Tennessee: Tax Resolution Options and Consequences of Unpaid Taxes

The Tennessee Department of Revenue (DOR) is responsible for administering tax laws and collecting taxes in Tennessee. The Tennessee DOR collects business tax, franchise and excise tax, inheritance tax, professional privilege tax, sales and use tax and several other types of taxes. 

If you have unfiled returns or unpaid taxes in Tennessee, the Collection Services Department of the Tennessee DOR may pursue collection activities on your account. This guide explains the resolution options for delinquent taxes in Tennessee, and it goes over the collection activities used in this state so you know what to expect.

Delinquent Tax Resolution Options in Tennessee

To protect yourself and your business, you should make arrangements to pay delinquent taxes as soon as possible. Tennessee offers the following tax resolution options. 

Payment Plan

Tennessee taxpayers who owe at least $300 in delinquent taxes may be able to set up a payment plan. An installment plan agreement (IPA) lets you pay off your tax bill in monthly installments over a two to 60-month time period, but you must meet specific criteria to qualify.

Offer in Compromise

An offer in compromise (OIC) is when the state agrees to settle your tax liability for less than you owe. To qualify, you must convince the state that you are unlikely to be able to pay the balance in full now or at any time in the next five years. The application process for an OIC is detailed and time-consuming.

Innocent Spouse Relief

Because Tennessee does not have an individual state income tax, the state does not offer innocent spouse relief. However, Tennessee residents who owe a federal tax liability exclusively due to their spouse or ex-spouse may qualify for innocent spouse relief on the federal level. 

Additionally, taxpayers who have lost their federal refunds due to their spouse's liabilities, such as unpaid child support, may be able to use injured spouse relief to reclaim their portion of the tax refund.

Hardship Status

The Tennessee DOR does not offer tax relief based on hardship status. However, state law does offer property tax relief for elder or disabled homeowners and disabled veterans and their surviving spouses. 

Penalty Abatement

The Tennessee Department of Revenue offers waivers for penalties assessed due to unfiled returns, unpaid taxes, and underpaid taxes. You may also be able to get a waiver for penalties incurred for not filing returns electronically when the DOR requires them to be filed electronically.

As long as the penalties aren't due to disregard of the law or gross negligence, you may qualify for a waiver if you have reasonable cause and a positive filing record for the last two years. You also must have already paid the delinquent tax.

You can apply for a penalty waiver through the Tennessee Taxpayer Access Point (TNTAP) or email a Petition for Waiver of Penalty to penalty.waivers@tn.gov. The Attorney General must approve penalty waivers of $100,000 or more. 

The application requires your name, Employer Identification Number (EIN) or state tax account number, the tax period, the date the tax was paid, and the penalty amount. Then, you must explain why your taxes were delinquent and why the penalties should be waived.

Appeals Process

If you receive a proposed assessment, you have the right to request an informal conference or file a suit in the relevant chancery court. You must request the informal conference in writing within 30 days of receiving the assessment, and if you don't take action, the proposed assessment becomes final on the 31st day. 

At the conference, you can discuss the proposed assessment and the final assessment and denial or deemed denial of a claim for refund. You may be able to resolve your concern without an informal conference if any of the following apply:

• You received an estimated assessment.
• You filed a return but didn't pay the tax reported due on the return.
• You closed your business but didn't close your tax account.
• You were assessed a penalty, but no additional tax was due — in this case, you may need to submit a penalty waiver request. 

The Tennessee DOR will contact you within ten days of receiving your request to set up an informal hearing. You cannot appeal tax based on your information on a tax return. The appeal's process only refers to assessed taxes. 

If you disagree with the final assessment, you have 90 days to file suit in chancery court in the county where you reside or perform the majority of your business activities. Note that you don't have to go through an informal conference first — you can file a suit at any time after your assessment is final.

If you don't file a suit within 90 days of the final assessment, you can pay the assessment, request a refund, and then file a suit when the refund is not paid. 

Interest will continue to accrue on your tax bill after requesting an informal conference or filing a suit. The state may also place a lien on your assets, but it will not apply any state tax levies until after the conference or the lawsuit.

Voluntary Disclosure

Tennessee does not have a tax amnesty program at the time of writing, but the state does offer a Voluntary Disclosure Agreement. These agreements are available for any tax administered by the DOR, but the DOR must not have contacted you about the tax to qualify. 

You agree to pay your prior tax liability and register to make payments for future tax periods by signing a Voluntary Disclosure Agreement. In exchange, the DOR agrees to give you a limited lookback period and reduce or waive penalties. For example, if you agree to pay the last three years of taxes that you missed, the DOR may agree to not look at any years prior to that time period. Note these are just sample numbers.

To apply for this program, you should write a letter explaining the situation and email it to voluntary.disclosure@tn.gov or mail it to the Audit Division – Discovery Unit, P.O. Box 190644, Nashville, TN 37219.

Collection Enforcement Actions for Delinquent Tax in Tennessee

Tennessee uses a variety of techniques to collect delinquent taxes. The state typically sends several notices before turning to collection activities. To protect yourself, your business, and your assets, you should try to make arrangements as soon as possible to avoid collection actions. Here are the collection actions used by the Tennessee DOR.

Tax Liens

A tax lien is when a taxing entity places a lien on your assets, and if you sell the assets, part or all of the proceeds go to the lienholder. The DOR has the right to place liens on your assets if you have delinquent taxes. Typically, liens do not start until about 120 days after receiving the original Notice of Proposed Assessment.

Tax Levy

A tax levy is when the government seizes your assets to pay delinquent taxes. Levies may include garnishing your wages, taking the funds in your bank account, or selling your assets. The Tennessee Taxpayer Bill of Rights says that the DOR must provide you with a notice at least ten days before enforcing a levy on your assets and at least 30 days before liquidating your seized assets. 

Tax Penalties and Interest

The Tennessee DOR charges a penalty of 5% of the unpaid tax for every month or part of a month that the tax is unpaid, up to 25%. For instance, if you owe $1,000 in tax, you incur a $50 penalty every month it is late, and the penalties may go up to $250. In contrast, if you owe $2,000, the monthly penalty is $100, and it can get up to $500.

Interest also accrues on delinquent taxes in Tennessee. On most accounts, interest starts accruing when the tax is due, but on unpaid inheritance tax, interest starts accruing within nine months after the decedent’s death. As of October 2021, the interest rate is 7.25% (effective until June 30, 2022), but if you're making payments through an installment agreement, the interest rate is 9.25%. 

Notices for Delinquent Taxes in Tennessee

The DOR sends taxpayers a Notice of Proposed Assessment if they have unpaid taxes due to a filed return, an estimated return, or an audit. If they don't respond, the DOR will create a collection case and send a Final Demand for payment about 45 days later.

The Final Demand for Payment explains how much the taxpayer owes and what returns they need to file. It also says the DOR may pursue collection actions such as liens and levies if the taxpayer doesn't respond within ten days. 

At that point, a revenue collection agent will try to reach the taxpayer over phone, email, or even text to resolve the issue. If they cannot get a resolution, the DOR will send an Intent to Levy or Lien letter. This letter typically comes about 110 days after the Notice of Proposed Assessment, and it gives the taxpayer two weeks to make arrangements on their tax liability.

Statute of Limitations

In Tennessee, the statute of limitations on tax collection is six years. The six-year collection period pauses upon the imposition of a bankruptcy stay or any other proceedings that prohibit collection activities, but it resumes once the end of the proceedings. 

The six-year period starts on January 1 of the year during which the taxes were incurred, but if a return was required, taxes should be assessed within three years from December 31 of the year the return was filed. No collection actions can be taken at the expiration of that period. 

Suppose the IRS adjusts a taxpayer's income in a way that leads to the taxpayer owing franchise, excise, or estate tax. In that case, the collection statute expires two years from when the commissioner notified the taxpayer of the revision. The statute of limitations doesn't apply to ad Valorem taxes. 

