New Hampshire Back Taxes Overview

Tax Resolution Options and Collection Methods in New Hampshire

The New Hampshire Department of Revenue Administration NH DRA administers and collects taxes in this state. If you have unpaid business or personal taxes, you must work with the DRA to make arrangements to pay your tax liability. 

NH DRA Contact Information:

• General Inquiries: (603) 230-5000
• Business Taxes: (603) 230-5000
• Collections: (603) 230-5900
• Website: NH DRA Website

So that you know what to expect, this guide provides an overview of the tax resolution options and tax collection actions used in New Hampshire. It also explains how to get help with your New Hampshire back taxes.

New Hampshire Taxes

New Hampshire does not have an individual income tax, but the state taxes interest and dividend income. It also assesses a real estate transfer tax and private car tax on individuals. 

Additionally, the DRA also assesses the following businesses taxes in New Hampshire: Business Enterprise Tax, Business Profits Tax, Meals & Rooms Tax, Communications Services Tax, Electricity Consumption Tax, Tobacco Tax, Smokeless Tobacco Tax, Utility Property Tax, Railroad Tax, Nursing Facility Quality Assessment, and Medicaid Enhancement Tax.

If you are behind on any of these taxes, it can have serious consequences for you and your business. The DRA has broad collection powers in New Hampshire, but luckily, the state is also willing to work with taxpayers who have gotten behind on their tax obligations. 

Tax Resolution Options in New Hampshire

The New Hampshire DRA offers several options for people behind on their state taxes. You must apply for these programs, and acceptance is at the department's discretion. A New Hampshire tax pro can help you apply for these programs, and they can also help you select the best option for your situation.

Payment Plan on New Hampshire Back Taxes

The New Hampshire DRA may be willing to let you make monthly payments on your tax debt. But again, installment agreements are at the discretion of the department. To apply for an installment agreement on your New Hampshire taxes, you should file Form CD-400 (Request for Installment Payment Agreement). 

This short form simply requires your basic contact details, the tax period, the amount you owe, and your suggested monthly payment. When you request an installment agreement, you are telling the department that you cannot afford to pay the taxes in full and are making a genuine effort to pay the taxes as quickly as possible. 

The department has the right to request additional information. If it feels that you're trying to delay the collection of the tax, the department can reject your payment plan request.

The DRA may issue a lien against your assets while you're on a state tax payment plan. The department also has the right to change or terminate payment plans if you break the terms of your agreement or if your financial circumstances change, and you can pay the bill in full. The department must give you a 30-day notice before changing your plan. 

You can go online to the NH DRA website to make the payments for your installment agreement. Or you can mail the payment along with Form CD-404 (Installment Payment Agreement Coupon).

New Hampshire Settlement Agreement

In rare situations, the New Hampshire Department of Revenue Administration may be willing to settle your tax bill for less than you owe. In many states, this is called an offer in compromise, but the New Hampshire government uses the phrase settlement agreement. 

To apply for a settlement, you should file Form CD-410 (Settlement Agreement Offer). This form requires the following details:

• Type of taxpayer — Individual, sole proprietorship, partnership, LLC, or corporation.
• Taxpayer name and address.
• Type of tax owed — Interest and dividends, business profits or enterprise tax, meals and rentals tax, or other. 
• Settlement offer — How much you are offering to pay to settle the tax liability. 
• Gross income and wages over the last 12 months. 
• A list of monthly expenses, including rent, mortgage payments, utilities, advertising, insurance, and others.
• Cash on hand in all bank accounts, including money market accounts. 
• Copies of your two most recent bank statements for each account. 
• Receivables — This is money clients or customers owe to your business.
• The value of inventory owned by your business. 
• Descriptions and values of your investments.
• Business equipment. 
• Real estate addresses and market value. 
• Taxes due to the IRS or other entities such as property taxes.
• Credit card debts and available credit lines.
• Accounts payable — Amounts due from your business to your vendors.
• Loans owed to banks.
• Mortgages on real estate.
• Copy of your 1040 (Individual Income Tax Return) if you are an individual.
• Copy of financial statements such as profit-and-loss reports and balance sheets if you are applying for a settlement for a business. 
• An explanation of why you cannot afford to pay the balance in full. 

Getting a settlement approved can be tricky. Effectively, you have to convince the NH DRA that the amount you are offering is the most that the state would be able to collect. For best results, you may want to work with a tax professional. 

A tax pro experienced with the NH DRA knows exactly what the department wants to see on settlement applications. Although a tax pro cannot guarantee if your application will be accepted or not, they can often let you know the likelihood of acceptance. They can also help you pinpoint the right settlement amount to offer. 

Hardship Status for New Hampshire Back Taxes

The New Hampshire Department of Revenue Administration does not advertise a hardship program for people or businesses with state back taxes. However, the state does offer property tax relief. In particular, if your income is below a certain level, you can get relief from the state education portion of your tax bill. 

As of 2022, your income must be $37,000 or less for a single person or $47,000 or less for a married couple. You need to apply by June 30th, and you must include a copy of your last federal income tax return to verify your income. To apply for hardship relief on other state taxes, you should consult with an NH tax pro.

Penalty Abatement in New Hampshire

You can request penalty abatement if you incur penalties on your New Hampshire tax account. However, the department only has to abate penalties if they were caused by incorrect written advice from the DRA. To be abated, the penalty must not have resulted from the taxpayer's failure to provide the requested information to the department. 

Note that New Hampshire offered a tax amnesty program from December 1, 2015, to February 5, 2016. If you have back taxes that were due prior to December 1, 2015, the state cannot waive penalties from those tax bills unless they were applied in error.

New Hampshire Appeals Process

If you disagree with the assessment of tax, penalties, or interest in New Hampshire, you have the right to appeal. You can also appeal if your claim for a refund of tax, penalties, and interest is denied. You must appeal within 60 days of receiving the notice of assessment or refund denial. To appeal, file Form A-101 (Appeals) and send it to the following address: 

NH DRA Hearings Bureau 
109 Pleasant Street 
PO Box 1467 
Concord, NH 03302-1467. 

When you appeal, you must explain the reasons for the appeal. In New Hampshire, you have the burden of proof to demonstrate that the department made an incorrect decision about your situation. A Hearing Officer will review your case. 

If you don't agree with the officer's determination, you can appeal to the Board of Tax and Land Appeals or to the Superior Court in your county. You must file this appeal within 30 days of getting a decision from the Hearing Officer. 

Inheritance tax has its own appeals process. To appeal an issue related to inheritance tax in New Hampshire, you should file the appeal with the Probate Court in the county where the deceased person resided. 

Bond Required for New Hampshire Appeal

In some cases, if you have an appeal pending, the Board or Court may require you to post a bond. The bond covers the amount of tax due, and it protects the state's interest in the debt. 

If you win the appeal, the department may be required to compensate you for attorney's fees and related costs. This only happens if the department's actions were unjustifiable. On the flip side, the courts may order you to pay for the department's legal fees if your actions were unjustifiable. 

Tax Amnesty Program in New Hampshire

At the time of writing, there is no tax amnesty program available in New Hampshire. The last time the New Hampshire DRA offered tax amnesty was from December 2015 to February 2016. 

The DRA gave taxpayers a very small window of time where they could file unfiled returns and pay tax debts without repercussions. Taxpayers who participated in the amnesty program had their penalties removed and their interest cut in half. 

New Hampshire Back Taxes Collection Process

The state can use a range of enforcement actions to collect unpaid taxes. Here is an overview of all of the collection actions you or your business may face if you have unpaid state taxes in New Hampshire. 

New Hampshire State Tax Liens 

The New Hampshire Department of Revenue Administration can issue liens against your property if you don't pay your state taxes. Liens can go against bank accounts, real estate, accounts receivables, security interests, and other real or personal property. 

New Hampshire state tax liens can make it very difficult and potentially impossible to sell or take loans against assets. Liens attach to all of your current property as well as to any property you acquire once the lien is in place. For instance, if the state issues a tax lien and then you inherit a boat, the lien attaches to the boat.

If you sell an asset while there is a state tax lien in place, the NH DRA has a right to the proceeds. Once there is a lien against your property, it can also be subject to a tax sale. 

Tax Levy or Distraint in New Hampshire

The New Hampshire Department of Revenue Administration has the right to seize your property for unpaid taxes. This is called a tax levy or distraint. The DRA may issue a distraint to notify you about the seizure of your property. Then, the department can sell the property and apply the proceeds to your unpaid tax bill. 

After sending the required notices, the DRA can keep distrained properties for four days. Then, if you don't pay the tax in full, the tax collector can auction off your property within 48 hours of the expiration of the four days. The DRA must post public notices about the sale in at least two places, at least 24 hours before the sale. The notice must contain a description of the property and the time of the auction. 

The DRA cannot take tools of the trade or necessary household utensils. There may also be other assets exempt from levy. Talk with a New Hampshire tax pro to learn more.

License Revocation or Suspension

If the DRA sends a demand for payment and you ignore it, the DOR can notify the Division of Motor Vehicles (DMV) that you are in default. Then, the DMV can revoke your vehicle registration. 

If you don't pay your New Hampshire state taxes, the DRA can also suspend or revoke licenses issued by the department. The DRA issues the following professional and business licenses:

• Meals and Rentals Tax Operator's License — Required for businesses such as restaurants, grocery stores, bakeries, hotels, and car rental companies. 
• Tobacco Tax Operator's License — Required for any business that sells tobacco products in New Hampshire.
• The Communication Services Provider's Tax License — Required for businesses that collect and remit communication services taxes. 

Bond Required for Unpaid Taxes Collected From Others

If you have unpaid NH taxes, you may have to post a bond to guarantee payment of taxes collected from others. For instance, if you collect sales tax from your customers and you have unpaid taxes, you may be required to post a bond. This gives the government a financial guarantee that you won't collect and spend the taxes. 

Tax Penalties

Fees and penalties will accrue on your account if you don't pay your taxes. If you make a partial payment, the state will apply the payment against fees and penalties first. Then, it will apply the remaining amounts to the interest on your account. Finally, the remainder will apply to your delinquent tax debt. As of 2022, the DRA charges 5% interest on unpaid state taxes. 

Statute of Limitations on Tax Collection in New Hampshire

Generally, the New Hampshire DRA has three years from the return due date to assess taxes. However, if the taxpayer underreported their income or profits by more than 25%, the department has up to six years to assess a tax. 

Once the taxes have been assessed, the department can collect the tax by lien or court proceedings as long as the lien or proceeding was commenced within 12 years from the date of the tax assessment. In New Hampshire, the Attorney General may also have the right to bring judgments or actions against you if you have unpaid taxes. 

Get Help With New Hampshire Taxes

Owing back taxes to the New Hampshire DRA can be stressful and confusing. To get help dealing with the NH DRA, you should contact a tax pro based in New Hampshire. Using TaxCure, you can search for tax professionals who have experience with the NH DRA. 
Then, you can filter your results based on specific types of tax problems. To get help now, contact an NH tax pro today. They'll start with a no-cost conversation about your tax issues. Then, they'll outline how they can help you.

Guide to Michigan Tax Liens & How to Release

What to Do if the Michigan Department of Treasury Issues a Tax Lien Against Your Assets

The Michigan Department of Treasury has the right to issue tax liens or take other collection actions against you if you have unpaid state taxes. To protect yourself, you should try to make arrangements on your Michigan tax debt before the state issues a lien. 

Contact a Michigan tax pro if there is already a lien against you. They can answer your questions and help you apply for a lien release. 

What Is a Michigan Tax Lien?

A Michigan state tax lien is the state's legal claim to your property. Once issued, state tax liens attach to your real or personal property. They give the Michigan Department of the Treasury the right to the property or interest in the property until the debt is paid.

To explain, imagine that you owe $20,000 in state back taxes. The state issues a lien, and it attaches to all of your real and personal property. If you sell any of your property (homes, cars, boats, etc), the Michigan Department of Treasury has a legal right to the proceeds of the sale.

When Does the MI Department of Treasury Issue Tax Liens?

The Michigan Department of Treasury issues tax liens relatively quickly when a taxpayer has unpaid state taxes. Aside from notices, a tax lien is usually the first collection action used by the state. 

Generally, the state sends taxpayers three notices over a 90-day period. If the taxpayer ignores all of the notices, the Department of Treasury files the lien 35 days after the last notice. 

What Is a Michigan Notice of Tax Lien?

A Michigan Notice of Tax Lien alerts you if the state has filed or plans to file a tax lien against you. However, this is not the first notice you will receive. The state sends several notices informing you of your state tax bill and urging you to pay your balance before it takes this action. 

