholding. 

Denial of Colorado Offer in Compromise

If the state denies your application, your tax liability is due in full. You should make other arrangements such as a payment plan as soon as possible. Failure to make arrangements on your Colorado tax bill can lead to wage garnishments, asset levies, and other collection activity. 

Get Help With a Colorado Offer in Compromise

Applying for an offer in compromise can be a complicated process, and even a small mistake can cause the state to rescind your offer. Consider working with a tax professional to improve your chances of being accepted.

At TaxCure, you can search for tax pros who have experience dealing with the CO DOR. Contact a Colorado tax pro today to get help applying for an offer in compromise or to talk about other options.

Tennessee Department of Revenue: Offer in Compromise

An offer in compromise is when the Tennessee Department of Revenue (TDR) lets you pay off your tax liability for less than you owe. 

The TDR typically only accepts offers if it believes they represent the most money the agency will be able to collect over the next three to five years, and offers tend to be the most successful when the taxpayer shows a good faith effort to pay the tax liability and adjust their lifestyle to stay on top of future tax bills. 

To help you understand the process, this guide explains how to apply for an offer in compromise in Tennessee and what to expect as you wait for your offer to be reviewed. 

Qualifications for an Offer in Compromise in Tennessee

To qualify for an offer in compromise in Tennessee, you must meet the following conditions:

• Not involved in an open or active bankruptcy case.
• Filed all required tax returns and reports.
• Fully completed the offer-in-compromise application.
• Provided all supporting documents.
• Responded to all requests for additional information.

The TDR looks at each application individually, but it pays close attention to your ability to repay the tax liability now and in the future. In addition to looking at your income, expenses, assets, and liabilities, the agency also considers the potential for change and your likelihood of complying with tax laws in the future. 

How to Apply for an Offer in Compromise in Tennessee

To apply, you need to fill out the Offer-in-Compromise Application and submit it to the TDR. The application is 25 pages long, but it includes detailed instructions and everything you need to disclose your personal or business financial situation fully. 

Individuals must include Form CS-14B (Statement of Financial Condition for Individuals), while businesses should use Form CS-14C (Statement of Financial Condition for Businesses). Self-employed people and business owners must submit both of these forms.

How to Structure Your Offer in Compromise

The offer-in-compromise application requires you to note how much you are offering to settle your tax liability. Here are your options:

• Make an offer and include payment for the full offer
• Make an offer, include a downpayment, and agree to pay off the balance in 30 days.
• Make an offer and agree to make monthly payments of a certain amount over a three to five-year time frame.

If you include a payment, the state will keep the payment even if it doesn't accept your offer. 

How Much to Offer for a Tax Settlement in Tennessee

So, how much should you offer to settle your tax bill? Tennessee applies a very straightforward formula to offers in compromise for both businesses and individuals, and you can use this formula to guide you to an offer. After taxes, the state takes your monthly disposable income, multiplies it by 60, and adds that amount to your total equity. 

Here's an example. Imagine you have $200 per month left over after expenses, and you have $5,000 in equity. When you multiply $200 times 60, you get $12,000, and adding $5,000 brings you to $17,000. In this case, the TDR assumes that it can collect $17,000 over the next five years, and it may not accept an offer below this amount.

It's important to note that the TDR may not take all your expenses into account. If you send in an application that shows you have just $100 in disposable income per month, the state may decide that some of your expenses aren't valid, and it may claim that you have more disposable income every month.

Information Required on the Offer-in-Compromise Application

When making an offer in compromise, you must include your personal or business tax numbers and contact info, monthly income or revenue, monthly expenses, assets, liabilities, and dependents. 

You also must note if you have made an offer of compromise to the Internal Revenue Service (IRS) and answer questions about the following:

• If you have disposed of assets in the last 18 months.
• If there are foreclosure proceedings on any real estate you own.
• If anyone is holding assets for you.
• If you're a party to a pending lawsuit.
• If you're likely to receive an inheritance in the next four years.
• If you've asked for an offer in compromise in the past.
• If you or your business are currently in bankruptcy.
• For business-related taxes, if the business has been discontinued.

Documents to Include With Your Offer in Compromise

When you make an offer in compromise in Tennessee, you need to include the following supporting documents with your application:

• Income tax returns for the last two years.
• Bank statements from all accounts.
• Credit and merchant card statements.
• Utility bills.
• Insurance statements.
• Life insurance statements with details about cash value, accumulated dividends, interest, and loans against proceeds.
• Statements from retirement accounts, investments, pensions, etc.
• Current credit report.
• Proof of employment.
• List of all assets.
• Accounts receivables for your business with the payor, account status, and account age.
• Profit and loss statement for your business for the last six months.
• List of all liens and judgments against you and your business.
• Statement of all IRS tax bills and proof of payment plans.