Get Help Resolving Tax Issues in Tennessee

If you're having trouble dealing with the Tennessee DOR, you should contact a tax professional. A tax specialist experienced with Tennessee tax laws and resolution methods can help you negotiate a payment plan, appeal a proposed tax, or address other tax concerns. At TaxCure, we have a unique ranking algorithm to help taxpayers find the best taxpayer to help with their unique problem. You can view the results here of the top tax professionals that help with Tennessee tax problems.

Colorado: Tax Options & Consequences of Back Taxes

The Colorado Department of Revenue collects personal income tax and business taxes in Colorado. If you don't file your return or pay your taxes, the DOR will issue a bill and start collection action on your account. 

The CO DOR may also refer your bill to a third-party collection agency. As of 2021, BC Services, based in Longmont, Colorado, and Integral Recoveries, Inc, based in Englewood, Colorado, are the collection agencies used by the DOR. If the Colorado DOR places your delinquent taxes with these agencies, you must work with them to take care of your outstanding liability. 

Here's an overview of what to expect if you owe back taxes in Colorado. 

Resolution Options for Colorado Back Taxes

The Colorado DOR has the following options available to people and businesses who cannot pay their taxes. You must apply and get approved for these programs. There is no automatic relief on back taxes.

Payment Plan

Individuals and businesses may qualify to pay back taxes on a payment plan. Individuals can apply online, but businesses need to speak with a compliance agent. 

You must pay at least $25 per month, and the amount of time you can take to pay off the liability varies. While you're on a payment plan, interest will continue to accrue on your balance, and the state of Colorado will keep your state and federal tax refunds and apply them to your balance. 

Offer in Compromise

Colorado's offer-in-compromise program allows you to pay off your tax bill for less than you owe. To qualify for an offer-in-compromise in Colorado, you must first apply and be accepted for an offer-in-compromise from the IRS for the same tax year. 

You also must meet other strict criteria and provide the state with detailed information about your financial situation. In most cases, the IRS and the Colorado DOR will only accept an offer if it represents the most money the agencies are likely to be able to collect from you.

Innocent Spouse Relief

Both taxpayers are responsible for the tax when you file as married filing jointly. But in rare cases, you may qualify for innocent spouse relief if you can prove that you should not be liable.

To obtain innocent spouse relief in Colorado, you must first obtain relief on your federal tax bill. Use Form 8857 to request innocent spouse relief from the IRS. If the IRS accepts your request, the Colorado DOR will also accept your request, but you need to send in paperwork. The process is not automatic.

To apply for innocent spouse relief in Colorado, send a request and a copy of your determination from the IRS to the following address:

Colorado Department of Revenue 
Innocent Spouse Desk, Room 240
PO Box 17087
Denver, CO 80217-0087 

Hardship Status

The Colorado Department of Revenue does not offer hardship status to delinquent taxpayers, but if you cannot afford to pay your tax bill, you have options. As explained above, you may qualify to reduce your tax bill through the offer in the compromise program. 

Alternatively, if you apply for a payment plan and cannot afford the payments, you can request lower payments. You just need to submit DR6596 (Statement of Income and Expenses). This form requires detailed information about your income, assets, and living expenses. If you can prove that you cannot afford to pay much, the DOR may be willing to accept very low payments on your account.

Penalty Abatement

Colorado does not advertise a penalty abatement program. But a tax professional may be able to help you contact the state and request to have the penalties removed from your account. 

Appeals Process

If the Colorado Department of Revenue makes changes to your tax return, you will receive a Notice of Deficiency or Rejection of Refund Claim. This letter will explain the protest process and the documents you need to provide. 

To file a protest, you must request a hearing with the Executive Director within 30 days of the mailing date of the notice. If preferred, you can request to file a written brief instead of having a trial. 

To protest Colorado taxes, write a letter with the following details:

• Your name and address.
• The source code from your letter. 
• Tax amount, tax type, and tax period. 
• A list of the elements you disagree with. 
• If you want to file a brief instead of having a hearing. 
• Your signature.

Then, you can mail your letter to the Colorado Department of Revenue or submit it through Revenue Online. Make sure to include a copy of the notice you received. 

Enforcement Actions for Colorado Back Taxes

If you owe back taxes, the DOR can use a range of different enforcement actions. Here are some of the collection actions that may occur when you have delinquent taxes in Colorado. 

Tax Liens

The Colorado DOR can file a judgment lien against your assets if you owe back taxes. A tax lien is the state's legal claim to your assets. It can attach to all your assets (real estate, vehicles, etc.), and you cannot sell the asset unless you pay the tax bill first.

The Colorado DOR will send a Notice of Intent to Issue Judgment/Lien to your last known address. To stop the lien, you must pay your tax bill within ten days of the date of the notice. 

You must pay certified funds such as cashier's checks or money orders. To ensure your payment is credited in time, you should not mail it. Once a lien is in place, it can be challenging to remove. 

Tax Levy 

A tax levy is when the Colorado DOR seizes your assets to cover your unpaid taxes. The state may seize bank accounts, property, and wages. In Colorado, a wage garnishment tends to be the most common type of levy. 

The DOR will send a letter notifying you that they will garnish your wages. You have 30 days to pay your tax bill in full or make arrangements to resolve the liability. If you have received this letter, you need to contact a tax pro or reach out directly to the DOR. 

Once the wage garnishment is in place, the state will not remove it until you have paid your tax liability in full. You cannot set up a payment plan at this point. Additionally, if you make a partial payment, it will not stop or reduce the garnishment. 

Typically, wage garnishments are 25% of your disposable pay. Disposable pay is your pay after Social Security, Medicare, and taxes. For instance, if you make $1000 per week after taxes, the state will typically take $250 every week. 

If your wage garnishment is causing financial hardship, you can request to reduce the garnishment. You must send the following to the state: 

• Form 6596 (Statement of Income and Expenses)
• Form 6597 (Waiver of the Statute of Limitations)
• Copies of your most recent paycheck stubs
• Your spouse's paycheck stubs, if applicable
• Colorado income tax returns
• The fax number for the payroll department of your employer

With the first form, you provide the state with detailed information about your financial situation. With Form 6597, you agree to give the state more time to collect the tax. You may want to consult with a Colorado tax professional before submitting either of these forms. 

Tax Penalties Charged

If you do not file your income tax return or make your payment on time, the Colorado DOR will assess a penalty of 5.5% of the tax due each month or partial month, up to a total of 12%. If you owe less than $100, your penalty is $5 per month. 

For example, if you owe $1,000, the penalty for the first month will be $55. This penalty applies the very first day you are late. If you don't pay by the next month, you'll incur another $55 penalty, but your total penalty will not exceed $120. 

In Colorado, the penalties for paying sales tax, marijuana sales tax, cigarette tax, and other business taxes range from 10 to 30% of the unpaid tax. On top of that, the DOR also charges a flat penalty for failure to file certain business tax returns.

Common Colorado Tax Notices

The Colorado DOR sends many different notices to individual and business taxpayers. Here are some of the state's most common notices, along with a brief description:

• Notice of Deficiency — The DOR has made changes to your tax return, and you now owe a tax bill.
• Rejection of Refund Claim — The state had made adjustments to your return that prevented you from getting a refund. 
• Final Notice of Determination and Demand for Payment — Your tax liability is final. The state is demanding payment. 
• Statement of Account — The DOR generally sends a Statement of Account with the above notice. It shows how much you owe, payments made, and your account status. If you are in a payment plan, you will still receive the Demand for Payment, and the Statement of Account will show which of your tax liability is in the payment plan. 
• Notice of Intent to Issue Garnishment — This is a courtesy letter the DOR sends before notifying your employer of the garnishment. You have 30 days to make arrangements or pay the tax owed.
• Intent to Issue Judgment/Lien — You have ten days to pay your tax bill, or a lien will apply to your assets when you receive this letter. 

The Colorado DOR issues letters when you miss filing deadlines, don't file tax returns or have unpaid taxes. It also sends notices if it adjusts your return. 

Statute of Limitations on Colorado Taxes

The statute of limitations on Colorado taxes is six years from the latter of the date on which the tax was due, or the return was filed. If the failure to collect the tax was based on an error or omission from the government, the statute of limitations is just two years. In cases of tax fraud, there is no statute of limitations. 