How Does Michigan Notify Taxpayers About State Tax Liens?

In most cases, the first notice is a Letter of Inquiry. This notice states the amount you owe. It may include tax from a Michigan state tax return that you filed and didn't pay, or it may include taxes assessed against you by the state. 

If you don't respond to the Letter of Inquiry, the state will send you a Bill for Taxes Due (Intent to Assess). This comes approximately 30 days after the first notice. If you don't agree with the tax shown on the bill, you should appeal or request a conference. Don't wait to appeal. Appeals are time sensitive, and you may lose your opportunity if you don't act quickly. 

You effectively agree with the tax bill by not responding to the Intent to Assess. Then, 60 days later, the Treasury will issue a Final Bill for Taxes Due (Final Assessment). This is typically the last notice you get before the state moves forward with the tax lien. 

Do not ignore the Final Assessment. It is a very time-sensitive notice. If you don't respond, the Treasury will issue a Michigan state tax lien against you. 

Requirements for Issuing Michigan Tax Lien

The Michigan Department of Treasury will only file a state tax lien after the following events have occurred:

• A tax liability has been assessed. 
• The Treasury sends you an Intent to Assess and/or a Final Assessment detailing how much you owe.
• You don't respond or pay the debt within 35 days of the date noted on the Final Assessment notice. 

If these elements are not in place, the state does not have the right to issue a tax lien. However, if there is a jeopardy assessment, the state may not have to follow this timeline. A jeopardy assessment is when the state believes that it may not be able to collect the tax unless it acts quickly. 

For instance, if the state has a reasonable assumption that the taxpayer is going to flee the country without paying their Michigan state tax debt, the state may have the right to file the lien much quicker than usual. 

Where Are Michigan State Tax Liens Filed?

The Michigan Department of Treasury files tax liens in the county where you live. The Treasury can file the lien with the Ingham County Register of Deeds if you live outside of Michigan. 

Impact of Michigan State Tax Liens

When the Department of Treasury files a tax lien against you, it adds a filing fee to your total balance. This increases the amount that you owe. Interest and penalties will also continue to accrue on your account until you pay off the balance. 

Additionally, tax liens are public records. If you apply for a loan, the lender will see the lien, and they may not be willing to offer you credit. Liens can hurt your credit score, and they may stay on your credit report for years. 

The most significant impact of a state tax lien, however, is that it attaches to your assets. If you sell the asset or take out a loan against it, the state has a right to those funds. This can effectively freeze your personal or business finances. Liens can make it very difficult to carry on your financial life as usual. 

Difference Between Michigan Tax Lien and Levy

Liens attach to your assets, while Michigan levies give the state the right to seize your assets. In Michigan, you will also hear the word "warrant" in relation to tax collection. 

A tax warrant is a legal order to seize your real or personal property. For example, if the state issues a lien against your assets, the state does not get any money until you sell the asset. However, if the state decides to levy that property, it will seize the property, sell it, and then apply the proceeds to your balance. A lien can be a precursor to a warrant. 

In Michigan, the state normally uses the word warrant when it plans to seize physical assets or to close your business for non-payment of tax. It uses the term levy when it garnishes your wages or seizes the funds in your bank account.

How to Get a Tax Lien Release in Michigan

The section of the state legal code that outlines the rules on lien releases is Section 205.29a(1). Here are the situations where the state of Michigan will release a tax lien:

If you pay the tax liability in full. 

The most effective way to get a lien released is to pay the tax liability in full. Once you pay, the Michigan Department of Treasury has 20 business days to release the lien. 

If the state made a mistake while filing the lien. 

The state will also release the lien if it made a mistake filing it. This can include procedural mistakes, such as when the department doesn't send out the correct notices. It can also include situations where the lien attaches to assets that the taxpayer does not own. 

If the state realizes that it has filed a lien against assets that the taxpayer does not own, the state must release the lien within five business days. The department will issue a certificate of nonattachment that clearly says the taxpayer doesn't have a right to that property and thus that the lien does not apply. 

Here's a quick example of when this might happen. Imagine that you are the custodian of your disabled adult child's checking account. Because your name is on the account, the state might issue a tax lien against it. However, when you reach out and prove that the funds in the account are not yours, the state will release the lien. 

If the lien attaches to property exempt from levy.

Michigan uses the same rules as the IRS when determining which assets are exempt from levy. According to Section 6334 of the Internal Revenue Code (IRC), the following assets are exempt from levy: school books, fuel, furniture, personal effects, tools of the trade, certain annuities, pension payments, worker's compensation, child support, and funds from public assistance.

 The government must also leave you enough of your wages to cover basic living expenses, and your personal residence is exempt from levy if you owe less than $5,000. If the state issues levies against any of these assets, it must release the levy within five business days of realizing the mistake. 

If subordinating the lien helps you pay your tax liability.

Michigan does not advertise any other situations where the state releases tax liens. However, the department may be willing to release or subordinate liens if doing so will help you pay your tax bill. 

To give you an example, imagine there is a tax lien attached to your assets, so you can't get a loan. However, if you get a loan against your house, you will be able to pay the tax liability. In this situation, the state may be willing to subordinate its lien to the lender who is extending you a loan against your house. 

If a mistaken lien made you incur fees from your bank or from the Department of Treasury, the state would reimburse you for the fees. 

Offer in Compromise to release the tax lien.

If you file an offer in compromise, the lien will remain in place until the Michigan Department of Treasury reviews your offer in compromise. If the DOT rejects your offer in compromise, the lien will remain in place until the liability is paid off. If your offer is accepted, the DOT will release the lien once the compromised amount is paid in full.

Installment Agreements and Michigan State Tax Liens

If you enter into an installment agreement, the state will not release your state tax liens. Generally, state tax liens stay in place while you make payments on your state tax liability. The state won't garnish your wages or seize your bank account if you are making payments. However, the state can seize your state and federal tax refunds. It can also seize vendor payments from the state of Michigan until your tax liability is paid in full. 

Get Help Releasing a Tax Liens Michigan

Do you have a Michigan tax lien against your assets? You need to contact a Michigan tax pro today. They can help you apply for a lien release or find other resolution options. 

Using TaxCure, you can search for tax pros based in Michigan and filter your results by the tax pro's experience with your concern. Don't let unpaid taxes stress you out. Use TaxCure to find a Michigan tax pro today.

What Does a Tax Warrant Mean in Indiana?

The Indiana Department of Revenue may issue a tax warrant against your assets if you have unpaid back taxes in Indiana. A tax warrant can make selling or taking out loans against your assets difficult or impossible. It can also affect your credit score and impair your ability to obtain new loans or credit cards.

Ideally, you should try to make arrangements on your tax bill before the state issues a tax warrant. However, if there is already a warrant against you, there are options. This guide explains what to expect when dealing with an Indiana tax warrant.

What Is a Tax Warrant in Indiana?

An Indiana tax warrant is a notification or record of your tax debt. The IN DOR files the warrant in the county clerk's office, and the warrant allows the debt to be collected by the county sheriff or a collection agency. 

Once filed with the county clerk, the tax warrant becomes a civil judgment against you. It establishes that you owe a debt to the state and creates a lien against your assets. The lien or warrant attaches to your assets. It ensures that if you sell the assets, the DOR has the right to the proceeds from the sale. 

Tax Warrant Vs. Arrest Warrant in Indiana

You've probably heard the term warrant about arrests. Don't worry. While these concepts overlap, they are not the same. A tax warrant does not give anyone the right to arrest you. Tax warrants are different than arrest warrants. 

A warrant is a legal order that authorizes someone to carry out a certain action. An arrest warrant, for example, authorizes the police to arrest someone. A tax warrant, in contrast, authorizes someone to collect your unpaid taxes and levy (seize) your property. 

Process for Issuing Tax Warrants in Indiana

The Indiana DOR can issue a tax warrant if you file a state tax return and don't pay all the tax due. The state can also issue a warrant if you owe tax due to a ruling on a protest. 

Before issuing the warrant, the DOR must send you a demand notice. The notice will state that you have 20 days to pay the tax bill in full or explain why you can't pay in full. The notice will also outline the DOR's right to issue a tax warrant, and it will explain the earliest date on which the warrant will be filed. 

Finally, the demand notice will provide you with steps that you can take to avoid the warrant. The DOR only has to send you one demand notice, even if it plans to issue warrants in multiple counties. The DOR can issue warrants in any county where you own assets. 

How Do Indiana County Clerks Record Tax Warrants?

The DOR can file the tax warrant directly with the circuit court clerk's office, or the DOR can give the warrant to the sheriff, who, in turn, gives it to the county clerk. In either case, the county clerk records the warrant by creating a judgment record.

The judgment record shows your name and the amount of tax, interest, and penalties you owe. It also includes a 10% collection fee, sheriff's costs, clerk's costs, and any other applicable fees. The total amount of all of these costs becomes a judgment against you. Then, the judgment creates a lien that attaches to your property.

What Happens When the DOR Files a Tax Warrant Against You in Indiana?

If you don't pay the tax liability within 20 days of the date on the demand notice, the DOR will file the warrant in the counties where you own assets. When the DOR files the warrant, it adds a collection fee of 10% of your unpaid tax liability to your total amount due.

Once the Indiana DOR files a tax warrant against you, you have two options. You can pay the full amount due or accept the tax warrant's cost and consequences. 

When the DOR files the tax warrant, it immediately attaches to your real and personal assets. For instance, it attaches to all vehicles titled in your name or with your Social Security Number. If you have an Employer Identification Number (EIN) for your business, the warrant also attaches to any vehicles registered in the county under that EIN. 

In Indiana, tax warrants authorize the sheriff or a collection agency to collect the unpaid state tax debt. Each of these entities has slightly different collection rules. 

Sheriff Collection Methods for Indiana Tax Warrants

If your Indiana tax warrant goes to the sheriff, they can collect your total balance. The balance includes the tax, penalties, and interest on your account, but it also includes costs related to issuing and carrying out the warrant. The costs associated with the warrant may consist of the clerk's costs, sheriff's costs, collection fees, and agency fees. 

In Indiana, a tax warrant gives the sheriff the right to sell your property at auction, garnish your wages, or levy your bank account. The sheriff chooses the collection methods that make the most sense based on the situation. 

Unfortunately, you cannot decide how the sheriff carries out the tax warrant. At this point, the collection process becomes involuntary. If you want control over how your taxes are paid, you must make arrangements before your account gets to the warrant stage. 

Indiana Tax Warrants Carried Out by Collection Agencies

If your Indiana tax warrant goes to a collection agency, they also have the right to collect your full balance due. As indicated above, this includes the unpaid state tax plus interest and penalties, and it also includes costs related to issuing and carrying out the warrant. 

Like sheriffs, collection agencies can also set up a garnishment against your wages, and they can levy your bank accounts. However, collection agencies do not have the right to seize and auction off your assets. 

As of 2022, the Indiana DOR contracts with United Collection Bureau, Inc. (UCB). This is a private company that handles third-party collections for the state. If you receive a letter from this company and you have questions, you or your tax professional may contact UCB directly. 

How Long Does an Indiana Tax Warrant Last?

Once filed, an Indiana tax warrant lasts for ten years. However, if desired, the DOR can extend the judgment by filing an alias tax warrant with the circuit court clerk in the county where the warrant was originally filed. That adds another ten years to the tax warrant. 

Indiana Tax Warrant Release

The tax warrant will be released if the account is paid in full. It can also be released if the DOR realizes that the tax assessment was incorrect or the warrant was issued in error. The DOR can also release a warrant if it's in the state's best interest. 

If the DOR decides to release the warrant, it will send a release of judgment to you and to the county clerk in each county where the warrant was filed. If the DOR releases a warrant issued in error, it must do so within seven days after discovering the error. The DOR must also send a copy of the release to each of the major credit reporting bureaus. 

Tax Warrant Release for Salvaged Vehicle

If you have a tax warrant and you need to salvage a vehicle, you will need to apply to have the tax warrant released from that vehicle. To do so, you need a letter from the insurance or salvage company stating that the vehicle is no longer operable. The letter should also explain if you are receiving a settlement or claim from the vehicle, and it should note where the funds are being distributed. Finally, it needs to note the VIN of the vehicle. 

What If There is a Tax Warrant Against a Vehicle You Purchased?