You also need to make a statement explaining how you incurred the tax liability and why you need a compromise. 

Allowable Expenses

The TDR does not take excessive expenses into account when assessing your ability to pay back taxes. It also does not consider liabilities such as credit card liabilities that would not prioritize the state's tax liens in a bankruptcy case. 

The state uses the IRS's guidelines for expenses. Here are the allowable amounts as of October 2021. 

Housing & Utilities	Food, Clothing, and Personal Care
One Person	$1446	$715
Two People	$1698	$1298
Three People	$1789	$1433
Four People	$1995	$1749
Five or More	$2027	Add $378 for each additional person

You're also allowed the following expenses:

• Court-ordered child support
• Public transportation $224
• Loan or lease for one vehicle $521
• Fuel and operating costs for one vehicle $193 
• Loan or lease for two vehicles $1042
• Fuel and operating costs for two vehicles $386
• Medical expenses for someone under 65 $56
• Medical expenses for someone age 65 or older $125

In extraordinary situations, the government will only consider expenses above these amounts or extra expenses such as cable TV, entertainment, legal fees, tuition, and personal loan payments. If you want the TDR to consider extra costs while assessing your offer, you need to attach a written explanation of why. 

For example, if your rent or mortgage is $2,000, that exceeds the amount allowed for a single person, and if you want the TDR to consider this amount rather than the standard housing allowance, you need to explain in detail why this is a reasonable expense in your situation. 

What Happens While TDR Reviews the Offer?

Submitting an offer in compromise does not stop the collection activity on your account, and if you're making installment payments, it doesn't change the terms of your payment plan. If you want to stop collection activities, you may want to set up a short-term Installment Payment Agreement (IPA) while the TDR reviews your offer, but even if you set up a payment plan, the TDR can still file a state tax lien. 

Making an offer in compromise does not change the deadline for requesting an informal conference or filing a suit to challenge a proposed tax assessment. If you disagree with a proposed assessment, you still need to request an informal conference or submit a suit by the deadline noted on the assessment. 

Tennessee Offer-in-Compromise Review Process

The Collection Services Division consults with legal counsel to decide if your offer is in the state’s best interest. Then, it makes a recommendation of acceptance or denial. The Commissioner of Revenue makes the final decision on most offers, but the Attorney General and Reporter and the Comptroller of the Treasury must approve some offers.

The TDR will notify you by mail if your offer has been recommended for approval or rejection, and then it will also let you know when the final decision has been made. 

What Happens If Your Offer Is Accepted?

If your offer is accepted, you must pay the balance of the settlement as outlined in your offer. You must also stay compliant with tax reporting, filing, and payment obligations for the next five years, or your compromise will be voided, and you will owe the full amount. 

What Happens If Your Offer Is Rejected?

If the TDR rejects your offer in compromise, the TDR will typically offer you a payment plan, and although you cannot contest the rejection, you can suggest an alternative payment plan. 

Common reasons for rejecting offers in compromise include the following:

• The TDR believes you can pay more.
• You have omitted serious information from the application.
• You have a history of non-compliance or fraud.
• The tax is based on amounts you collected from customers and never remitted to the government — for instance, sales tax.

Tennessee Offer in Compromise Based on Legal Argument

An offer in compromise based on a legal argument applies when you request an offer in compromise because you believe that you do not legally owe the taxes. In this situation, you need to submit a written statement about your legal argument, but you do not need to fill out the application or provide financial disclosure. 

Get Help Applying for an Offer in Compromise in Tennessee

Applying for an offer in compromise can be a tricky process, and for best results, you need to include the right information and detailed explanations about your situation. Ideally, you should work with a tax professional who understands how this state handles the process.

To get help with tax issues in Tennessee, contact a tax pro with experience negotiating with the TDR. 

Tennessee Department of Revenue Payment Plans

If you have unpaid taxes in Tennessee, you may be able to qualify for a payment plan. An Installment Payment Agreement (IPA) allows you to pay off your tax liability in equal monthly payments over a set period of time. Still, you must meet certain criteria to qualify. Take a look at how tax payment plans work in Tennessee. 