Get Help With Colorado Back Taxes

Dealing with unfiled returns and back taxes in Colorado can be confusing and stressful. To ensure you get the best result for your situation, you need to work with a tax pro who's experienced with the Colorado DOR. To learn more, contact a Colorado tax pro today.

New Jersey Consequences of Unpaid Taxes & Docket Judgements

If you have unpaid taxes in New Jersey, the state may use private collection agencies, liens, levies, and other collection tactics to claim its funds. The New Jersey Division of Taxation takes unpaid taxes very seriously, and ignoring your tax bill can lead to significant consequences.

If you have past due taxes (deficiencies) or unfiled returns (delinquencies) in New Jersey, here is what to expect.

New Jersey Tax Collection Process

The New Jersey Division of Taxation will try to contact you through the mail and phone if you have unpaid taxes. The division will refer your unpaid taxes to a private collection company if you don’t respond. 

Currently, the private collection company is Pioneer Credit Recovery. As of 2021, when the case is referred to the collection agency, a Referral Cost Recovery Fee of $10.75 is added to the tax liability.

Certificate of Liability (COD) in New Jersey

If you ignore the collection agency, a Certificate of Liability (COD) will be filed with the Clerk of the New Jersey Superior Court. Once the COD is filed, the case is returned to the State for further collection activity.

In New Jersey, a COD is a tax lien filed against you. A tax lien is the state's legal claim to your assets in relation to your unpaid tax liability. It secures the state's interest and carries the same effect as a Docketed Judgment. 

COD vs. a Docketed Judgment

A docketed judgment is a judgment entered in court. A tax lien, in contrast, is filed with the Clerk of the New Jersey Superior Court. Although the filing process is different, both COD and Docketed Judgments create an official notice of the lien against you. They both allow the state to take the next step to a levy. 

Bank Levies in New Jersey

Once a COD or Docketed Judgment is issued, the state will send a bank levy to your bank requesting that they forward the required amount to the state. By law, banks must comply with these orders. 

If your bank receives a levy notice from the state, it will put a hold on the funds, and it must send them to the state in a certain amount of time. 

How to Remove a COD in New Jersey

To remove a COD, you must pay the balance in full with certified funds. Paying the balance in full is also called satisfying the docketed judgment. The final payment may include interest and penalties, making it more than your original tax bill. You can contact the state to find your pay-off amount.

Judgment Payoff Request

To find out the amount of your judgment pay off, contact your assigned caseworker. If you don't have a caseworker, complete a Judgment Payoff Request Form. 

This form simply needs your name, address, and Social Security Number, as well as your lien or docket judgment number and the date filed. Then, you can submit it through email, fax, or mail.

• Email: judgments.taxation@treas.nj.gov.
• Fax: (609) 292-9614
• Mail: NJ Division of Taxation Judgment Section, PO Box 245, Trenton, NJ 08695-0245

Release or Subordination of New Jersey Tax Lien

Tax liens attach to your assets, and they can prevent you from selling or refinancing your assets. In New Jersey, you may be able to obtain a release or subordination of your tax lien if you can prove financial hardship. 

A release simply means that the state removes the tax lien. A subordination means that the state allows another creditor to claim first rights to the asset. 

For example, the state may attach liens to your motor vehicles if you have unpaid taxes in New Jersey. If you want to sell the vehicle to pay off your tax liability, you will need to request the lien removed. However, if you want to take out a loan against the vehicle and use it to pay off your taxes owed, the state will need to subordinate its lien to the new lender. 

To apply for a release or subordination of your tax lien, contact your caseworker or email the Judgments Unit at judgments.taxation@treas.nj.gov. There is no official form to request release or lien subordination in New Jersey. You may want to work with a tax professional to get help with this process. 

Statute of Limitations in New Jersey

New Jersey has a twenty-year collection statute as opposed to the IRS collection statute of ten years. This time limit gives New Jersey an extra decade to collect unpaid state taxes. This means that even if you have old IRS tax liabilities that have expired, your New Jersey tax bill from the same time period may still be active. 

Get Help With New Jersey Back Taxes

Don't let the New Jersey Division of Taxation issue COD, place liens on your vehicles, levy your bank account, or engage in other tax collection actions. Instead, contact the state and make arrangements now. 

New Jersey offers payment plans, closing agreements, and penalty abatement to taxpayers with unpaid tax liabilities. Contact a New Jersey tax professional today to get help with unfiled returns or unpaid taxes. They can help you deal with NJ taxes and get the best resolution for your situation. Charles Montecino, the author of this article and a CPA located in Pitman, NJ, has extensive experience resolving New Jersey tax problems.

South Carolina Department of Revenue: Offer in Compromise Program

Qualifying taxpayers can reduce their South Carolina tax bill with an offer in compromise. The South Carolina Department of Revenue (SCDOR) accepts offers in compromise on all individual and corporate taxes, except for sales and withholding taxes.

What's an offer in compromise? How can you reduce your state tax bill? An offer in compromise is when the state agrees to reduce your tax bill. Having an offer in compromise accepted can include removing penalties and reducing the tax bill itself. To use this program, you make an offer, and the SCDOR decides if it wants to compromise.

Qualifying for an offer in compromise is a tricky process, and for best results, you should consider working with a tax professional. They can help you apply, and if you're not eligible, they can direct you toward the best arrangement for your situation. Here's what you need to know.

Requirements for an Offer in Compromise in South Carolina

To qualify for an offer in compromise on South Carolina taxes, you must meet the following criteria:

• Owe at least $10,000.
• Be compliant with all current tax filing obligations.
• Made all current year withholding or estimated tax payments as required.

Additionally, the tax assessment cannot be related to a criminal investigation. If you have unfiled South Carolina returns, you need to file them before applying for an offer in compromise. Once you file unified returns, you can apply for an offer in compromise on all of your outstanding tax liabilities.

How to Apply for an Offer in Compromise

To apply for an offer in compromise, you must complete Form SC656 (Application for Offer in Compromise) and Form SC433-A (Collection Information Statement for Individuals) or Form SC433-B (Collection Information Statement for Businesses). These forms plus detailed instructions are available in the South Carolina offer-in-compromise pdf.

The offer-in-compromise application requires basic contact details about you or your business and information about your tax liabilities. Then, you note why you are requesting an offer in compromise and write out a detailed explanation of your circumstances. Finally, you make full financial disclosure on Form SC433A or SC433B and attach the requested supporting documents.

Reasons for Offers in Compromise

The SCDOR recognizes two valid reasons for offers in compromise:

• Doubt as to collectability
• Economic hardship

Doubt as to collectability refers to when the state doubts it will be able to collect more than the offer amount. Economic hardship applies when paying the entire tax liability would cause you financial distress.

When you fill out your offer-in-compromise application, you must note which of these reasons you're using. Then, you must explain why you should qualify. It's usually best to have a tax pro who understands the SC tax code write out the reason.

Making an Offer to the SCDOR

You must note the total offer and include a 10% downpayment when you make the offer. You also must tell the SCDOR how you obtained the funds.

When deciding whether or accept or reject your offer, the SCDOR considers the following elements:

• Your net equity in assets such as cash, bank accounts, investments, available credit, real property, personal vehicles, and personal assets.
• Disposable income which is defined as your income minus expenses. 
• Lifestyle factors such as whether you made extravagant purchases instead of paying your taxes due.

The SCDOR can only accept offers if they're in the state’s best interest. Acceptable offers must represent the most money that the taxpayer would be likely to pay between now and the end of the statutory collection period.

If you can afford to make installment payments, the SCDOR will reject your offer. Similarly, if the state can garnish enough wages to cover the full tax liability before the collection statute expires, it will not accept an offer in compromise. Or, if the SCDOR knows that you can sell assets to cover your tax bill, it will also not accept your offer.

Examples of Offers in Compromise

To help you understand how the SCDOR reviews offer, here are a few basic examples of the decision-making process.

Imagine that you owe $20,000 in South Carolina back taxes, and you offer to pay the SCDOR $5,000. The SCDOR looks at your financial disclosure, and they see that you have a boat worth $15,000 and an extra income of $500 per month. In this case, the state will assume that you can pay the bill in full, and it will not accept the offer.