Unfortunately, in some cases, you may purchase a vehicle from a private owner and then discover that it has a tax lien against it. In this situation, you will also need to apply to have the warrant released. To do so, you need the following:

• Vehicle Identification Number (VIN)
• Sales receipt or bill of sale showing the date and purchase price. 
• Notarized affidavit explaining where you purchased the vehicle and from whom — This helps to ensure that you were not purchasing the vehicle from a friend or relative to help them avoid the effects of the tax warrant. 
• Information about the warrant — Warrants are public information so you can obtain these details even when the warrant is not in your name. 
• Proof of the fair market value of the vehicle — For instance, you can use a fair market value estimation from Kelly Blue Book. 
• Photograph of the vehicle. 
• Copy of your driver's license or other state-issued photo ID. 

Contact the Indiana DOR or the county clerk with this information, and they will guide you through the process of getting the warrant released against your vehicle. 

What If You Inherit a Vehicle That Has a State Tax Warrant Against It?

In some cases, you may end up inheriting a vehicle that has a state tax warrant against it. In these cases, you can also reach out to request a warrant release. You need the following:

• Notarized affidavit explaining your heirship or relationship with the deceased person.
• The vehicle's VIN.
• Warrant information from the public record. 
• A copy of the owner's death certificate. 
• Document showing the fair market value of the vehicle. 
• Photo of the vehicle. 
• Copy of your state-issued photo ID. 

You will need to get the warrant removed before you can sell the vehicle. You may even need to get the warrant released so that you can register and use the vehicle. 

Indiana Tax Warrant Expungement

In addition to getting a warrant released, you may also want to get it expunged. A warrant expungement erases it from the public record. Indiana tax warrant expungement can happen in the following situations:

• You have paid and filed all state taxes for the last five years. 
• The warrant was issued more than ten years before the expungement request. 
• The warrant is not subject to litigation. 

The state will not expunge a tax warrant if it was created due to fraud or reckless conduct. 

How to Request Indiana Tax Warrant Expungement

To request expungement on your Indiana state tax warrant, submit State Form 56196 (Expungement Request Form) to the DOR. 

This one-page form requires your name, address, email address, phone number, and the last four digits of your Social Security Number. It also needs your tax warrant number. If there are multiple tax warrants against you, you should list all the ones you want to expunge. 

Then, you need to note if you are current on filing and paying all taxes due to date. Finally, you should detail why you believe the warrant should be expunged. You can attach supporting documents to make your case if necessary. 

Although this form looks straightforward, it requires an understanding of the expungement rules. To increase the chances of your request being approved, you may want to work with a tax pro experienced with Indiana tax warrant expungement.

How to Pay a Tax Warrant in Indiana?

If you want to make an Indiana tax warrant payment, you can do so online, through the mail, or over the phone. 

To make an Indiana tax warrant payment online, visit the Indiana Taxpayer Information Management Engine (IN TIME). Select bill payments. Be ready to enter your letter ID or tax warrant number. You can make an Indiana tax warrant payment with an electronic check or ACH withdrawal for free. There is a fee to pay with a credit card. 

You can pay through the mail by sending your tax warrant payment to the following address:

If you have questions about your Indiana tax warrant, you can call the Indiana DOR at 317-232-2240. If a collection agency handles your tax warrant, you can contact UCB at 866-599-4313. Or you can visit the company's website at ucbinc.com. 

Get Help With an Indiana Tax Warrant

Tax laws vary from state to state. If you're dealing with an Indiana tax warrant, you need a tax pro who is experienced with the rules and procedures of the IN DOR. Using TaxCure, you can search for Indiana tax pros, and you can narrow down your search based on their experience with specific types of tax problems and concerns.

Don't let a tax warrant attach to your assets. Instead, get help with your Indiana back taxes today. An Indiana tax pro can help you release the tax warrant and apply for tax resolution programs such as payment plans or offers in compromise. They have the experience you need to deal with unpaid state taxes and unfiled returns.

Massachusetts Tax Installment Agreements

How to Make Monthly Payments on Your MA Back Taxes

Can't afford to pay your Massachusetts state taxes in full? Luckily, in many cases, the MA DOR will allow you to set up monthly payments. To help you out, this guide provides an overview of tax payment plans in Massachusetts. Then, it explains how to apply and outlines what to expect while making payments on your tax debt. 

Overview of MA Tax Payment Plans

If you owe $5,000 or less, you must pay at least $25 per month, and you can take up to 36 months to pay off the total balance. Taxpayers who owe over $5,000 must pay at least $50 per month, and the length of their payment plan varies based on the situation. 

These rules apply to both business and personal income taxes. You must set up separate payment plans if you owe both business and personal taxes. You can only roll business and personal taxes into the same payment plan if you're a sole proprietor. 

To qualify for a payment plan, you must receive a Notice of Assessment or a Statement of Account from the MA DOR. If you have just received a Notice of Proposed Assessment, you must wait until you receive the assessment before you can apply for a payment plan. 

Similarly, if you file a state tax return and can't afford to pay, you cannot apply for the payment plan right away. You must wait until you receive the Notice of Assessment or the Statement of Account. 

How to Apply for a Payment Plan on MA Back Taxes

If you owe $5,000 or less, you can apply for a payment plan online. To get started, register for an online account at MassTaxConnect. Then, sign in, navigate to the Collection Notices section, select "More," and click on "Request a Payment Plan." Or apply through the mail by filing Form 433I (Payment Agreement Application).

To set up a payment plan if you owe more than $5,000, you need to contact the MA DOR directly. In addition to speaking with someone from the DOR, you may also need to make a financial disclosure by filing Form 433I. 

Alternatively, a MA tax pro can help you set up a payment plan. They know how to navigate the system and can help you get the best plan possible for your budget.

How to Fill Out MA Form 433I (Payment Agreement Application)

MA Form 433I requires information about your assets, debts, income, and expenses. It also allows you to propose your monthly payment. The MA DOR uses this information to decide whether or not to approve your payment plan. If you apply online, you will need to provide very similar information. 

At the top of the form, write your proposed payment and if you want to pay weekly, bi-weekly, or monthly. Then, note your name, Social Security Number, contact details, and your spouse's information if applicable. You also must list all of your dependents and household members. 

MA Form 433I also requests information about your and your spouse's income, properties, bank accounts, retirement accounts, and vehicles. If you have other assets such as stocks, bonds, life insurance with cash value, RVs, firearms, or artwork, you should also list those. 

On page three of Form 433I, you need to list all your monthly income sources, followed by all your monthly expenses. Finally, you need to detail your debt obligations, such as credit cards, IRS debt, student loans, and child support. 

To back up the details on your application, the MA DOR requires you to submit the following supporting documents:

• A copy of your last federal income tax return. 
• Proof that all missing tax returns have been filed. 
• Copies of your and your spouse's three most recent pay stubs. 
• Name and account numbers of all bank and credit card accounts. 
• The last months of three bank statements — if you use apps such as Venmo or Paypal, you should also include their statements.
• Proof of your housing expenses — include proof of arrears if you are behind on payments. 
• Payment proposal letter that explains why you got behind and your plan for repayment.

Self-employed individuals should also include a profit-and-loss statement, their most recent credit card statements, and proof that they've been making estimated quarterly tax payments. If you're setting up a payment plan for a corporation, you should include a certificate of a corporate vote authorizing the responsible person to set up a payment agreement. 

Mail Form 433I to this address:

After you submit the form, the MA DOR has the right to request additional supporting documents. You must comply with these requests if you want your payment plan to get approved. 

How to Make Payments for MA Tax Installment Agreements

The MA DOR recommends making payments automatically through direct debit. Once the DOR approves your payment plan, sign in to MassTaxConnect to activate your payment plan and set up direct debits. Or you can authorize direct payments through the mail by filing Form EFT (Electronic Funds Authorization Form). 

Alternatively, you can mail in a check or money order to make your payments. You cannot pay MA installment agreements with cash, credit cards, or debit cards. 

What to Expect When Making Payments on MA Back Taxes

While you're making payments on your back taxes, the MA DOR may still issue tax liens. Liens attach to your property, and they protect the state's interest. They can make it hard to sell assets or take out loans. If you've lost your driver or professional licenses due to unpaid taxes, the state will usually reinstate them once you set up a satisfactory payment plan.

Interest and some penalties will continue to accrue on your account while you make payments. If you can take out a loan or use a credit card to pay your Massachusetts back taxes, you may want to consider those options. If the interest rates are lower than the penalties and interest assessed by the state, you will save money in the long run. 

The state can also intercept tax refunds when you're making payments. For instance, if you file a return with the MA DOR or the IRS while you're on a payment plan, the MA DOR can seize the refunds and apply them to your balance. 

Lien Waiver Agreement for MA Back Taxes

To avoid a lien and make monthly payments, you must be able to pay off the balance within 12 months. In Massachusetts, this is called a Lien Waiver Agreement. It works just like a regular tax payment plan. You simply need to make payments large enough to pay off what you owe in a year. You also have to specifically request this agreement.

Defaulting on Massachusetts Payment Plans

If you miss a payment or don't make the full payment, your payment plan will go into default. The MA DOR will cancel your payment plan. The full balance will be due, and the DOR has the right to seize your assets, garnish your wages, or take other collection actions against you. 

Your payment plan can also go into default if you don't file your returns or pay taxes when due. In this situation, you will receive a default notice. Then, to prevent the DOR from canceling your payment plan you must file all the required returns and pay the tax associated with those returns. 

Get Help Setting Up a MA Tax Payment Plan

Want help setting up a MA payment plan? Not sure if a payment plan is the right option for you? Then, you need to contact a MA tax pro. These professionals have experience with the MA DOR. They can explain the options to you and help you find the best resolution for your situation. 

Dealing with unpaid taxes or unfiled returns can be confusing and stressful. Get help before the MA DOR starts garnishing your wages or seizing your assets. To learn more, use TaxCure to find a MA tax pro today.

Massachusetts: Tax Resolution and Collection Overview

Collections Process and Payment Options for Massachusetts Back Taxes

The Massachusetts Department of Revenue (DOR) is the state agency responsible for tax collection and administration in Massachusetts. The Department collects various taxes, including personal and corporate income, sales, and property taxes. The Department also administers tax incentives and abatements and supports local governments in administering their tax programs.

If you owe MA back taxes, you must work with the DOR to make arrangements for your tax debt. The sooner you make arrangements, the better — this agency has broad powers to enforce various collection actions. To help you out, this guide provides an overview of the tax resolution options in Massachusetts, followed by an explanation of the MA DOR tax debt collection process. 

Massachusetts Department of Revenue Contact Information:

• For Individuals: (617) 887-6367
• For Businesses: (617) 887-6367
• General Inquiries: (617) 887-6367
• Collections: (617) 887-6400
• Website: Massachusetts Department of Revenue

Tax Resolution Options for Massachusetts Back Taxes

The MA DOR has a variety of programs to help you pay your back taxes. If you owe MA state taxes, here are some potential resolution options. When you contact a MA tax pro, they can help you find the best resolution option for your situation.

Payment Plan on Massachusetts Back Taxes

The MA DOR offers payment plans for people who are behind. You must pay at least $25 monthly, but if you owe over $5,000, your minimum monthly payment is $50.Taxpayers who owe $5,000 or less can take up to 36 months to pay.  If you owe more, there is no time limit. 

Massachusetts Offer in Compromise

An offer in compromise allows you to pay off your MA tax bill for less than you owe. To qualify, you must meet strict application criteria and provide detailed information about your financial situation. The MA DOR only accepts offers if they are $5,000 or more. If accepted, you can pay off your offer in a lump sum or in 24 monthly payments. 

Hardship Status

Hardship is when you struggle to pay for basic essentials such as food and shelter. You may also be able to get temporary hardship status if you are on unemployment or receiving government benefits. 

If you qualify for hardship status, the MA DOR will pause collection actions on your account. The agency may still file tax liens against you, but it will remove levies and wage garnishments. It will also restore your driver and professional licenses and remove your name from the public MA tax debt list. You still must file and pay all returns. Interest and penalties will continue to accrue on your account. 

Hardship status is not permanent. The MA DOR will periodically revisit your situation to see if you can resume payments on your tax debt. You can apply online at MassTaxConnect, by filing Form M-911 (Taxpayer's Application for Relief Due to Hardship) or by calling the MA Hardship Team at 617-867-6400. 

Tax and Penalty Abatement in Massachusetts

Abatement means to reduce something. In Massachusetts, you can apply for abatement of tax and penalties. The MA DOR cannot abate interest, but if taxes or penalties are removed, the interest corresponding to those amounts will also be adjusted. 

If you disagree with a penalty, a responsible person determination, or the results of an audit, you can request abatement. To apply for penalty waivers or tax abatement, go to MassTaxConnect or mail Form ABT (Application for Abatement). 