How to Qualify for a Tax Payment Plan in Tennessee

To qualify for an installment plan, you must meet the following criteria:

• Owe at least $300
• Agree to make monthly payments of at least $50
• Set up direct debit for the payments
• Be able to pay off the tax liability in two to 60 months

You also must submit an application that includes a detailed analysis of your financial situation. If you have a business, you must keep your daily records current and submit all tax returns and reports as required to the TDR. If you cannot afford the monthly required payments then it may be possible that you could qualify for an offer in compromise with the Tennessee DOR.

What to Expect With a Tax Payment Plan in Tennessee

If you have a payment plan, your tax liability will continue to accrue interest, but it will not incur any more penalties. As of October 2021, the state charges 9.25% interest on payment plans accounts. Note that because the interest rate is so high, you may want to consider obtaining a bank loan to pay off your tax bill instead of requesting a payment plan through the state. 

If you have a payment plan, the state will not impose any tax levies such as wage garnishments or asset seizures, but the TDR may still file a lien against your assets. Late payments violate the terms of your IPA, and the TDR has the right to demand full payment plus interest and penalties if you don't make your payments on time. 

If you pay off your tax liability, make sure to cancel your automatic payment at least five days before it is scheduled and contact the IPA Unit directly to cancel future withdrawals. 

How to Apply for a Tax Payment Plan in Tennessee

You can apply for a payment plan online at the Tennesse Taxpayer Access Point (TNTAP), or you can fill out an Installment Payment Agreement Application and email it to Payment.Plan@tn.gov.

If you have had two or more payment plans in the last two years, you must submit a 25% downpayment with your application, or the TDR will not consider your request. For instance, if you request a payment plan on a $10,000 tax bill and you've already had two payment plans in the last two years, you need to include a downpayment of at least $2500.

How to Fill Out the Request for a Payment Plan

The installment plan request requires your name, address, Social Security Number or Employer Identification Number, the legal structure of your business, the type of tax, and the tax period. You also must include a written explanation of why you need an installment agreement. 

Individuals and self-employed applicants must also include Form IPA-IND (Financial Condition Statement for Individuals). Similarly, corporations and partnerships must submit Form IPA-BUS (Financial Condition Statement for Business), and corporate officers and partners may also need to provide Form IPA-IND. 

Financial Statement for Tennesse Tax Payment Plans

Whether you're a business or an individual, the financial condition statement gives the TDR an overview of your financial situation so the agency can decide whether or not to approve a payment plan. The IPA-IND requires individuals to provide the following details:

• Name and contact information
• Marital status
• Year of last filed federal return
• Adjusted gross income from your last federal return
• Employment info
• Dependent's info, including their monthly income
• All assets, including bank accounts, stocks, retirement accounts, life insurance, antiques, and collectibles
• All liabilities, including credit cards, past-due taxes, vehicle leases, etc.
• List of income and expenses

You also must disclose if you have disposed of any assets in the last 18 months, if you have a foreclosure against any real estate, if anyone is holding assets for you, and if you or your business is a party to a lawsuit or currently under bankruptcy. 

Businesses must include the same details on their IPA-BUS. They must also disclose info about machinery and equipment, merchandise and inventory, accounts receivables, and loans to owners or partners.

Supporting Documents to Include With Payment Plan Application

If you're submitting a payment plan request with the state, you also need to include the following supporting documents:

• Copy of most current personal and business federal income tax returns.
• Bank statements for the last two months.
• Statements from lenders.
• List of business equipment plus fair market value. 
• Accounts receivables records showing payor, the amount due, age of the account, and status.
• Proof of employment for you and your spouse.

If your spouse is not liable for the tax liability, their income will not be considered when determining the amount of your monthly payments. Still, their income can affect the distribution of your living expenses. In other words, you won't get credit for paying all your living expenses if your spouse's income indicates that they can cover some of your shared living expenses. 

Get Help Setting Up a Payment Plan

At TaxCure, we have curated a database of tax professionals from around the country who are ready to help with your tax issues. If you owe back taxes in Tennessee, you need help from a tax professional who understands the laws in this state and how to negotiate with the TDR. To get help, contact a tax pro today.

Payment Plan for Colorado Back Taxes

In Colorado, you may be able to set up a payment plan to repay delinquent taxes in monthly installments. Here is an overview of payment plans on back taxes in Colorado.

How to Set Up a Payment Plan for Individual Taxes Online

Individual taxpayers can apply for payment plans online. Simply set up an online account with the Colorado Department of Revenue and follow the prompts to request a payment plan. 

To set up an online account, you will need to confirm your identity with one of the following: 1) your most recent tax return, 2) your federal taxable income amount, 3) your refund amount, or 4) an ID number from a letter received from the Colorado DOR.