On the other hand, if you have no assets and no extra income but you can borrow $5,000 from a relative, the state may be more likely to accept your offer. Again, the application process can be complicated, and you should consider working with a tax pro.

What Happens If the SCDOR Accepts Your Offer in Compromise?

The SCDOR will notify you by mail if they accept your offer. If accepted, you must pay the offer plus accrued interest within 30 days. After you pay the offer plus any extra interest in full, the state will release any tax liens against your assets. The SCDOR maintains the right to audit you for the tax period related to the offer as long as the audit is within the statute of limitations.

Once you have made the payment, you must stay compliant with the terms of the offer, or the SCDOR will reinstate your tax liability and start the collection process.

What Happens If the SCDOR Denies Your Offer in Compromise?

If the SCDOR denies your offer, the state will notify you by mail, and the 10% downpayment will apply to your tax bill. SCDOR expects you to set up a payment plan within 30 days, and if you don't make arrangements, the SCDOR will resume collection actions on your account 30 days after they made the determination.

OIC and Statute of Limitations

In South Carolina, the state has ten years to place a lien on your property after assessing a tax. The collection period is called the statute of limitations, and if the state doesn't take action during this time frame, it loses its opportunity to collect the tax.

When you apply for an offer in compromise, the SCDOR pauses the statute of limitations on your account. The pause remains in place while the department reviews your application. Then, the statute of limitations continues to be paused until you pay the accepted offer and while you are completing the terms of your offer.

If you don't pay the offer, or break the terms, the collection period will start again. To give you an example, imagine that nine years have passed since the SCDOR assessed the tax. The state has one year left to collect your tax liability. You apply for an offer in compromise, so the state pauses the clock.

The state accepts your offer, and you pay it, but you forgot to file a tax return six months after your initial application. This breaks the terms of your offer. At this point, the clock starts running again, but the state still has a year to collect the outstanding balance. Because the statute of limitations was paused, the state has not lost that collection time.

Tax Refunds After Offer in Compromise

The SCDOR has the right to keep any tax refunds issued during the offer’s calendar year. For example, if the SCDOR accepts an offer in compromise in January 2022 and you have a refund when you file your state tax return in April of 2022, the SCDOR will keep that.

Bankruptcy and Offers in Compromise

If you file bankruptcy before the offer is completed, the SCDOR will file a claim for the entire amount of the tax liability.

Collection Actions With Offers in Compromise

In most cases, the SCDOR pauses collection actions on your account when you apply for an offer in compromise. Still, if needed, the department can continue collection activity while reviewing your offer in compromise.

If you have an existing payment plan, you must continue to make payments while the department reviews your offer-in-compromise application. The payments will not be considered part of the offer in compromise. Additionally, if the SCDOR has a levy in place, any funds collected from the levy will also not count toward the offer.

Get Help Applying for an Offer in Compromise

South Carolina is serious about collecting delinquent taxes, and if you want to try to reduce your tax bill, you should work with a professional who understands the state's tax code. At TaxCure, we have a directory of tax professionals from around the country. View this search here that shows the top-rated professionals that have experience in handling South Carolina offer in compromise submissions.

SC Department of Revenue: Payment Plans

If you owe back taxes to the South Carolina Department of Revenue (SCDOR), you may qualify for a payment plan if you cannot afford to pay your tax bill in full. A payment plan allows you to pay off your tax liability in monthly installments, and the SCDOR offers payment plans on both individual and corporate back taxes. 

Here's what you need to know if you want a payment plan on your South Carolina back taxes.

Payment Plan Terms on South Carolina Taxes

If you owe individual income tax or GEAR debts, the SCDOR may be willing to give you up to four years to pay off your bill. Here are the terms based on how much you owe:

• 0 to $999 — 12 months or less
• $1,000 to $4,999 — 24 months or less
• $5,000 to $9,999 — 36 months or less
• $10,000 and above — 48 months or less

For example, if you owe $3,000, you may be able to make payments over a 24-month time period, but if you only owe $700, you must be able to pay off your balance in 12 payments or less.

The state determines payment plan term lengths for business taxes on a case-by-case basis.

How to Apply for a Tax Payment Plan in South Carolina

Individuals can apply for a payment plan using the following methods:

• In-person at their nearest SCDOR office.
• Through the mail using forms FS-102 (Payment Plan Request) and FS-102B (Waiver of Rights and Consequences).
• Online at the SCDOR website.

Businesses can only apply for a payment plan if they have received a payment plan request from the SCDOR, and they must use one of the following application options:

• In-person at the nearest SCDOR office.
• Through the mail using Forms FS-102 and FS-102B.

Whether you apply in person, through the mail, or online, you need to provide the SCDOR with the information requested on Form FS-102. This short single-page form requires your name or business name, contact info, the total balance due, and your proposed monthly payment amount.

Regardless of how you apply, there is a $45 application fee, and the SCDOR applies this amount to your balance.

Downpayments on SC Tax Payment Plans

If you want to pay online or with checks or money orders, you must include a downpayment with your application. The required downpayment is 10% of your GEAR balance and 20% of your individual income tax payments.

However, if you agree to make your payments with direct debit, you do not need to include a downpayment. You just provide the SCDOR with your checking account information, and you choose the date you want the SCDOR to withdraw your payments each month.

How to Determine Your Monthly Payment Amount

You can calculate your minimum monthly payment by dividing your total amount due by the maximum length of your payment plan.

For example, if you owe $12,000, you can take up to 48 months to pay off your balance. When you divide $12,000 by 48, you get your minimum monthly payment of $250.

If you want to pay off your balance faster, you can suggest a higher monthly payment, but the SCDOR will not accept a payment lower than this amount.

Terms of SC Tax Payment Plans

You must meet the following terms and obligations as you make payments on your South Carolina back taxes:

• File all required tax returns. 
• Pay all new tax liabilities in full.
• Stay current with estimated income tax payments.
• Provide the SCDOR with additional information if requested.

If you fail to meet these requirements, the SCDOR will consider you in default, and the agency can start pursuing collection actions on your account.

SCDOR's Obligations to Taxpayers Making Payments

The SCDOR will not seize or levy your property when you set up a payment plan, but the state may issue a tax lien to secure its interest. Additionally, the SCDOR has the right to claim tax refunds or lottery winnings. These amounts will be applied to your balance, but they will not take the place of your agreed-upon monthly payments.

The SCDOR has the right to request information about your financial situation when you're in the midst of a payment plan. But if the department decides to change your payment plan due to an improvement in your financial situation, it must notify you in writing at least 30 days in advance.

If you default on your payment agreement, the SCDOR has the right to take legal action against you. In the case of default, the SCDOR can force immediate collection of the tax.

How to Make Changes to Your SC Payment Plan

Individuals can request changes to their payment arrangements using Form FS-147 (Payment Plan Change Request). You can use this form to change your bank draft information or payment date.

You may also use this form to add an additional bill to your payment plan. You can only add an extra bill once, and you must pay off the extra bill within 12 months.

Businesses cannot use Form FS-147. If you want to make changes to a payment plan for business taxes, you must contact the SCDOR directly.

Get Help Applying for an SC Payment Plan

Contact an SC tax pro today to get help applying for a payment plan on South Carolina back taxes. A tax professional experienced with the SCDOR can help you identify the best resolution option for your situation, and they can help you negotiate the best arrangement possible.

At TaxCure, we have a unique ranking system. You can view the top-rated professionals that can best help you with a South Carolina Payment plan.

South Carolina: Tax Resolution Options and Consequences of Back Taxes

The South Carolina Department of Revenue (SCDOR) collects individual income tax, estate tax, and other personal and business taxes. If you have unpaid taxes, the SCDOR can place liens on your property, garnish your wages, revoke business licenses, or take other collection actions.

However, the department is also willing to make arrangements with taxpayers who have unpaid state tax liabilities. This guide looks at the tax resolution options in South Carolina, and then it explains what the SCDOR can do if you don't pay your tax bill.

Tax Resolution Options for South Carolina Back Taxes

If you have back taxes in South Carolina, you may be able to make various arrangements. The SCDOR offers payment plans, offers in compromise, and other tax relief programs to delinquent taxpayers.