You can appeal if the MA DOR denies your request for tax or penalty abatement. You must appeal within 60 days of the Notice of Abatement Determination or within six months of the date of denial. Ideally, you should appeal as soon as possible to ensure you don't miss the deadline. 

If you made a mistake on your tax return, you should not use the abatement program to request relief. Instead, you should amend the return. Similarly, If you want abatement for tax incurred by your spouse, you should not use the MA abatement program. You should request innocent spouse relief. There is more information on these programs below.

Applying for Abatement by Amending a Return

If you amend your MA tax return and the changes reduce the tax you owe, the DOR will treat this as a request for abatement. By amending your return, you automatically consent to let the DOR take more than six months to review your request. 

If you don't want to give the DOR this extra time, you must contact the agency in writing to withdraw your consent. Then, if the DOR doesn't process your request within six months, you will receive an automatic denial. The denial will take place the later of the day you withdraw consent or six months after you filed the amended return. 

Innocent Spouse Relief in Massachusetts

Normally, when you file a joint tax return with your spouse, you are both liable for the tax owed. However, if your spouse lied on the return and the DOR sends an assessment for the unpaid tax, you may qualify for innocent spouse relief. File Form 84 (Application for Relief From Joint Income Tax Liability) to apply. 

The MA DOR will consider if you are divorced and whether or not you knew (or should have known) about the understated tax. When you apply for innocent spouse relief, the MA DOR will alert the other spouse. The other spouse must complete Form M-12508 (Massachusetts Questionnaire for Non-Requesting Spouse). This form asks detailed questions about both parties' involvement in preparing the tax return. 

If someone owes child support, unemployment, college expenses, or IRS back taxes, the MA DOR may seize their refund to cover these bills. In some cases, the MA DOR may end up seizing a refund from a jointly filed tax return to cover a bill due solely to one spouse. In that situation, you can apply for a refund of your portion of the tax refund. Simply file Form M-8379: (Nondebtor Spouse Claim and Allocation for Refund Due).

Appeals Process for MA Tax Disputes

In Massachusetts, you can appeal if you disagree with the tax and penalties owed. Previously, this was called a MA tax dispute. In some cases, it's called an abatement. The rules vary depending on whether the tax is pre or post-assessment.

To appeal a proposed assessment from an audit or to request a settlement based on legal issues, file Form DR-1 (Office of Appeals Form). If you receive a Notice of Intent to Assess, you have 30 days to request a pre-assessment conference to meet with an appeals officer. 

If you request a settlement, you should also file Form B-37 (Special Consent Extending the Time for Assessment of Taxes). Through the appeals process, the DOR usually only accepts settlements in situations where the DOR would probably lose if the issue went to court. If you want a settlement due to financial hardship or inability to pay, you shouldn't appeal. You should use the offer in compromise (OIC) program.

To dispute tax or penalties that have already been billed, you need to file Form ABT (Application for Abatement) to dispute tax or penalties that have already been billed. This is called a post-assessment appeal. To request a settlement of assessed taxes, you also need to file Form DR-1. 

You can also contact the MA Office of Appeals for penalty disputes or to appeal manufacturing classifications, responsible person determinations, or certain tax credits. 

There is a time limit on appealing MA taxes. Typically, you must appeal by the latest of the following dates:

• Three years after the return was filed.
• Two years after the tax was assessed.
• One year after the tax was paid. 

For instance, if a tax was assessed 18 months ago and you paid the tax yesterday, you must appeal within a year from yesterday. If you filed a return two years ago and you paid the tax one year ago, you still have a year to submit your appeal. 

While the appeal is being processed, the DOR will pause most collection actions. Your account will not incur late penalties for the late payment of an audit assessment, but you will face other late penalties. Interest will continue to accrue on your account. 

If you're in a payment agreement, the agreement will automatically end when you request an appeal, but you can continue to make payments if you like. If your appeal is approved, you can get a refund of your overpayments. If denied, you will need to set up a new payment plan. 

You can request a hearing if the DOR doesn't agree with your appeal. Massachusetts appeal hearings are in-person in Boston, or over the phone. The appeals process can be very complicated. For best results, you should work with a tax professional.

Massachusetts 2024 Tax Amnesty Programs

The Massachusetts Department of Revenue is offering a tax amnesty program from November 1 to December 30, 2024. If you have unpaid tax, the program allows you to waive the penalties if you apply for amnesty and pay the tax due by December 31st. If you have unfiled returns and qualify for amnesty, you can avoid penalties by filing the returns by December 30th and paying the associated tax by December 31, 2024. The program applies to individual, business, estate, and trust taxpayers on a wide variety of different taxes.

If you have unfiled returns or unpaid MA state tax, you should consider applying for this program. These programs are very rare. Massachusetts last offered amnesty programs in 2016 and 2002. 

Massachusetts Department of Revenue Collection Actions

The MA DOR uses a range of collection actions to collect unpaid back taxes. The state can seize your assets, garnish your wages, take the funds in your bank accounts, or even take away your driver's license. Here's an overview of what can happen if you don't pay your MA taxes. 

Massachusetts Collection Notices

The MA DOR sends out a variety of collection notices. You will receive these notices if you have unfiled returns, unpaid taxes due to an assessment, or if you file but don't pay.

• Notice of Assessment — This notice explains your tax due plus penalties and interest. It also outlines your taxpayer rights and appeal options. If you don't appeal or make payment arrangements within 30 days, the MA DOR will continue collection actions on your account. 
• Statement of Account — A follow-up to the last notice, the Statement of Account (SOA) outlines all of the tax, penalties, and interest you owe to the DOR. If you don't respond, the DOR has the right to enforce collection actions as long as 60 days have passed since the assessment.
• Final Notice or Notice of Collections — Your account has been transferred to the collections department. A collector will try to reach you. 
• Notice of Levy — This notice means that DOR plans to seize (levy) your property. It stays in effect for 60 days until you pay the tax bill in full or get the levy released.
• Notice of Intent to Disclose Tax Liability — If you owe $25,000 or more and haven't made a payment for at least six months, the MA DOR can publish your name. This notice is a notification that your name is going on the public tax debtor list unless you pay the tax within 90 days.
• Notice of Intent to Suspend License — You will receive this notice if the DOR plans to suspend your driver or professional license. Usually, the DOR uses this as a last resort for people who owe a substantial amount. 

You may also receive other notices from the MA DOR. Don't ignore these notices. Get help with your unpaid MA taxes as soon as possible. A tax professional can deal with the DOR for you and help you apply for tax resolution programs. 

Tax Liens for Unpaid Massachusetts Taxes

The DOR can issue a tax lien if you have unpaid MA taxes. The lien attaches to all of your real and personal property. It can prevent you from selling or transferring your property, and because it's a public record, it can make it hard to get loans. 

To avoid a tax lien, you should pay the tax in full. Alternatively, if you can pay the tax in monthly payments over a 12-month period, you can enter into a Lien Waiver Agreement. If you are on a longer payment plan, the MA DOR will issue a tax lien until the balance is paid in full. 

Tax Levies in Massachusetts

If you have unpaid taxes, the MA DOR can seize your bank accounts, garnish your wages, and seize your business and personal assets. The DOR can also take tax refunds, gambling and lottery winnings, and other government payments. 

MA DOR Tax Penalties

If you don't file your MA tax returns or if you have unpaid taxes, the DOR can assess a range of penalties. Here are the most common penalties for individual taxpayers in MA:

• Failure-to-file penalty — 1% of the unpaid tax per month, up to 25%. 
• Failure-to-file after notice — Double the tax due.
• Failure-to-pay penalty — 1% of the unpaid tax per month, up to 25%.
• Penalty for filing a fraudulent return — Double the tax due.
• Failure-to-pay deficiency assessment — 1% of the unpaid tax per month, up to 25%.
• Negligence or substantial underpayment — 20% of underpaid tax.
• Failure to report federal change — 10% of the additional tax.
• Penalty for bad checks or failed electronic transfers — the greater of $30 or 2% of the payment amount. 

There are other fees for not filing, paying, or depositing business taxes or tax reports. If you incur a first-time penalty, the MA DOR may waive it if you have reasonable cause. You must contact the DOR to request abatement. 

The state charges interest on unpaid penalties and unpaid taxes. The interest rate adjusts quarterly. It is the federal short-term rate plus four points. It compounds daily. 

Revocation of Driver License, Vehicle Registration, and/or Business Licenses

If you owe a significant amount of back taxes, the MA DOR can suspend or revoke your driver's license and vehicle registration. The DOR can also take away professional licenses or certificates. To keep your license or get it reinstated, you must pay the tax in full, set up a payment agreement, or apply for hardship status. 

Public Disclosure List of Delinquent Taxpayers

The MA DOR publishes a Public Disclosure list of businesses and individuals with unpaid taxes. The top 10 offenders in each category are posted directly on the DOR's website. All others are in a searchable database. You will be added to the list if you owe over $25,000 and are at least six months late. 

Statute of Limitations on Massachusetts Tax Debt

Normally, the statute of limitations for tax assessments is three years from the later of the date the return was due or filed. However, if there was a substantial omission of income, the statute of limitations is six years. There is no time limit if you submit a false or fraudulent return or if you don't file.

The statute of limitations on tax debt collections is ten years from the assessment. Generally, that means that the MA DOR cannot forcibly collect taxes that are more than ten years old. However, if the MA DOR issues a tax lien, it can continue to exist beyond the 10-year deadline. This gives the DOR the right to seize the property attached to the lien, even if the 10-year collection statute has expired. 

In many cases, the collection statute of limitations gets paused. For instance, if you apply for an offer in compromise, the time clock on the statute will be paused. It will restart when the DOR finishes processing your application. This is just one example. There are several other situations where the MA DOR can extend the statute. 

Tax Evasion in Massachusetts

If you commit tax evasion in Massachusetts, you can face felony charges. If convicted, you can go to prison for up to five years. You may also incur a criminal penalty of up to $100,000 for individuals and up to $500,000 for corporations. You will also continue to owe the tax, penalty, and interest.

Get Help With Massachusetts Back Taxes

If you have unpaid taxes or unfiled returns in Massachusetts, you should contact a tax professional with experience in this state. Tax collection processes and resolution options vary a lot from state to state. For the best outcome, you need to work with someone experienced in your state. Get help now — contact a MA tax pro today. 

When you reach out to a MA tax pro, they'll start with a free consultation. You get to explain your tax problem, and they give you an idea of the options in your situation. Then, if you decide to move forward, the tax pro will help you take care of unfiled returns, request penalty abatement, set up payment plans, or make other arrangements on your MA tax debt.

Massachusetts Offer in Compromise: Eligibility Criteria and How to Apply

How to Settle Your MA Back Taxes for Less Than You Owe

If you cannot afford to pay your Massachusetts back taxes, you may want to apply for an offer in compromise. An offer in compromise is when the Massachusetts Department of Revenue (MA DOR) allows you to pay off your taxes for less than you owe. The offer must be at least $5,000, and you must meet eligibility criteria.

To help you out, this guide explains how to apply for an offer in compromise in Massachusetts. It also covers what to expect if your offer is accepted or rejected. 

Who Can Apply for an Offer in Compromise in Massachusetts?

Individuals and businesses can apply for offers in compromise on Massachusetts taxes. By law, the Commonwealth can accept an offer if it represents the most the state is likely to be able to collect. The offer must also be in the best interest of the state. 

You cannot apply for an offer in compromise if you have attempted to defraud the government. You also cannot use this program if you dispute the tax owed or believe you're not liable for the tax.

How to Apply for a MA Offer in Compromise

The MA offer-in-compromise booklet contains everything you need to apply. This 33-page document includes instructions and offer-in-compromise FAQs. It also includes the following documents:

Form M-656 (Offer in Compromise Application)

On the OIC application, you include your basic contact information and details about your tax liability. Then, you write an explanation of your circumstances and explain where you are getting the funds for the offer. Finally, you note the offer and opt between a one-time lump sum payment or monthly payments over 24 months. Form M-656 also outlines the terms of the offer. 

Form M-433-OIC (Statement of Financial Condition and Other Information)

The M-433-OIC form collects detailed information about your financial situation. Individuals need to complete part one. Part two is for corporations and business taxpayers. Corporate officers, individual partners, and responsible persons must complete both sections. 

This form requires basic contact details plus information about your income, investment accounts, retirement accounts, life insurance policies, real estate, personal assets, expenses, and debts. You must include supporting documents for all of the information you include on the M-433. In section three of the M-433-OIC, you present your offer. 

Electronic Transfer Authorization Form

You must include this authorization form if you request to pay your offer in monthly installments. It requires your bank name, account, and routing number. Then, you note the installment payment amount and sign to authorize the payment. 