Once you have created an online account, follow these steps to request a payment plan:

1. Log into your Colorado Revenue Online account.
2. Click "additional actions" in the account box.
3. Chose "set up a payment plan.”
4. Select the date you want your payment plan to start — it must be 30 to 60 days from the current date.
5. Decide if you want to base your monthly payment on the amount you can afford or the number of installments you want to make. The system gives you both options, calculating your payment based on your response. The minimum monthly payment you can select is $25, and the system will show you the maximum length of time you can take to repay the bill.
6. Choose if you want to make your payments automatically with direct debit or ACH, manually online, or through the mail. 
7. Click the box that says you agree with the proposal. 
8. Enter your bank details if you want to set up automatic payments. 
9. Save your payment confirmation number or print a copy for your records. 

Remember, this is just a request. Completing the online application is not a guarantee of your payment agreement. The CO DOR will contact you to let you know if your plan was approved.

How to Request a Payment Plan on the Phone

Alternatively, you can request a payment plan over the phone. Call the Collections Section at (303) 205 8291. When you call, the collections rep will talk with you about your outstanding tax bill and your financial situation. Then, they will give you an overview of your options. 

How to Set Up a Payment Plan Over Email

You cannot set up a payment plan on Colorado taxes over email. However, you can email the DOR with questions about payment plans. Contact the agency at DOR_Compliance@state.co.us. 

How to Set Up a Payment Plan for Business Taxes

You may be able to set up a payment plan on sales tax or wage withholding tax for your business. But, you must contact the CO DOR directly. To request a payment plan for Colorado business taxes, contact a compliance agent at (303) 866-3711 Monday through Friday, 8:00 am to 4:30 pm. 

The state will only let you make a payment plan request for business taxes if you have received a bill. Additionally, you cannot be in an active bankruptcy case, and you must have filed all required tax returns. 

When Can You Set Up a Payment Plan

You can request a payment plan on your current year's taxes any time after April 15. For example, you can request a payment plan for your 2021 Colorado state taxes any time after April 15, 2022. 

If you know that you cannot afford to pay your Colorado taxes in full, you should set up a payment plan as quickly as possible. If the state garnishes your wages or seizes your assets, you typically cannot reverse those actions by setting up a payment plan. 

What to Expect When You Have a Payment Plan

If you set up a payment plan, interest will continue to accrue on your balance. The CO DOR will also keep any state tax refunds until your balance is paid in full. 

When the CO DOR keeps your refunds and applies them to your balance, those amounts are not a substitution for your monthly payment. You must continue to make payments as outlined in your plan. 

While you are on a payment plan, the DOR may still send you a Final Notice of Determination and Demand for Payment. Don't worry — as long as you're making payments, the state will not take any new collection actions. 

However, to ensure the state has a record of your payment plan, look at the Statement of Account. This document should be included with the Final Notice, and it should show you which of your debt is in a repayment plan. If you don't see that information, you should reach out to a tax professional or contact the DOR directly to make sure your payment plan is recorded. 

Reasons for Payment Plan Cancellation

If you don't maintain the terms of your agreement, the CO DOR can cancel your payment agreement. You must satisfy the following terms to keep your payment plan valid:

• Sign and return the waiver with your payment plan paperwork.
• Make the full monthly payment on time. 
• File all tax returns.
• Pay all tax due.
• Provide a complete statement of income and expenses if requested.
• Update your address if you move.

To make sure your payment reaches the DOR on time, mail the payment at least ten days before the due date. If you're paying online, remit the payment two days before the due date. 

If the state decides to cancel your payment plan, the CO DOR will notify you in writing. Failure to meet these terms is considered a violation of your agreement. However, if you cannot afford to pay your tax bill, you may be able to roll your existing tax bill into your payment plan. You can use Revenue Online or call the DOR to make this request. 

What If You Can't Afford to Pay Your Colorado Tax Payment Plan

If you cannot afford to make the payments on your payment plan, you can request new terms. Send your request along with DR 6596 (Statement of Income and Expenses) to the CO DOR. You must continue to make payments during the review process. 

You can also use this form to request different payment terms if you cannot afford the CO DOR's proposed payment plan. Form DR6596 provides the CO DOR with a very detailed analysis of your financial situation, and if you are experiencing financial hardship, this form will prove your situation to the state.

Get Help Setting Up a Colorado Payment Plan

Can't afford to pay your Colorado taxes in full? Then, a payment plan may be the best option. Contact a Colorado tax pro today to help set up a payment plan or explore other options for your back taxes. You can view the top-rated Colorado tax problem professionals here.