Here are the main options for people who owe back taxes in South Carolina. 

Payment Plans for South Carolina Taxes

The SCDOR allows both individuals and businesses to make payments on their tax liabilities. To qualify, you must have received a notice to request a Payment Plan Agreement, and you cannot have an active garnishment or levy from the SCDOR.

Payment plan terms vary based on how much you owe. Individuals can get up to 48 months to pay off their tax bills, but businesses need to contact the SCDOR directly. You can request a payment plan online or by emailing Brian at Brian.Smith@dor.sc.gov.

South Carolina Offer in Compromise

An offer in compromise lets you pay off your tax bill for less than you owe, and the SCDOR accepts offers in compromise due to doubt as to collectibility and economic hardship.

Doubt as to collectibility refers to situations where the department doubts it will ever be able to collect the tax liability. Economic hardship applies in situations where the taxpayer can't pay due to exceptional circumstances. It also applies if paying the bill would place undue hardship on the taxpayer.

You can apply for an offer in compromise using Form SC656 (Application for Offer in Compromise). This PDF contains the instructions, application, and a list of supporting documents. It also includes Form SC433A (Collection Information Statement for Individuals) and Form SC433B (Collection Information Statement for Businesses).

Innocent Spouse Relief

The SCDOR offers innocent spouse relief to taxpayers who need relief from tax liabilities due exclusively to their spouse or former spouse. You can apply for innocent spouse relief if you have received a proposed assessment or had a tax refund applied to a tax liability for which your spouse was liable. To apply, use Form SC8857 (Request for Innocent Spouse Relief).

Hardship Status

The Internal Revenue Service (IRS) will stop collection activity on your account if you qualify for hardship or currently not collectible (CNC) status. Unfortunately, the SCDOR does not advertise a similar program, but the state may be willing to accept offers in compromise from taxpayers experiencing economic hardship.

Economic hardship is for people who cannot pay their tax liabilities due to exceptional circumstances. You may also qualify if paying the tax liability in full would place unfair economic pressure on you.

Penalty Abatement on South Carolina Taxes

In South Carolina, you can apply for penalty abatement using Form C530. This concise form requires basic contact information and details about the tax you owe. Then, it prompts you to explain why the SCDOR should waive your penalties.

The application requests you to back up your request with relevant parts of the tax code. You may want to work with a tax professional to improve your chances of success.

South Carolina Tax Appeals Process

If you disagree with a tax assessment, you can file a protest with the SCDOR. The SCDOR Appeals Section and the SCDOR Litigation Section will review your protest. The Litigation Section will issue a Department Determination, and if you still disagree, you can request a contested case hearing.

Amnesty Program

At the time of writing, South Carolina does not have an active tax amnesty program. The SCDOR offered amnesty in 2015.

However, the state does have a voluntary disclosure program. If you haven't been paying or filing South Carolina taxes, you can come forward using this program, but you only qualify if you initiate contact. Once the SCDOR contacts you about the tax, you no longer qualify for voluntary disclosure.

The SCDOR still applies interest to your balance when you use this program, but the department waives all penalties. Additionally, in most cases, the SCDOR will only look back for three years or less. In other words, if you come forward voluntarily, you typically shouldn't have to worry about any taxes that are more than three years old.

Back Tax Enforcement Actions

In South Carolina, the SCDOR has the right to take a range of collection actions against taxpayers who have not filed returns or paid their tax bills. The SCDOR also collects unpaid bills for state agencies, institutions of higher learning, housing authorities, political subdivisions, and other governmental entities of U.S. states through its Governmental Enterprise Accounts Receivable (GEAR) program.

Whether you owe state taxes or liabilities through GEAR, the SCDOR may use the following collection actions against you.

Tax Liens

The SCDOR may place a tax lien on your real or personal property if you have unpaid taxes. A tax lien refers to the state's legal right to your assets, and once in place, it is active for ten years. During this time, you cannot sell your property or receive a clear title.

To remove a South Carolina tax lien, you must pay your tax bill in full. The state also publishes a directory of all state tax liens on the SCDOR's website. Typically, the SCDOR only files liens once the opportunity for appealing the tax bill has passed, but if you believe the SCDOR filed a lien in error, you should email the SCDOR at ComplyToday@dor.sc.gov.

Tax Levy

A tax levy is when the state seizes your assets to satisfy an outstanding tax liability. In South Carolina, the state may levy your wages, bank accounts, investment accounts, and contract payments.

For example, if you are an independent contractor and a client owes you money, the SCDOR may contact your client and have them send your payment directly to the department. Similarly, if you are a vendor and a business owes you money for products or services, the SCDOR may contact that business and request your payment.

The SCDOR can garnish 25% of your gross wages. The 25% refers to wages before taxes, health insurance premiums, retirement contributions, or other deductions.

In addition to placing levies for state taxes, the SCDOR may also be able to garnish your assets for bills from other entities such as state agencies, public and private institutions of higher learning, and housing authorities.

Tax Penalties

The SCDOR assesses a range of different penalties on taxpayers who fail to file returns or pay their tax liabilities. If you file late, you face a failure-to-file penalty of 5% of the balance each month, up to 25%. The failure-to-pay penalty is 0.5% of the balance due, and the SCDOR assesses this monthly until you pay your balance or the penalty reaches 25% of the balance.

In South Carolina, total penalties on your account can reach up to 50% of your balance. The SCDOR has an online calculator that will show your penalties based on your filing due date and when you plan to pay and file. The easiest way to get this information is by creating an account on MyDORWAY.

The SCDOR also assesses interest on outstanding tax liabilities. The department uses the IRS's interest rate. The IRS changes its interest rate quarterly, and it uses the federal short-term rate plus 3%.

Other Tax Collection Enforcements

The SCDOR publishes a list of the top 250 delinquent individuals and the top 250 delinquent businesses every quarter. It does not include taxpayers who have filed for bankruptcy or set up payment plans.

The department also revokes business licenses from businesses that do not pay their tax bills or make arrangements on their outstanding tax liabilities. Businesses that continue operating after a license revocation may face a penalty of $500 per day.

Common Notices Sent by the SCDOR

The SCDOR sends a variety of notices to taxpayers with outstanding tax liabilities. The state uses notices to alert taxpayers about the following issues:

• Tax balance due.
• Increase or decrease to the taxpayer's refund.
• Request for additional information related to a tax return.
• Changes made to the taxpayer's return.
• Identity verification.

All of the SCDOR's notices should explain how much you owe, your resolution options and the state's plans to take additional collection actions. Notices also contain information on how to contact the SCDOR.

Statute of Limitations on SC Tax Collection

The SCDOR has three years from the date the return was due or filed to assess taxes, and the clock starts running on the latter of these dates. This statute of limitations does not apply if there was fraudulent intent or if the taxpayer underreported the tax due by 20% or more. The SCDOR has up to 72 months (six years) to assess the tax in these cases.

Once the tax has been assessed, the SCDOR typically has ten years to place a lien on a taxpayer's assets, and the lien can stay in place for ten years. For example, if someone files but doesn't pay a tax return in 2020, the SCDOR has until 2030 to place a lien. If the SCDOR places the lien in 2030, the lien can remain in place until 2040.

Get Help With South Carolina Back Taxes

If you owe back taxes in South Carolina, the SCDOR can use a lot of different tactics to collect your bill. To avoid wage garnishment, property levies, or other enforcement actions, you should reach out to the SCDOR and make arrangements on your account as soon as possible.

Unfortunately, dealing with the SCDOR on your own can be confusing and frustrating. For best results, you may want to work with a tax professional. To learn more about the best options for your situation, contact a tax professional experienced with the SCDOR today. Also, you can see the top-rated professionals that help with South Carolina DOR tax problems below as well as top-rated tax pros by designation type located in South Carolina.

• Top Pros That Help With South Carolina DOR Problems
• Top Tax Problem Pros Located in South Carolina
• Top Enrolled Agents in South Carolina

Guide & Help with Missouri Department of Revenue Offer in Compromise

If you have unpaid taxes in Missouri, you may be able to reduce your tax bill through an offer in compromise. An offer in compromise is when the state agrees to settle your tax bill for less than you owe. Essentially, you make an offer, and the state decides if it wants to compromise.