Form M-2848 (Power of Attorney and Declaration of Representative)

You can represent yourself when you apply for an offer in compromise. But the MA DOR suggests working with a tax professional. If an enrolled agent, a CPA, or a tax lawyer is representing you, you must include this form with your application. 

Once you have completed the offer in compromise application, you can email it to doroicunit@dor.state.ma.us. Or, you can send the paperwork through the mail to this address:

Massachusetts Department of Revenue

Collections/OIC Unit

P.O. Box 7021

Boston, MA 02204

Downpayments for MA OICs

When you submit your MA OIC application, you must include a downpayment. If you're applying for a lump sum offer, you should include a 20% downpayment. You should include the first month's payment if requesting an installment plan offer. Then, you should continue making monthly payments until you hear about your application. 

How Much to Offer for a MA Offer in Compromise

Section three of Form MA-433-OIC guides you through the calculations to make an offer. Basically, you add together your available business and personal assets plus 12 or 24 months' worth of disposable income. Here's an overview of the calculations. 

The MA DOR considers all of the money in your bank accounts as available assets. It also considers the cash value of life insurance policies minus loans against them as available assets. To calculate the available amount of your investment accounts, real estate, vehicles, and assets such as artwork or firearms, the DOR takes 80% of the asset's value minus the amount owed. 

For instance, if your home is worth $400,000 and you owe $300,000, the available amount is $20,000. That is the home's fair market value ($400,000) times 0.8 minus the loan amount. The available amount of retirement accounts is 70% of their value minus any outstanding loans. 

Your disposable income is your monthly household income minus your household expenses. Then, you add on net self-employment income and net business income. 

If you want to make a lump sum payment, you take your available assets plus 12 months' worth of disposable income. To make an installment payment offer, you take the value of your available assets plus 24 months of disposable income. Installment payment offers are always higher than lump sum offers, but they can be easier to manage. In all cases, offers must be at least $5,000. 

What If You Offer Less Than the Minimum Amount?

In some cases, you may not be able to offer the minimum amount. This doesn't necessarily mean that the MA DOR will reject your offer. But you need to explain why you can't pay the minimum amount. 

Be ready to explain why paying the offer would cause economic hardship. In other words, how would paying the minimum offer prevent you from covering essential living expenses? Some possible reasons for offering less than the minimum include advanced age, serious illnesses, or similar factors.

Does the DOR Always Accept the Minimum Offer Amount?

Remember that working through the minimum offer calculations doesn't guarantee success. The DOR can reject offers even if you offer more than the minimum amount. For instance, if your living expenses are extravagant, the DOR may reject your offer. Or, the DOR may reject your offer if it believes that you could sell an unnecessary asset to cover your tax liability. 

Basic Eligibility Criteria for an OIC 

To apply for an offer in compromise in Massachusetts, you must meet basic eligibility criteria. When the DOR receives your application, they will review it to ensure it meets the eligibility criteria. 

If not, they will automatically reject the application and return your payment. This is the only situation where the DOR returns the payment with an OIC application. 

You must meet the following criteria to apply for an OIC in MA:

• Filed all required tax returns and reports. 
• Paid the entire liability for the most recent tax year.
• Current on estimated tax payments. 
• Received a Final Notice of Assessment for all MA taxes owed.
• Don't want to dispute the amount due or contest your responsibility for the liability. 

Ideally, you should not apply if you don't meet the criteria. The OIC application lists these criteria and says not to apply if you don't qualify. 

What Happens When You Apply for a MA Offer in Compromise?

When you apply for an offer in compromise, the MA DOR will pause collection actions on your account, but only if you meet the basic eligibility criteria. In both cases, interest and penalties will continue to accrue on your account. State tax liens will also remain in place. If the MA DOR has already taken away your driver or professional license, check with a tax pro to learn what to expect when you apply for an OIC.

The DOR will review your application closely. The financial audit part of the process can take five to six months. If the DOR requests more information, make sure to respond promptly. If you fail to respond, the DOR can reject your application. 

During the financial audit, the DOR can continue discovery on your account. This includes responsible person determinations, audits, and return reviews. While your OIC is processing, the DOR can take gambling and lottery winnings, offsets, tax refunds, insurance proceeds, and any other government payments and apply them to your balance. These payments are not considered part of your offer.

You must continue to file and pay tax as required while the offer is pending. During this time, the statute of limitations pauses on your account. 

Who Approves MA Offers in Compromise?

The Commissioner of Revenue and two deputy commissioners must approve your offer. The Massachusetts Attorney General must also approve your offer if you're saving over $20,000 or more than half of your tax bill. 

These people consider your ability to pay, the equity in your assets, and the potential for your financial situation to change. They also consider if your offer is in the best interest of the Commonwealth and whether or not it has fraudulent or misleading information. 

What Happens if MA Accepts Your Offer in Compromise?

The MA DOR will notify you by mail if your offer has been accepted. Then, you must sign the settlement agreement and pay by the date on the agreement. 

Typically, you must pay lump sum offers within 60 days. Installment agreement offers are spread out over 24 payments. Because you must make payments while the DOR reviews your offer, you will generally have around 17 or 18 payments left after acceptance. 

What Happens if MA Rejects Your Offer in Compromise?

If the MA DOR rejects your offer, you will also receive a mailed notice. The DOR will keep your initial payments and apply them to your tax liability. You should contact the DOR to make arrangements to pay off the rest of your tax liability. Unfortunately, you cannot appeal a rejected offer in compromise in Massachusetts. 

Common Reasons for Rejections

Here are some of the reasons that the MA DOR may reject your offer in compromise:

• The DOR believes that you can pay the balance in full now.
• The DOR believes that you can pay the full balance over time through an installment agreement. 
• You failed to respond to requests for more information. 
• You requested an installment payment offer but didn't make payments while your application was being processed. 
• You omitted income or assets from your application. 
• You failed to disclose other important information. 
• You submitted fake or misleading information. 
• You have a history of willful non-compliance with MA tax laws. 
• You have a history of criminal tax convictions, including guilty and no-contest pleas. 

Does the MA Counteroffer OIC Applications?

The MA DOR usually only makes counteroffers if the original offer is very close to what the DOR wants to see. The DOR doesn't make counteroffers in other situations. It also doesn't accept counteroffers from taxpayers. The MA DOR says that it will not negotiate over offers in compromise. 

Can You Apply for a MA OIC When You're Filing Bankruptcy?

Normally, the DOR will not consider an offer if you're in an active bankruptcy case. Contact the Bankruptcy Unit to talk about options. If you submit an OIC application while you're filing bankruptcy, the MA DOR will forward your application to the Bankruptcy Unit. 

What If You Dispute the Amount of Tax Due?

As indicated above, you cannot use the OIC program if you want to dispute the amount of tax you owe. In this situation, you need to File Form ABT (Application for Abatement), and you may also need to file Form DR-1 (Office of Appeals Form). If applicable, you can amend your return to show the correct information. Contact a MA tax pro to learn more about what to do when you disagree with a tax liability. 

Get Help Applying for a MA OIC

Applying for an offer in compromise can be a confusing and complicated process. To ensure you get the best outcome, you should work with a tax professional who is experienced with the Massachusetts Department of Revenue. They know what type of offers the DOR will likely accept, and they can help you work through the process. 

Get help today. Use TaxCure to search for a MA tax pro who is experienced with MA OICs. Then, contact them directly to talk about your situation and find the best path forward for your unique situation.

Form 15103 (Form 1040 Return Delinquency)

If the IRS believes that you haven't filed your tax returns, the agency may send you Form 15103 (Form 1040 Return Delinquency). The IRS usually sends this form with Notice CP56, CP59, CP516, or CP518, but you may receive it with another notice. The right response depends on your situation — you may need to file a return, resend your return, or explain why you didn't need to file. Take a look at your options. 

Key takeaways

• The IRS sends Form 15103 to taxpayers with unfiled returns. 
• If you've already filed, just let the agency know.
• If not, file a return or explain why you don't need to file. 
• If you don't respond, the IRS may send additional notices, and eventually, they may file a substitute for return on your behalf.

What to Do If You Receive Form 15103 or IRS Asks You to Complete

If you receive Form 15103, the steps you should take vary based on your situation — here are the main options:

• Make sure the IRS received your tax return.
• File a tax return if you haven't.
• Fill out the form to explain why you didn't need to file. 

Keep reading for more details on what to do in various situations. If you want personalized guidance, use TaxCure to find a licensed tax professional today.

If you recently filed

You could ignore the Form 15103 questionnaire if you filed your return in the last eight weeks. The IRS sent the notice before receiving your return. You may want to follow up to make sure the agency received your return. To make sure they received your return, sign into your IRS online account or check with your accountant. You can use the IRS app or its Where's My Refund tool to check your refund status. 

If you filed two or more months ago

If you filed more than eight weeks ago, you should attach a copy of the return to Form 15103. Then, tick the box saying you filed the return and fill in the year. Also, include the name on the return, the filed forms, the year, and the tax return date. Make sure that the name on Form 15103 matches the name on your tax return. 

If the person listed on Form 15103 is deceased

In the case of a deceased taxpayer, you should note their date of death on the form. Then, tick the box if you have already filed Form 1041 (Income Tax Return for Estates and Trusts). If so, note the name shown on the return, the EIN used on the return, and the tax return year. Note that you only have to file this return if the deceased person's estate earned more than $600 in income. For instance, if the deceased person's estate received rent from an investment property or gains on a bond, this form may be required.

However, you may need to file Form 1040 in the year of the person's death. Generally, you file a deceased person's final return in the same way as when they were alive, but you note their date of death on the return. If you've already filed this return or if you don't have to, you may also need to reach out to the IRS about that.

If you don't need to file

There is a spot on Form 15103 where you can note that you do not need to file. On this part of the form, you should note the tax year, your filing status, and your income. Then, select if any of the following situations:

• you or your spouse are over age 65,
• you or your spouse are blind,
• you're not a US citizen or permanent resident,
• you worked in another country, or
• you were claimed as a dependent on someone else's return.

All of those factors play a role in determining your filing requirements. Then, write out your reason for not filing. For instance, if your income was under the standard threshold, you would write something like, "I did not file because in the tax year 2025, my income was less than the standard deduction for my filing status." Or, if you didn't file because you are not a U.S. citizen or permanent resident, you would write out that reason. 

If you haven't filed yet

If you haven't filed (but you're supposed to), you can simply file a tax return in response to this form. In this case, you don't need to respond to the form directly. Instead, you can simply submit your return. But since you're on the IRS's radar, you should verify that they received the return to be on the safe side. Note that even if you're not required to file, you may want to file so that you can claim a refund. 

If you disagree with the notice

If you disagree with the notices you received with Form 15103, you can contact the IRS directly. Call the phone number on your notice or hire a tax professional to contact the IRS for you. You can also use Form 15103 to explain why you disagree, as explained above. 

How to submit Form 15103

Mail Form 15103 questionnaire to the address provided on the envelope you received with your notice. Or fax the form to the number provided on the notice. If you're not sure where to submit it, reach out to a tax professional or call the IRS. Here are some more tips on how to respond to this notice.

How to get a copy of your return

If you need to send the IRS a copy of your return, there are a few different ways that you can get it — if you have a copy on hand, send that, but otherwise, check out these tips:

• Ask your tax preparer for a copy — by law, preparers must keep copies of tax returns or they may be subject to penalties.
• Print off a copy from your tax prep software — if you filed online using a tax prep company (for example, TurboTax), you should be able to print a copy of your return. If not or if you can only create a copy that says "not for filing", reach out to the customer support team for that tax software.
• Recreate a copy of your tax return — you should only do this as a last resort and consider working with a tax professional.

Tips for catching up on unfiled returns

If you've received Form 15103 because you haven't filed your returns, you may want to get professional help filing your back taxes. Of course, you can also file them yourself. Here are some tips to help you:

• Gather all of your wage and income documents for unfiled years.
• If you're missing documents, reach out to the entity that issued them — for example, ask your bank if you can get a copy of your interest statements.
• Request a wage and income transcript from the IRS to see your W2 and 1099 information from various tax years. 
• Make sure you use the tax form from the delinquent year — income tax forms change from year to year. 
• Remember that you will owe penalties and interest on top of the tax due amount shown on the tax return. 
• But if you have a refund, the IRS will pay you interest — note that you only have three years after the original due date to claim a refund. 
• Once you file, apply for penalty abatement — the IRS is often willing to remove or reduce penalties, especially if this is your first offense and you had a reasonable cause for not filing. 