Missouri has strict qualification criteria for offers in compromise, and you may want to work with a tax professional when applying. So that you know what to expect, here is an overview of the process.

Reasons for Offer in Compromise

The MO DOR may be willing to accept offers in compromise for the following reasons:

• Doubt as to collectability — There is doubt that you will be able to pay the full tax due.
• Severe economic hardship — Paying the total tax due would cause you extreme financial hardship.
• Doubt as to liability — There is a significant doubt that you owe the tax.
• Exceptional circumstances — Exceptional circumstances such as a natural disaster or a severe illness prevent you from paying the tax in full.
• Low income — You cannot afford the tax in full due to having a low income.

The application process varies slightly depending on your situation.

How to Apply for an Offer in Compromise in Missouri

You can use these forms to apply for an offer in compromise in Missouri:

• Form MO-656 (Missouri Individual Income Tax Offer in Compromise)
• Form MO-656B (Missouri Business Tax Offer in Compromise)
• Form MO-656A (Exceptional Circumstances or Low-Income Offer in Compromise)

If you're applying based on doubt as to collectability or severe economic hardship, you should complete all of Form MO-656 or MO-656B. You only need to complete sections one and two if you're applying based on doubt as to liability or exceptional circumstances. Low-income applicants should complete Form MO-656A.

Requirements for an Offer in Compromise

The state will only consider your request if you meet the following criteria:

• You have filed all required tax returns.
• You do not have an open bankruptcy proceeding.
• You are current on all estimated tax payments.
• You have included all the documents listed in the application checklist.

You do not need to meet these requirements if you're applying based on doubt as to liability. In that situation, you need to prove to the state that you don't owe the tax, but you can still qualify if you have unfiled returns or are in the midst of bankruptcy.

Filling Out the Missouri Offer-in-Compromise Application

The application for an offer in compromise in Missouri requests basic information about you or your business in section one. Then, in section two, you explain why you need an offer in compromise, and you make your offer.

The remaining sections require you to provide in-depth details about your personal and/or business finances. You must list all of your assets, liabilities, income, and expenses. You also need to include proof of income, bank statements, and credit card statements from the last three months. The state may request additional documents if needed.

Making an Offer on Missouri Back Taxes

You can offer to make a one-time payment within 30 days. Or you can offer to do a short-term deferred payment plan of x amount per month over x number of months.

If you send a down payment with your offer, the MO DOR will keep the payment. If the offer is accepted, the payment goes toward your offer. However, acceptance of the payment does not require the state to accept your offer. If your offer is not accepted, the payment reduces your balance.

Reasonable Collection Potential

Typically, the state will only accept an offer in compromise if it represents the account's reasonable collection potential (RCP). The RCP is the most amount of money the state is likely to collect on the account. The DOR looks at your assets, current income, and future income to determine your RCP and then subtracts basic living expenses.

For example, if you have non-exempt assets worth $20,000 and you only owe $5,000, the state is unlikely to give you an offer in compromise. However, if you can show that your assets and income are not enough to cover your full tax liability, the MO DOR may be willing to settle your tax liability.

Common Reasons for Rejections

The MO DOR will reject offers in compromise if any of the following situations apply:

• The offer is not fair or reasonable.
• The application is incomplete.
• You have not attached the required documents.
• You have not filed all required tax returns.
• You have a history of non-compliance.
• The tax is related to a crime to which you pleaded guilty.

The state automatically rejects any offers of $0. Again, if you are applying for an offer in compromise, you should try to offer an amount equal to the account's RCP.

Appealing a Rejected Offer in Compromise

If the MO DOR rejects your offer in compromise, the decision is final. You do not have the right to appeal a rejection.

Collection Actions After an Offer is Accepted

Once you pay an accepted offer in compromise, the state will release any liens or levies issued against you. However, the state has the right to take any state or federal tax refunds for tax periods through the tax year that the offer is accepted.

Here's an example. Say that you owe $10,000, and in 2021, the MO DOR agrees to accept $5,000. When you file your 2021 tax return, you receive a federal refund of $1,000 and a state refund of $300. The MO DOR will take both of those refunds. Note that the state will not take any amounts that exceed the amount settled.

Default After Acceptance

If the offer is accepted, you must remain compliant with state tax filing and payment requirements for the next three years. If you miss a filing or payment obligation, the Missouri DOR will retract the offer, and you will owe the original balance plus interest and minus any payments you made.

Alternatives to Offer in Compromise

If you cannot qualify for an offer in compromise, you may want to request a payment plan or look into other resolution options. A tax professional can help you negotiate an arrangement with the MO DOR.

Get Help With Missouri Back Taxes

Dealing with back taxes can be scary and frustrating. If you don't make arrangements on your tax bill, the MO DOR may seize your assets, garnish your wages, or take other collection actions.

Protect yourself, your finances, and your business by reaching out to a tax professional. At TaxCure, we have a directory of tax professionals from around the country — contact a Missouri tax pro for help today that has experience with Missouri DOR offer in compromise filings.

Missouri Tax Resolution Options & Consequences of Owing Taxes

The Missouri Department of Revenue (DOR) collects state income tax, corporate and franchise tax, sales and use tax, and other personal and business taxes. If you don't pay your state taxes, the DOR can issue liens, seize assets, garnish wages or bank accounts, or take other collection actions. The state may also send your account to a collection agency or a prosecuting attorney.

Here's what to expect if you have unpaid taxes in Missouri. This guide outlines the state's tax resolution options and then looks at what can happen if you don't pay your taxes.

Tax Resolution Options in Missouri

If you have unpaid taxes in Missouri, you should try to make arrangements before the state starts collection actions on your account. The state offers several options for taxpayers with outstanding liabilities.

Payment Plans on Missouri Tax Liabilities

The Missouri DOR offers payment plans to individuals and businesses that cannot pay their taxes in full. Missouri DOR calls their payment plans Internet Installment Agreements. Missouri's tax payment plans allow you to pay off your tax bill in monthly installments over 24 months.

You can sign up online or by calling the MO DOR at (573) 751-7200. Make sure you have your Social Security Number and the PIN from your notice.

Missouri Offer in Compromise 

An offer in compromise lets you settle your tax bill for less than you owe. Missouri will accept offers in compromise on some tax liabilities but only if the amount offered reflects the account's reasonable collection potential (RCP).

RCP refers to the most money the state is likely to be able to collect. The state looks at all your assets, income, and future income, and then it makes a small number of allowances for living expenses. Obtaining an offer in compromise is a long and detailed process, and you may want to work with a tax professional.

Innocent Spouse Relief

The MO DOR does offer some relief for people who filed returns jointly, but it does not refer to the program as innocent spouse relief. If you want to split the unpaid tax liability on a jointly filed state tax return, you need to contact the DOR directly.

Hardship Status

If the MO DOR garnishes your wages or your bank account, you may apply for hardship status to get the garnishment stopped or reduced. To apply, you need to complete Internal Revenue Service Form 433-A for individuals or Form 433-B for businesses and include three months' worth of financial documents.

The state also offers a short offer-in-compromise application if your income is 125% of the federal poverty level. You may also use the short form if your income is 200% of the federal poverty level and you're on a fixed income, receive public assistance, or have significant medical issues.

Penalty Abatement

Tax penalties in Missouri can be significant. State law allows the DOR to add a 100% penalty for employers who willfully attempt to evade income tax or sales or use tax. Individuals can face penalties of up to 30% of their tax liability. Unfortunately, however, the state does not advertise any penalty abatement programs.

You may be able to have penalties abated through the offer-in-compromise program, or a tax professional may be able to help you get penalties removed from your account.

Appeals Process for Missouri State Taxes

If the state adjusts your tax bill, you will receive an Assessment of Unpaid Tax. You can dispute the amount due by filing an official protest within 60 days. You have 150 days if you are outside of the United States. The state will review your account and issue a Final Determination.

At that point, you have 30 days to file an appeal with the Administrative Hearing Commission (AHC). If you disagree with the AHC's determination, you have another 30 days to appeal your case through the state court system.