What If You Don't Respond to This Form

If you don't respond, the agency may send you other non-filer notices. Eventually, they may take matters into their own hands and file a substitute for return (SFR) on your behalf. That process involves using all of the income information the IRS has received about you from other parties and filing a return on your behalf with no deductions or credits. Once that happens, the agency will send you a 90-day letter. If you don't respond to that, they'll move forward with the collection process, which can include wage garnishment, bank levies, and asset seizure.

This can happen even if you weren't required to file. Take, for example, a situation where you run a small business. Let's say the IRS has received a 1099-K showing that you processed $50,000 in credit card payments. Based on this info, the agency assumes you need to file. However, now let's say that you had $51,000 in business expenses. In this case, you had a $1000 loss, and you probably should file so that you can claim the loss against future income. But you don't have to file as your self-employment income was less than $400 (for the sake of simplicity, we're assuming that you don't have any other income or events that trigger a filing requirement). If you don't respond to the 15103 explaining why you didn't need to file, the agency may create an SFR showing that you have $50,000 in income and no business expenses or deductions. 

However, if you ignore this form in a situation where you've recently filed, you don't have to worry — you can ignore it in this case. But again, you should double check that the IRS received your return.

What If You Can't Afford to Pay Your Taxes?

People have all kinds of reasons for getting behind on their tax returns. Sometimes, life just gets in the way of paperwork. In other cases, you may be worried that you don't have enough money to pay. If you don't have enough money to pay, you should still file your return. 

Once your return has been filed, you can take care of your taxes using one of the following options:

• IRS installment plan — make monthly payments on your taxes over several years.
• IRS partial payment installment plan — make monthly payments until the tax expiration date.
• Offer in compromise — settle your tax liability for less than you owe if you cannot afford to pay it in full.
• Hardship status — get temporary relief from collection actions until your financial situation improves.

You can apply for these programs on your own or you can consult with a tax professional to identify the best option for your situation. 

Get Help With Form 15103

If you need help or have questions about Form 15103, contact a tax professional in your area. Tax attorneys, CPAs, and enrolled agents can help you file back taxes, respond to Form 15103 and negotiate with the IRS. To learn more, contact a local tax pro today.

Taxpayer and Employer's Guide to IRS Form 668-W

(Levy on Wages, Salary, and Other Income)

The IRS has the right to collect delinquent taxes through wage garnishments and asset seizures forcibly. The agency will send Form 668-W to your employer if and when the IRS decides to garnish your wages. Here is an overview of what to expect if your boss receives this form, as well as tips for employers who receive this form. 

IRS wage garnishments can consume a significant portion of your paycheck. To protect yourself financially, you should reach out to the IRS before garnishment. Contact a local tax pro for help today if your wages are already garnished. 

What Does Form 668-W Mean?

Form 668-W notifies your employer that you owe back taxes to the IRS, and it instructs your employer to withhold some of your wages and send them to the IRS. If your boss doesn't comply with this form, they can face serious penalties. 

What Happens If My Boss Receives Form 668-W?

If your boss receives Form 668-W, they will give you a Statement of Dependents and Filing Status to complete. On this statement, you note your filing status and the number of dependents you claim on your tax return. This information helps your employer determine how much to withhold from your paycheck. 

You only have three working days to respond. Otherwise, your employer will garnish your wages as a single person with no dependents. This can leave you nearly penniless.

What If You Receive Form 668-W for Your Employee?

When you receive Form 668-W, you are supposed to start garnishing your employee's wages and sending them to the IRS. You may receive Form 668–W(ICS) or 668-W(C)DO. Do not ignore either of these forms. 

If you fail to garnish your employee's wages correctly, you can become personally responsible for your employee's back taxes, penalties, and interest. You can also incur a penalty of 50% of the tax owed. 

For example, suppose your employee owes $10,000 in back taxes and you ignore the IRS's instructions to garnish their wages. In that case, you can become personally responsible for the $10,000 tax liability plus a $5,000 fee. 

After receiving the garnishment instructions, give your employee the enclosed paperwork and have them return it in three days or less. Then, use that information to determine how much to withhold from their paychecks. In most cases, you must start garnishing your employee's wages within ten days or by the next pay period. 

How Much of My Wages Can the IRS Garnish?

The IRS must leave you money for necessary living expenses, but the agency can take everything over that threshold.

As of 2022, if you are married and filing jointly with three dependents, you can keep $751.94 per week. If you're single with no dependents, your weekly allowance is $249.04. Refer to Publication 1494 to see how much of your wages are exempt from garnishment. 

These allowances are very low. The IRS thinks you can survive on this amount. Ideally, you should avoid a wage garnishment by making arrangements before the IRS sends Form 668-W. If your wages are already garnished, contact a tax professional to get the garnishment lifted. 

How Long Do Wage Garnishments Last?

Wage garnishments last until the tax liability, penalties, and interest are paid in full. However, you may be able to get a garnishment released if the following appy:

• The garnishment was served after the collection statute expiration date (CSED). 
• Releasing the garnishment would allow you to pay the taxes faster. 
• The garnishment is causing financial hardship.
• You set up monthly payments and the agreement allows the garnishment to be released. 

In all of these cases, you will need to reach out to the IRS. The IRS will not release a wage garnishment unless you pay in full, negotiate a payment arrangement, prove that you're experiencing financial hardship, or convince the agency that releasing the garnishment will improve the collection process. A tax professional can help you deal with the IRS. 

How Long Should I Garnish My Employees Wages?

If you're an employer, you need to garnish the wages as instructed by Form 668-W until the IRS releases the garnishment. The IRS will send you Form 668-D when the garnishment has been released. You should only stop a garnishment when you hear from the IRS. You should never stop a wage garnishment based on your employee's instructions. 

What Is a Continuous Levy?

You may hear a wage garnishment called a "continuous levy". That simply means that the levy (garnishment) continues indefinitely until it is released. In contrast, a "one-time levy" only happens once. 

Here's an example. Imagine that you owe $10,000. The IRS sends a levy notice to your bank. You have $5,000 in your account, and the IRS seizes all of it. This is a one-time levy. If the IRS wants to levy additional funds from your account, the agency must send a new levy request. 

In contrast, imagine you owe $10,000, and the IRS sends a levy notice to your employer. After completing the paperwork, your employer garnishes $500 from your paycheck. Then, your employer garnishes $500 from your next paycheck, the paycheck after that, and so on. This process happens continuously until the garnishment is completed. 

Why Are My Wages Being Garnished?

Typically, the IRS will only garnish your wages if you have ignored several requests to pay delinquent taxes. Before sending Form 668-W to your employer, the IRS will send you a Final Notice of Intent to Levy and Notice of Right to a Hearing. 

At that point, you have 30 days to pay your tax liability, set up a payment plan, or request a Collection Due Process (CDP) hearing. A CDP hearing allows you to dispute the tax due or make payment arrangements. 

Can I Be Fired for a Wage Garnishment?

Your employer cannot fire you if you just have a single wage garnishment. However, there are no federal laws that prevent your employer from firing you for multiple wage garnishments. 

Check the laws in your state to find out if an employer can terminate an employee for multiple wage garnishments. 

W4 and Wage Garnishments

Form W4 tells your employer how much to withhold from your paycheck for taxes. Typically, you can submit a new W4 at any time, but you cannot submit a new W4 after your employer receives Form 668-W. 

However, if the garnishment lasts for more than a year, you can submit a new Statement of Dependents and Filing Status once a year. This allows you to make changes to the garnishment amount if your filing status or the number of dependents has changed. 

Difference Between Forms 668-W and 668-A

The IRS uses Form 668-A to garnish funds from third parties such as banks and clients. For example, if you are a 1099 contractor, the IRS may send Form 668-A to one of your clients. Sometimes, people refer to Form 668-A as a 1099 levy.

If your client receives Form 668-A, they must send the IRS the funds they owe you. Typically, your client must make the payment on the same day they normally pay your invoices. 

This can be professionally embarrassing. Clients may see you as irresponsible and untrustworthy if they find out you are not paying your taxes. To protect your reputation, you should try to deal with unpaid taxes before the IRS starts sending out these types of forms. 

Independent Contractors and Wage Garnishments

As indicated above, the IRS can send Form 668-A to clients of independent contractors. Form 668-A is a one-time levy form. However, in some cases, the IRS may know that a certain client pays you on a regular basis, similar to an employer. For instance, this may happen if you work for a company in the gig economy or if you have regular long-term clients. 

Sometimes, in these situations, the IRS may send Form 668-W to your clients. Because Form 668-W is a continuous levy form, your client may need to send repeated payments to the IRS. However, this is a gray area of the tax code. 

According to the tax code, Form 668-A applies to wages, salary, and other income. Arguably, payments from clients may be considered as other income. On the other hand, Form 668-A typically only applies to payments that are fixed and determinable, and payments from clients may not meet these criteria. If you believe that the IRS has sent the wrong form, you should contact a tax professional. 

How Much Do I Owe on My Wage Garnishment?

Initially, when the IRS sends out Form 668-A or 668-W, the form will state your total amount due. Your employer or client can see how much you owe when they originally receive the notice, but they will not be able to check your balance after that point. Due to privacy concerns, the IRS will only reveal your current balance to you or your power of attorney. 

Get Help With Form 668-W

If you are an employer who needs help complying with Form 668-W, contact a local tax pro today. They can help you ensure that you're handling the garnishment correctly.

Don't let the IRS garnish your wages. Instead, get help with your delinquent taxes today. Using TaxCure's directory, you can search for local tax professionals who have experience with wage garnishments. You don't have to deal with the IRS on your own — contact a local tax pro for help today.

How Much Does a Tax Attorney Cost?

Tax attorney costs vary, but you need to consider experience as well as price.

Tax attorneys can help with a wide range of tax problems, including issues related to unpaid taxes, tax bills, penalties and interest, and what happens if you don't file taxes. They're the only tax pros who can represent you in Tax Court (other than Enrolled agents and CPAs with a USTCP designation, with some restrictions). But if you've never worked with one, you're probably wondering how much tax attorneys charge, what typical tax attorney rates look like, and whether or not tax attorneys are worth it when dealing with a serious tax matter.

Tax attorney fees vary widely — from a few hundred dollars to $10,000 or more, depending on the complexity of your case. How much an IRS lawyer costs is typically based on their experience and credentials.

The cost also depends on the complexity of your situation, the time required, the tax attorney's fee structure, and the severity of your tax problems. To get a quote, contact a tax attorney directly. Most tax attorneys start with a free consultation. Then they can explain their fee structure and give you an estimate of the cost.

This guide provides an overview of tax attorney rates and what to expect if you contact a tax attorney. Then, it covers alternatives to hiring tax attorneys if you want to save money.

Types of Fees and Tax Lawyer Rates

When you ask, "How much does a tax lawyer cost?" the first step is to find out how they assess their fees. Most tax attorneys charge flat fees or hourly rates. These fee structures influence how much tax attorneys charge and help you compare the cost of different professionals.

Flat-fee pricing for tax attorneys

A tax attorney may charge a flat fee for each of the services they provide, or they may charge a flat fee that covers all of their services. For instance, one tax attorney may charge a fee for filing unfiled returns and another fee for submitting an offer-in-compromise application. Another attorney may charge a flat fee that includes both of those services and anything extra that you need. Flat fees vary based on the situation's complexity, and generally, a full financial analysis is required before estimating the flat fee cost, especially when penalties and interest or IRS audits are involved.

Hourly tax attorney cost

In other cases, tax lawyers charge by the hour. Tax attorney hourly rates vary significantly, but on average, they tend to be $200 to $550 per hour. If you hire a tax attorney who charges by the hour, they can tell you how much their rates are. Hourly billing is more common in complicated tax matters or situations involving failure to file penalties, criminal tax exposure, or extensive IRS audits.

Whether a tax attorney charges a flat fee or by the hour, individual tax resolution cases cost $3,500 to $4,500 on average. For businesses, the average tends to be $5,000 or $7,000. However, depending on your situation, you may pay more or less than these averages.

When You Should Hire a Tax Attorney

You should contact a tax attorney if you're overwhelmed with unfiled tax returns, unpaid taxes, or IRS collection actions. Tax attorneys can help you deal with liens and levies, negotiate with the IRS, and apply for tax relief programs. They have extensive expertise with tax laws, IRS programs, penalties, and interest relief, and resolving tax problems that occur when you fail to file or fall behind on tax bills. However, you can also hire other tax professionals, such as Certified Public Accountants (CPAs) and enrolled agents (EA) to help with these issues.

You will likely need a tax attorney if the IRS investigates you for tax crimes. They can also offer you attorney-client privilege, which you don't get with other tax professionals. This level of confidentiality is especially valuable if you are dealing with complex tax matters, allegations of fraud, questions about what happens if you don’t file taxes, or situations where a legal defense may be necessary.

Tax Attorney Cost Based on Service

How much tax attorneys charge often depends on which IRS program you need, how complicated your tax matter is, the amount of penalties and interest involved, and how severe your tax problems have become. Here is an overview of the average tax attorney fees for different types of IRS services.

Keep in mind, however, that these prices are average. They may be higher or lower, depending on your situation.

Installment Agreements

How Much do Tax Attorneys Charge for Installment Agreements?

On average, tax attorneys charge $2,500 to $3,500 to set up IRS installment agreements. The cost varies based on the complexity of your situation. For instance, if you owe more than $50,000, you may have to make a financial disclosure, and that can drive up the total tax attorney cost. Similarly, the number and complexity of your unfiled returns also affect the cost. Tax attorney rates may be higher when penalties and interest are substantial or when IRS revenue officers are already pursuing collection.

What Is the Tax Attorney Cost for Partial Payment Installment Agreements?

Partial payment installment agreements cost $3,500 to $5,000 on average. They typically cost more than regular installment agreements because the IRS requires a detailed financial analysis and ongoing verification to confirm that you qualify. With a partial payment installment agreement, you make monthly payments for a set period of time, and then the IRS eliminates the rest of your debt.

Offer in Compromise

How Much Are Offer-in-Compromise Attorney Fees?

The average tax lawyer cost for an offer in compromise ranges from $4,000 to $7,500. An offer in compromise lets you pay off your tax debt for less than you owe. This program is complicated and has low acceptance rates. For best results, you should hire a tax attorney with experience handling OIC applications, calculating reasonable collection potential, and addressing penalties and interest that may influence the settlement amount.

Audits

How Much Does a Tax Lawyer Cost for an Audit?

Tax audit lawyers charge $2,000 to $3,500 for a straightforward audit, but for a more complex audit, the cost can be $5,000 or more. Generally, business audits cost more than individual audits, but it also depends on the complexity of your return. IRS audits involving multiple years, substantial unpaid taxes, or fail to file issues can significantly increase tax attorney rates.

Earned Income Tax Credit (EITC)

How Much Do Tax Lawyers Charge to Help With ETC Audits?

The earned income tax credit (EITC) is one of the most commonly audited tax credits. The IRS audits EITCs at a significantly higher rate than it audits tax returns in general.

If the IRS adjusts your return after reviewing your EITC claim, a tax attorney can help you contest the changes. Tax attorney fees for EITC representation vary, but they are often lower than full audit defense costs because these cases are typically narrower in scope. You can get a quote by contacting a tax attorney.

Penalty Abatement

What Is the Tax Attorney Cost for Penalty Abatement?

Tax lawyer rates for penalty abatement can range from $250 to $1,000 or more. Some tax attorneys charge a base rate for penalty abatement plus a percentage of the fees they remove. If you hire a tax attorney for penalty abatement, make sure that their fees aren't higher than the penalties you need to be removed.

These are just some of the services you can access from a tax attorney. When you contact a tax lawyer, they can go over the options for your situation and answer your questions about how much tax attorneys charge, what affects the tax attorney cost, and whether hiring a tax attorney is worth it in your situation. Before selecting a tax lawyer, you may want to get a few quotes from a few different professionals.

But keep in mind that fees should not be your only consideration. You also have to ensure the attorney has the experience you need.

How to Find an Affordable Tax Attorney Near Me

After asking, "How much does a tax attorney cost?", most people's second question is, "How do I find an affordable attorney near me?" To find a local attorney with affordable rates, talk with friends or family. Or look for local listings in your area.

Use TaxCure to search for a local attorney in your area for a more practical approach. We host a directory of tax professionals from all over the country. Using our site, you can search for tax attorneys and other tax professionals based on their experience with your particular tax issue. You can also narrow your search to ensure the tax attorney has experience with your state tax authority. Remember, you don't necessarily need a local tax attorney. You just need an affordable tax attorney with the right experience. You can meet virtually if the tax attorney isn't close to your home.

What to Consider When Hiring a Tax Attorney

If you're hiring a tax attorney, you need to consider their experience and customer reviews. Also, compare their fees to the costs of other tax attorneys. To ensure you hire the best tax attorney for your situation, consider asking the following questions.

• Are you experienced with my tax issue?
• Where are you licensed to practice? Can you help clients in my state?
• Who will work on my case? What are their credentials? Are they tax professionals?
• Do we have client-attorney privilege?
• How much do you charge? Do you charge a flat fee or an hourly tax attorney rate, and what determines the cost?
• What is your billing process?
• How will we communicate? What should I expect from this process?
• What tax resolution program do you recommend for my situation?
• Do you have experience with that type of tax resolution?
• Do you have reviews from other clients?

While talking with different tax attorneys, keep in mind that there are no "special programs." A tax lawyer cannot connect you with a special IRS program that isn't available to other attorneys. They can only help you apply for existing programs. If a company claims they can access unique IRS relief programs that others cannot, that is a red flag and not accurate.

However, experience is certainly a defining factor. A tax professional with a lot of experience in a certain area may be able to get you a better resolution than someone without experience. This is true even if they're dealing with the same IRS program.

Alternatives to Hiring a Tax Attorney

A tax attorney is not your only option. Certified Public Accountants (CPAs) and enrolled agents (EAs) can also represent you in front of the IRS. There are also tax resolution firms, and many people take care of their own tax issues. Here is an overview of what to consider when comparing tax attorney cost to the cost of alternative tax professionals.

CPAs and Enrolled Agents

CPAs and enrolled agents can handle the same issues as tax lawyers with the exception of tax crimes and Tax Court. In some cases, these tax pros are less expensive than the cost of a tax attorney. But it depends on the situation. You may want to talk to a few different professionals as you narrow down your choices.

Tax Relief Companies

Tax relief companies often employ tax attorneys. Although they have the right credentials to represent you, the attorneys at these companies cannot offer you attorney-client privilege. Unfortunately, some of the larger national tax relief companies are also notorious for overcharging for subpar services.

This industry has a lot of consumer complaints, and the Federal Trade Commission (FTC) advises consumers to avoid these companies. In most cases, you get better results and more transparent tax attorney fees if you work directly with a company where you know the professional that will be handling your case.

Do-It-Yourself Tax Resolution

You can take care of problems on your own, but a tax professional is an investment if you're dealing with a complex situation. They can help you avoid errors. They negotiate with the IRS. Their experience enables you to get a better resolution.

If you're thinking about tackling your own tax problems, here are some signs a DIY approach may be appropriate:

• You're comfortable dealing with your tax problems on your own.
• You understand the tax resolution options.
• You owe less than $10,000.
• You don’t question the amount owed and can afford to pay it over time.
• You don't have any unfiled returns.
• You're dealing with individual income tax rather than business taxes.
• The IRS has not issued a lien or put a levy on your assets.
• The IRS isn't garnishing your wages.
• You're not facing tax crime charges.
• You don't need to go to Tax Court.

On TaxCure, we have published detailed pages on tax solutions and resolution options. If you want to handle your own tax issues, you can find the information you need and links to IRS forms on our website. Note, however, that the complexity of certain tax problems is outside the scope of what we can cover online. You should contact a tax pro if you're dealing with a complex tax concern.

How to Get Quotes From Multiple Tax Attorneys

Using TaxCure, you can easily get quotes from multiple tax attorneys. On our site, you can search for tax professionals based on their experience handling unpaid taxes, IRS audits, penalties and interest, fail to file issues, or other specific tax matters. You can also narrow down your search so that you only see tax attorneys in the results.

Once you've searched on TaxCure, you can read different attorneys' profiles, see client reviews, and more. Then, you can contact as many tax attorneys as you like to get quotes. Our directory of tax professionals makes it easy for you to find a qualified, affordable tax attorney in your area.

Free Consultations From Tax Attorneys

Most tax attorneys offer free or no-cost consultations, and you should take advantage of this offering. During your free consultation, you briefly explain the issue. Then, the tax attorney gives you an overview of the options, explains how much tax attorneys charge for cases like yours, and helps you understand the likely tax attorney cost based on the complexity of your tax matter.

Free consultations can be a great way to get quotes from multiple tax attorneys. More importantly, these meetings give you a chance to learn more about the tax attorney's experience so that you can choose the right professional for your situation. Outcomes for audits, offer-in-compromise applications, partial payment plans, and other services can vary drastically depending on the tax pro's experience.

Get Help From a Tax Attorney Today

To get help now, search for a tax attorney today. Then, call for a free consultation to learn more. You don't have to deal with the IRS on your own. You can get trustworthy, experienced, and affordable help by searching for a local tax lawyer on TaxCure today.

FAQ

Are tax lawyers worth it?

Tax attorneys are often worth it when you’re facing serious tax problems such as unpaid taxes, fail to file penalties, IRS audits, or complex tax matters involving large tax bills or significant penalties and interest. They provide legal expertise, negotiation skills, and representation that other tax professionals cannot. If your situation involves potential legal exposure, complex financial analysis, or the need to negotiate directly with the IRS, hiring a tax attorney is usually worth the tax attorney's cost.

For basic tax questions or straightforward filings, CPAs or enrolled agents may be more cost-effective alternatives.

Do tax attorneys make more than CPAs?

Tax attorneys generally earn more than CPAs because their work often involves legal expertise, complex IRS matters, and representation in high-stakes tax problems. Their additional training and ability to handle legal tax matters typically lead to higher tax attorney rates.

However, highly experienced CPAs or those specializing in areas like forensic accounting or corporate taxation can sometimes earn comparable or higher incomes.

Do tax attorneys charge a flat fee or hourly rate?

Tax attorneys may charge either flat fees or hourly rates depending on the complexity of the tax matter. For predictable work, such as setting up installment agreements, filing unfiled returns, or preparing penalty abatement requests, flat fees are common. For more complex cases—such as defending IRS audits, negotiating offers in compromise, or handling fail to file investigations—tax attorney rates are often billed hourly, typically ranging from a few hundred dollars to several hundred dollars per hour.

Understanding whether your case is suited for a flat fee or hourly billing helps you better estimate how much tax attorneys charge.

What factors affect the cost of hiring a tax attorney?

Several key factors affect how much a tax attorney costs, including: the complexity of your tax problems, whether you have fail to file issues, the amount of unpaid taxes, any penalties and interest owed, the number of tax years involved, and whether you are facing IRS audits or enforcement actions.

More complex cases require more hours, more documentation, and often more negotiation with the IRS, increasing tax attorney fees.

Experience also influences tax lawyer cost—attorneys with decades of specialized tax experience typically charge higher rates.

Geographical location, urgency, and whether litigation is involved can also raise the tax attorney's cost.

IRS Form 656-L (Offer in Compromise Doubt as to Liability)

How to Reduce Tax Liabilities When You Dispute the Amount Owed

If there is legitimate legal doubt about the existence or amount of tax you owe, you may qualify to reduce your tax liability through an offer in compromise based on doubt as to liability. These are complicated concepts, and for best results, you should work with a tax lawyer, Certified Public Accountant (CPA), or enrolled agent (EA). 

To help you out, this guide explains the essentials. It provides examples of doubt as to liability, and it outlines how to apply for this type of offer in compromise. 

What Is an Offer in Compromise?

An offer in compromise is an agreement between a taxpayer and the Internal Revenue Service (IRS) to settle the taxpayer's taxes for less than the full tax amount owed. Simply put, you "offer" how much you think you should pay, and if the IRS agrees, the agency "compromises" on the bill. 

There are two main types of offers in compromise: doubt as to collectibility and doubt as to liability. Doubt as to collectibility comes into play when you can't afford to pay your tax debt. The IRS doubts that it will be able to collect the full amount, so it lowers your bill. This guide covers doubt as to liability. 

In rare cases, the IRS also settles tax bills based on effective tax administration. This is a type of offer in compromise that can come into play when the other two options don't apply. There is more information on effective tax administration at the end of this page.

What Is Doubt as to Liability?

Doubt as to liability means there is a doubt that the liability exists. Depending on the situation, you may doubt the entire tax debt or just a portion. To reduce your tax debt, you need to convince the IRS that the doubt is legitimate. 

You cannot apply for doubt as to liability if there is already a final court decision about the tax owed. Similarly, you cannot apply for this program if the tax due is based on current law. 

Examples of Doubt as to Liability

Doubt as to liability usually applies when a tax examiner makes a mistake or ignores the information you provide. It can also apply when new evidence is available about the situation. Here are a couple of examples to help you understand when you can apply for doubt as to liability. 