Missouri Tax Amnesty Program

At the time of writing, Missouri does not have an active state tax amnesty program. The state last offered tax amnesty in fall 2015. Amnesty programs allow taxpayers to come forward and pay unpaid taxes without facing penalties or prosecution.

Missouri DOR Voluntary Disclosure Program

The MO DOR offers a voluntary disclosure program. If the MO DOR has not contacted you about the back taxes you owe, you may be able to use this program to file and pay. You can apply using Form 5310 (Application for Voluntary Disclosure Agreement).

If you make a voluntary disclosure, the state will not assess penalties on your account, and the MO DOR will only consider the last four years. However, if you have collected taxes from customers and not remitted them, the state will look back further than four years. Additionally, you cannot use this program if you have filed a return but underreported taxes.

Consequences of Back Taxes in Missouri

The MO DOR uses a range of collection actions to deal with unpaid taxes, and the state will continue to pursue the tax liability until it is paid in full. Even if you anticipate a tax refund that could cover your outstanding tax liability, the state will still not pause collection actions.

Here are some of the measures Missouri uses to collect unpaid tax bills.

Missouri Tax Liens

A tax lien is a legal claim to your property. The MO DOR can attach liens to your real or personal property if you have unpaid state taxes. A lien can stop you from selling or transferring property until you have resolved the liability. If you sell property with a lien attached, the proceeds go to the lienholder.

To get the lien removed immediately, you can pay the tax in full with a cashier's check, money order, guaranteed bank check, or an escrow check. If you pay by any other method, the state will take six to eight weeks to remove the lien.

Garnishment for Tax Liabilities in Missouri

In Missouri, the state can garnish your wages or bank accounts for unpaid taxes. If the courts order a garnishment, your financial institution or employer will have to send your money to the DOR.

The MO DOR is legally allowed to garnish up to 100% of the funds in your bank account and your wages. However, in most cases, the state only garnishes 25% of your net pay, which is your pay after deductions such as taxes, healthcare premiums, and retirement contributions.

Tax Penalties

The MO DOR assesses a 5% penalty per month up to 25% of the unpaid balance if you don't file your tax return on time. The state also charges a one-time 5% penalty if you pay your taxes late. MO DOR assesses both penalties the first day you are late.

For example, if you file your return and pay your tax a day late, you will face both a 5% failure-to-file penalty and a 5% failure-to-pay penalty. On a $1000 tax bill, these penalties are $100.

In contrast, if you pay and file your return six months late, you face the maximum failure-to-file penalty of 25% plus a 5% failure-to-pay penalty. This brings your penalty to $300 on a $1,000 tax bill.

The MO DOR also assesses simple interest on your account. As of 2021, the interest rate is 3%. You can use the state's calculator to determine the interest and penalties on your outstanding balance.

Other Tax Collection Enforcement Actions

If you have unpaid taxes in Missouri, the state can claim your federal and state tax refunds. If your business owes sales tax, use tax, corporate income tax, or withholding tax, the state may take your personal income tax refund to cover these liabilities.

Notices for Unpaid Taxes in Missouri

If you have unpaid taxes in Missouri, the state will send the following notices:

• Balance Due, Adjustment, or Non-Filer Notice — You will receive one of these three notices depending on if you owe a balance, had your return adjusted, or failed to file. 
• Assessment of Unpaid Tax —The state will send this assessment if you don't respond to the first notice. You have 60 days to appeal before your tax determination becomes final. 
• 10-Day Demand Notice — You have 10 days to respond before the state takes collection actions on your account. 
• Notice of Intent to Offset — This notice says that the state has taken your state refund to offset liabilities from other state or federal agencies.
• Administrative Judgment or Lien — The MO DOR is issuing a lien against your assets. 
• Garnishment — The state plans to garnish the funds in your bank account or from your wages.
• Referral to Prosecuting Attorney or Collection Agency — The state is referring your account to a prosecuting attorney or a collection agency. 

If you owe business taxes in Missouri, you will also receive a Revocation of Sales Tax License Notice and a Bond Forfeited Notice. These will come after the garnishment and before the referral to the collection agency.

Statute of Limitations on Missouri Tax Liabilities

The state has three years to assess additional tax. The clock starts on the later of the date you filed the return or its due date. However, if the IRS adjusts your federal return, you are supposed to adjust your state return within 90 days. If you don't, the state can make an assessment after the three-year time limit. Additionally, if you fail to report more than 25% of your income, the MO DOR has up to six years to bill you.

If you don't file or file a fraudulent return, there is no statute of limitations. The MO DOR can bill you for the tax, interest, and penalties at any time.

Get Help With Unpaid Taxes in Missouri

Dealing with unpaid taxes in Missouri can be time-consuming, complicated, and frustrating. To get the best results possible in your situation, you should reach out to a tax professional with experience with the MO DOR.

At TaxCure, we have a directory of quality tax professionals from around the country — contact a Missouri tax pro to get help today. Our unique search and filters will help ensure you find the best professional to help with your unique tax problem. Also, see our list below of top-rated tax professionals in Missouri & by designation type.

• Top Pros that help with Missouri DOR
• Top Pros that help with Missouri DOES
• Top Professionals in Missouri
• Top Missouri Enrolled Agents

Guide to Setting up Missouri Tax Payment Plan

The Missouri Department of Revenue (DOR) offers payment plans to qualifying taxpayers who cannot afford to pay their personal or business tax bills in full. If you owe back taxes to the DOR, here is what you need to know about installment plans.

Benefits of a Tax Payment Plan

A tax payment plan lets you pay off your Missouri tax liability in installments. Instead of paying taxes in a lump sum, you make monthly payments until you have paid off the balance. Qualifying for a payment plan is relatively easy and is available to most taxpayers. Other resolution options are available if you cannot afford the payment plan, but they require more financial documents & filings.

Payment Plans on Missouri Back Taxes

The MO DOR offers payment plans on a 24-month term, and you may be required to make a downpayment. For example, if you owe $2,800, the state may be willing to accept a $400 down payment followed by 24 monthly payments of $200. Note these are just sample numbers.

You may be able to negotiate a longer payment plan in some situations, but the MO DOR does not advertise longer terms on its website. You will need to contact the DOR directly if you need more than 24 months. To get more time, you usually need to submit extensive financial information.

How to Apply for a Tax Payment Plan in Missouri

You can apply for a payment plan by calling the MO DOR at (573) 751-7200. Or, you can request an Internet Installment Agreement online. Ensure you have your Social Security Number and the PIN from your last notice if you want to complete the online application.

Alternatively, you can apply using Form 4338 (Individual Income Tax Payment Installment Request). Form 4338 is a concise one-page form. It requires your name, Social Security Number, and contact information. Then, you note the tax due, your downpayment, and the amount you want to pay every month.

Making Payments on Missouri Back Taxes

The state generally requires you to make payments with a direct debit from your bank account. If you submit the paper application, you must include your checking account details so the payment plan can begin immediately if accepted.

You can also make payments with a debit or credit card online. The MO DOR charges a convenience fee between $1.25 and $2.15 for payments under $100. If your payment is $100 or more, the processing fee is 2.15%.

Interest and Penalties on Payment Plans

Once you set up a payment plan, the state will not assess additional penalties on your account. Typically, the state's penalties are 5% of the balance for unfiled returns, up to 25% of the balance. The state also assesses a one-time 5% penalty for paying taxes late.

Interest will continue to accrue on your account while you make payments. The MO DOR adjusts its interest rate annually, and as of 2021, the interest rate is 3%.

Additional Documentation Required for a Payment Plan

Generally, the state does not require any additional documentation if you apply for a payment plan. Again, however, if you need more than 24 months to pay off your balance, you may be required to make full financial disclosure.

In this case, you should be prepared to provide proof of income and bank statements for the last three months and any other information requested by the MO DOR.

Conditions for a Missouri Payment Plan

You can only receive a payment plan if you are current on all filing obligations. If you have unfiled returns, you can file them online. Or, you can submit your unfiled returns with Form 4338.