Doubt as to Liability After an Audit 

Imagine the IRS audited your tax return. A house fire destroyed your tax records, you moved to a new home, and in the shuffle, you missed the notice about the audit. The IRS decided to disallow many of your expenses, and as a result, you incurred a tax debt. 

Because you didn't receive the mail, you weren't aware of the tax bill for quite a while, and it incurred penalties and interest. When you become aware of the tax bill, you requested an audit reconsideration. 

Unfortunately, the IRS issued an adverse decision about the consideration, and you didn't appeal. So, you decided to apply for an offer in compromise based on doubt as to collectibility. During this process, you convinced the IRS that the expenses were reasonable, and you explained why you no longer had the records. The IRS agrees that there is a doubt that the liability exists and reduces your tax bill.

Doubt as to Liability After Amending a Return

Here's another example. Say you filed a tax return that included the value of stock options from your employer, and you incurred the Alternative Minimum Tax (AMT). You paid most of your tax debt, but you couldn't afford to pay all of it. 

A few months later, you learned that your employer over-valued the stock options. You filed an amended tax return showing the new value of the stocks. Unfortunately, the IRS said that you need to pay the full amount of the original tax due before requesting a refund. 

You received an adverse decision on your amended return and didn't appeal. At this point, you can request an offer in compromise as to doubt as to liability. If the IRS agrees with your claim, it will reduce your tax debt. 

As you can see, in both of these examples, the taxpayer sought a different resolution before applying for the Offer in Compromise. In many doubt as to liability cases, you must first explore other alternatives before applying for this program. A tax pro can help you decide if this is the right option for your situation. 

Requirements for a Doubt as to Liability Offer in Compromise

The main requirement for a doubt as to liability offer in compromise is a legitimate doubt that the tax exists or a legitimate doubt of its amount. The doubt must be based on law. You cannot make this type of claim to make general disagreements about the fairness or constitutionality of income tax. 

You do not qualify for this type of offer in compromise if any of the following apply:

• There is already a final court decision about your tax debt. 
• You're involved in an open bankruptcy case. You can apply when your case is resolved.
• You owe restitution to the IRS. The IRS will not compromise restitution. 
• You've already had a doubt as to collectibility offer in compromise for the same tax year or the same tax debt. 
• You've made an election under Internal Revenue Code 965(i). This typically only applies to s-corps. A tax pro can give you more information. There are also special rules if you're deferring a tax liability under IRC 965(h)(1). 

How to Apply for Doubt as to Liability

To apply for an offer in compromise based on doubt as to liability, you need to file Form 656-L (Offer in Compromise (Doubt as to Liability)). Here is an overview of the instructions on how to fill out Form 656-L.

Section One Form 656-L

To get started, this form requires the basics such as your name, Social Security Number, address, and your spouse's information. Then, you note the tax period and the return filed. Form 656-L lists Forms 1040, 941, 940, and the Trust Fund Recovery Penalty, but if you owe other federal taxes, you can also note them. 

Section Two Form 656-L

If you're requesting a compromise on business taxes from Form 1120, 940, 941, etc, you must fill out section two of Form 656-L. This section is for taxpayers who doubt the liability of corporate income tax, employment tax, federal unemployment tax (FUTA), or other federal business taxes. 

Section Three Form 656-L

In section three of Form 656-L, you make your offer. The offer amount is the only thing you note in this section. When you're applying for doubt as to liability, the offer must be at least $1, and it should represent the amount you believe you owe for the tax. 

Section Four Form 656-L

Section Four of Form 656-L doesn't require any information from you. Instead, it lists the terms of the offer in compromise. When you sign at the end of the form, you agree to the following terms:

• You must voluntarily submit payments for the offer. 
• The IRS can keep any payments or tax refunds while the offer is being reviewed. 
• The IRS can keep proceeds from levies such as bank levies or wage garnishments related to this tax debt until an IRS official signs the offer and acknowledges it as pending.
• Once the offer is pending, the IRS cannot serve any levies. 
• If the offer review process reveals that the IRS collected too much, the IRS will return the over-collected amounts. 
• You remain liable for the tax, penalties, and interest while the offer is pending. 
• You have the right to appeal a rejection within 30 days. If you don't protest within 30 days, you waive your right to an appeal hearing.
• If the IRS has not processed your application within 24 months, your offer will be automatically accepted. 
• If you don't meet the terms of the offer, the IRS has the right to sue you or levy your assets for the original amount of the tax debt plus interest and penalties minus payments you've made. 
• You authorize the IRS to contact third parties as necessary when reviewing your offer. 

By submitting an offer in compromise application, you agree to extend the statute of limitations on tax assessment for the length of time while the offer is pending, plus an extra year if the IRS rejects or terminates your agreement. If you don't want to extend the statute, you can still apply, but the IRS doesn't have to consider your offer. In this case, the statute will still be extended for the length of time the offer was pending plus an extra month after rejection or termination. 

Section Five Form 656-L

Section five is the most important part of Form 656-L. In this section, you get to explain why you believe that you don't owe the tax. To be effective, you need to be thorough and have a good understanding of the tax code. A tax pro can help to ensure you complete this part correctly. If you need extra room, attach additional sheets. Note your Social Security Number or Employer Identification Number on each sheet for references. 

Section Six Form 656-L

In section six, you and your spouse sign your names. Corporate officers should sign in this section if you're applying for a business. You can also check a box to allow the IRS to contact you by phone about your offer. 

Section Seven Form 656-L

If someone filled out this form for you, you should note their information in this section. You can note anyone who helped you. This section isn't just for paid preparers. 

Section Eight Form 656-L

Paid preparers should fill out section eight. If you handle this form on your own, simply leave this section blank. If you want someone to represent you about this matter to the IRS, you should also attach Form 2848 (Power of Attorney and Declaration of Representative) or Form 8821 (Tax Information Authorization). 

Supporting Documents for Form 656-L

When you file Form 656-L, you must include documents supporting your claim. The documents will vary depending on your situation. A tax pro can help you ensure you include the right documents. 

Alternatives to Offer in Compromise Doubt as to Liability

Here is an overview of several different situations where your tax debt may be incorrect. Still, you shouldn't necessarily apply for an offer in compromise based on doubt as to liability. Instead, you should use the other resolution programs explained below. 

You can't afford to pay the tax due. 

If you agree with the amount of tax due but cannot afford to pay it, you can still apply for an offer in compromise. But rather than applying based on doubt as to liability, you need to apply based on doubt as to collectibility. Use Form 656-B (Offer in Compromise Doubt as to Collectibility). 

Your tax debt is incorrect due to mistakes you made on your tax return.

In this situation, you should amend your return. Depending on the return you filed, you should use Form 1040-X (Amended US Individual Income Tax Return), Form 1120-X (Amended US Corporation Income Tax Return), or Form 709 (US Gift Return). 

If the IRS rejects your amended return, you may be able to appeal or request an audit reconsideration. Alternatively, rather than appealing, you may apply for an offer in compromise based on doubt as to liability. 

Your tax bill is incorrect because the IRS filed your return. 

In some cases, when you don't file a tax return, the IRS may file a return on your behalf. The agency may file a substitute-for-return for your individual or business returns. These returns are often incorrect. 

In this case, you should file the return that was filed on your behalf. Depending on the situation, this may be Form 1040 (Individual Income Tax Return or a business return such as Form 941 (Employer's Quarterly Federal Tax Return). 

Your tax debt is incorrect due to an audit. 

If the IRS changes your return due to an audit, you may end up with a tax debt you don't agree with. To contest the tax, you should request an audit reconsideration. Requesting an audit reconsideration reopens the audit and allows you to present new information. 

Note that you can't request reconsideration if you already paid the full tax debt. Instead, you should file an amended return. 

You disagree with penalties on your tax bill.

If you disagree with penalties, you may qualify for penalty abatement. The IRS is often willing to remove penalties, especially for first-time offenders who have reasonable cause. To request penalty abatement, file Form 843 (Claim for Refund and Request for Abatement). 

You disagree with changes the IRS made to your return based on unreported income. 

This scenario occurs when the IRS's info on file doesn't match the info on your return. For instance, if the income you report is lower than the income shown on the W2 your employer sent to the IRS, you have unreported income. Similarly, if the IRS receives a 1099 form in your name but doesn't see the income on your return, you also have unreported income. 

When this happens, the IRS will send you a CP2000 notice. The notice outlines the steps you should take if you disagree with the IRS's changes to your return. 

The tax is incorrect due to inconsistencies between Forms W2/W3 and Forms 941, 943, 944, 945, or 1040 Schedule H.

At the end of the year, employers send W2 and W3 forms to the Social Security Administration (SSA) to report how much their employees have earned through the year. Most employers also file Form 941 quarterly. Or they may file one of the following returns annually: Form 943 for farmworkers, Form 944 for very small employers, Form 945 for non-employees, or Schedule H for household employers. 

The IRS and SSA use Combined Annual Wage Reporting (CAWR) to ensure their information matches. If there is a discrepancy that indicates an underpayment of tax, the IRS will send you a notice and open a CAWR case. To address the issue, figure out which form had the mistake. Then, submit a corrected version of the form to the IRS or SSA.

The incorrect tax is due to the Affordable Care Act or marketplace tax.

The Affordable Care Act (ACA) allowed the government to assess a penalty on your tax return if you didn't have health insurance for the full tax year. The penalty was eliminated at the end of 2018. As part of the ACA, the government also issues tax credits to people who purchase insurance on the marketplace. If your income is too high, you may have to repay some of the credits. 

If you have a tax liability due to these types of issues and you disagree, you should not use the doubt-as-to-liability program. Instead, you should file an amended return. The amended return should clearly indicate that you do not owe the ACA or marketplace tax. 

The tax liability is incorrect because you were misclassified as an independent contractor or an employee.

Your employment status has a direct effect on your tax liability. If your employer misclassifies you as an independent contractor, you will incur self-employment tax. This covers Medicare and Social Security, and it's double the amount you pay as an employee. 

On the other hand, if your employer misclassifies you as an employee, you will not be able to deduct expenses from your income as you can when you're an independent contractor. Depending on the situation, both types of misclassifications can create an incorrect tax debt. 

If you're dealing with this issue, you should file Form SS-8 (Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding). The IRS will use the information on this form to determine your correct employment status. Then, your tax debt will be adjusted based on the determination. 

You believe the tax owed is due to your spouse or ex-spouse's actions.

If the tax is due exclusively to your spouse or ex-spouse's actions, you should apply for innocent spouse relief. For example, imagine your spouse was hiding income from you. They didn't report it on your tax return, and the IRS sent you a bill for the tax and penalties. Because you didn't know about the underreported income, you may qualify for this program. If you don't qualify for classic innocent spouse relief, you can apply for separation of liability relief or equitable relief.  

To apply, file Form 8857 (Request for Innocent Spouse Relief). If the IRS has kept your joint refund to cover a liability due just to your spouse (such as child support or back taxes), you may need to file Form 8379 (Injured Spouse Allocation). 

If you have exhausted all of these other options, you can apply for doubt as to liability. Doubt as to liability cases requires a very firm understanding of the tax code. If you want your claim to be successful, you should work with a tax pro who has experience with this program. 

What If You Agree With the Tax But Can't Pay?

As indicated above, the doubt-as-to-liability program applies when you doubt the liability of the tax. If you agree with the legitimacy of the tax, you should not use this program. Instead, you need to apply for an offer in compromise based on doubt as to collectibility. 

If you submit applications for both types of offers in compromise, the IRS will return the doubt as to collectibility application. The agency will not review that application. 

Effective Tax Administration

Effective tax administration (ETA) produces equity and fairness in the tax collection system. This option doesn't apply to people who doubt the legitimacy of the tax. Instead, it comes into play if you can technically afford to pay the tax or an offer, but doing so would cause economic hardship. ETA can also apply in cases where there is a compelling equity consideration for compromising the tax.

You need exceptional circumstances to qualify for this option. Most people who settle taxes this way are very advanced in age or have serious illnesses. For example, imagine someone who could sell assets to pay their taxes. However, their child has a chronic illness, and they may need to sell the assets to cover their child's expenses. 

Get Help With Doubt as to Liability

Facing a tax debt that you don't think is legitimate? Not sure what to do? You may qualify to reduce your tax debt based on doubt as to liability. To learn more, contact a tax professional today.

Using TaxCure's search feature, you can search for a local tax pro experienced with offer in compromise filings. They can talk with you about your situation and help you find the best resolution option for your situation.