In most cases, the state will not accept your payment plan if you have a history of defaulting on payment plans. Typically, you will not get a payment plan if you have defaulted on more than one agreement in the past.

Defaulting on Your Payment Plan

If you miss a payment, your Missouri tax payment plan may go into default. You will also go into default if you fail to file or pay a current tax liability. If your payment plan goes into default, the MO DOR can start collection actions against you.

Get Help With Missouri Back Taxes

If you owe back taxes in Missouri, you may want to reach out to a tax professional. They can help you identify the best resolution method for your situation, and they can negotiate with the MO DOR on your behalf. To learn more, contact a Missouri tax pro today.

CT State DRS 2021 Tax Amnesty Program Overview

The Connecticut Department of Revenue Services (DRS) is offering tax amnesty from November 1, 2021, to January 31, 2022. Taxpayers can report and pay CT back taxes without penalties.

You can use this program to report and pay almost every tax administered by the DRS, and it can significantly reduce your tax bill. Here is what you need to know.

What CT Taxes Are Available for Amnesty?

All taxes administered by the CT DRS are available for amnesty, except for Motor Carrier Road Tax also called International Fuel Tax Agreement (IFTA) tax. You can claim amnesty for the following Connecticut taxes: 

• Business use tax
• Cigarette tax
• Corporate business tax
• Gift tax
• Individual income tax
• Estate income tax
• Trust income tax
• Individual use tax
• Motor fuel tax
• Sales and use tax
• Withholding tax
• Pass-through entity tax 

You cannot use the CT Tax Amnesty program to get relief on taxes not administered by the CT DRS. This includes taxes such as CT property taxes, federal taxes, payroll taxes owed to the Department of Labor, and annual fees imposed by the Secretary of State. 

The program applies to all tax periods ending on or before December 31, 2020. You can apply for tax amnesty for any period up to that date, but you cannot apply for amnesty for taxes from 2021. 

Who Can Apply for Tax Amnesty in CT?

Both individuals and businesses can apply for tax amnesty in Connecticut if any of the following situations apply:

• You have unfiled returns.
• You have unreported tax liabilities. 
• You have delinquent tax balances.
• You are under an audit with the DRS. 
• You have an ongoing protest in front of the DRS's Appellate Division. 
• You are pursuing civil litigation with the DRS. 

You cannot apply for amnesty if you are currently under criminal investigation by the DRS or are party to criminal litigation pending as of November 1, 2021. You are also ineligible for amnesty if you are a party to a closing agreement with the DRS, you're party to a managed audit agreement, or the DRS has accepted an offer in compromise (OIC) agreement from you. 

Benefits of the CT Tax Amnesty Program

If you qualify for the tax amnesty program, the CT DRS will waive all the penalties associated with the tax and reduce your interest by 75%. For example, if you have penalties of $1000 and interest of $1000 on your account, your total penalties and interest will drop to just $250.

This program also allows you to avoid criminal persecution. CT tax amnesty applications are confidential, and the DRS does not use them as evidence in criminal investigations unless you knowingly file an application with false information. 

When you apply for amnesty, you agree to waive all rights of appeal related to the tax liability. 

How to Apply for Tax Amnesty in Connecticut

Again, you can apply for tax amnesty anytime between November 1, 2021, and January 31, 2022. You can apply online at GetRightCT.com — just click "apply now" to get started. Or you can apply through the DRS's online payment portal at myconneCT. 

To apply online, you need the following information:

• List of tax types and tax periods for which you want amnesty.
• Amount of tax due each period.
• Record of estimated tax payments made.

If you cannot apply online, you can call the DRS Amnesty Help Line at 1-866-658-1528. 

Amnesty Application Instructions Based on Your Situation

The CT DRS has specific instructions on how to apply for tax amnesty depending on your situation. You can learn more about what to do by contacting a tax professional.

Taxpayers with unfiled returns

If you are applying for amnesty for unfiled returns, you should complete the returns to determine how much you owe. Don't file the returns or send them to the CT DRS. Simply note the amount due on your amnesty application, and then, keep the returns for your records in case you are audited or the DRS wants more information. 

Taxpayers with underreported liabilities on filed returns

You should fill out an amended return if you are seeking amnesty on underreported taxes. Do not send the amended return to the DRS. Note the additional tax due on your amnesty application, and keep the amended return for your records in case of an audit or a request for additional information. 

Taxpayers with delinquent tax liabilities 

If you have an existing delinquent tax liability, the CT DRS should send you an Offer of Amnesty. When you apply, you need to enter the Amnesty ID printed on your notice. 

The CT DRS says that taxpayers with outstanding liabilities who have not received an Offer of Amnesty should contact the Amnesty Help Line at 1-866-658-1528.

Taxpayers with back taxes and underreported tax liabilities from the same tax period.

In this case, you need to complete two different amnesty applications. Follow the prompts to apply using the Amnesty ID on your Amnesty Offer Letter. Then, fill out an amended tax return and complete a second amnesty application following the above instructions for taxpayers with underreported tax liabilities on already filed returns.

Taxpayers with pending appeals or protests

This applies to taxpayers with pending appeals before the DRS Appellate Division and to taxpayers with protests pending before the Tax Session of the Connecticut Superior Court. 

If you have a pending case with the DRS Appellate Division, you should withdraw your protest by sending a fax to (860) 297-4780. If you appealed to the CT Superior Court, you must file a written Withdrawal of Action using the court's required forms. 

Once your protest or appeal has been withdrawn, you can apply for amnesty. If your withdrawal is not processed before you apply, any payment you make will be applied to your outstanding liability. 

Taxpayers under audit by the DRS

To get amnesty, talk to your revenue examiner about closing the audit under amnesty guidelines. Then, apply as usual based on your situation.

Paying Tax Liabilities Through the CT Tax Amnesty Program 

In exchange for tax amnesty, the CT DRS expects you to pay your bill in full. To qualify for this program, you need to pay the entire liability at the time of application. You can pay with direct debit, ACH credit, or credit card. 

There are no payment plans or extensions available with the tax amnesty program. If you can't afford to pay in full right away, the DRS will deny your application, and you will owe the taxes plus penalties and interest. 

Calculating the Amount Due When You Apply for Amnesty

If you have a delinquent balance, the amount owed will show in your Offer of Amnesty letter. If you have unfiled returns or underreported liabilities, you will figure out how much tax you owe when you fill out a return or amended return. 

When you use the amnesty program, you don't have to pay any penalties, and again, your interest will be reduced by 75%. Don't try to calculate the interest on your own. When you fill out the amnesty application, it will calculate the interest for you so that you know exactly how much to pay. 

Rejected CT Tax Amnesty Applications

The CT DRS will send you a letter if your amnesty application has been denied, and the DRS will apply any payments you have made to your tax balance. If your application is accepted, the DRS will not notify you. 

The CT DRS's Amnesty Offer Letter

The CT DRS plans to send Amnesty Offer Letters to people with outstanding liabilities who qualify for amnesty. This letter contains an ID you should use when applying for amnesty. 

If you have recently made a payment on your account, the offer letter may show an Eligible Balance that is higher than your actual balance. Do not simply subtract your payment when applying for amnesty. Instead, contact the Amnesty Help Line to ensure your application is processed correctly. 

The offer letters don't pause the collection process. As a result, you may get both an offer letter and a bill. Even if you get a bill, you are still eligible for amnesty.

Audit After Amnesty

The CT DRS has the right to audit you for the periods related to your amnesty application. If you are audited, your amnesty will not be revoked. However, if the audit reveals additional taxes due, you will be subject to interest and penalties. 

If the department finds out that you have falsified your amnesty application, you can be fined up to $5000, imprisoned for up to five years, or both. 

Get Help Applying for CT Tax Amnesty

The CT DRS's Tax Amnesty Program offers an invaluable opportunity for individuals and businesses. The last time the state offered amnesty was in 2017 and before that in 2013. If you do not take advantage of the amnesty program, you will owe outstanding taxes plus penalties and interest. 

To get help applying for tax amnesty in Connecticut, contact a CT tax professional that specifically helps with tax amnesty today. These tax professionals are experienced in dealing with the CT DRS, and they can help you make the most of this opportunity.