Since each state has its unique regulations and standards for how citizens must file taxes, where you file affects your path to resolving a state tax problem. The important thing to remember is that most states have tax rules and processes that are essentially comparable to those of the IRS. Of course, this does not imply that you should think you can follow IRS procedures while seeking to resolve a tax problem or receive state tax debt relief.
It is erroneous to suppose that state tax debt is less significant than federal tax debt. Failure to submit or pay your state taxes can find you in hot water and result in severe fines.
What Are the Approaches for Resolving State Tax Debt?
Making a complete payment for the amount you owe is the quickest approach to seek state tax relief. If you’re in a position to do so, you’ll be able to solve your situation right away.
However, not everyone has the wherewithal to pay what they owe in late state taxes. Let’s take a look at several alternatives that are practically universally available in all 50 states:
- You can use an Offer in Compromise (OIC) to pay less than the entire amount of your tax debt.
- The Installment Payment Agreement allows you to make payments over a six-year period.
- If you can establish that mistakes or fraud were committed on your behalf without your knowledge, Innocent Spouse Relief will forgive your debt.
- The status of Currently Non Collectible (CNC) stops all collection attempts and penalties based on your inability to pay.
Consider the fact that the particular conditions and terms of each relief option may differ from one state to the next. You will be needed to provide the necessary papers and documents to demonstrate your eligibility for any of these alternatives. While no relief option is assured, virtually all taxpayers will be eligible for payment plans that would allow them to repay debt over time.
How does it work?
State tax debt relief is granted on an individual basis. In general, your state will consider your capacity to pay back what you owe in a realistic manner. It’s conceivable that your state will let you negotiate a lower total amount owed. Furthermore, if you can demonstrate a financial hardship, your state may agree to temporarily halt collection attempts.
When filing for Offer in Compromise or Currently Non Collectible Status, you must be prepared to comply with complete financial disclosure since your state will utilize severe rules to determine if your financial situation qualifies you for these levels of aid. Your state will consider not just your capacity to pay today, but also your ability to pay in the future. This implies that even if your payment requirement is deferred today, your case may be reconsidered in the future.
How Do I Settle My State Debt?
The IRS and most state taxation bodies use the same fundamental procedures for settling tax liability. The first step is to comply. File any outstanding/required tax returns, and ensure that all current taxes are paid in full. Then, you may work out a payment plan for your past taxes. Keep in mind that each state may have many taxation authorities, each with its own set of laws.
You have two alternatives for resolving your tax debt:
- Pay now
- Engage into a relief agreement with your state agency.
It is up to your state to decide whether or not you will be admitted into a relief program. Keep in mind that it might take months for state authorities to accept relief petitions. That is why it is critical to respond fast. So, Contact your state’s tax authorities and conduct some independent investigation. Ask a lot of questions about how to acquire what you want and your debt-resolution choices.
Is State Tax Debt Ever Forgiven?
The fact is that state tax debt tends to linger longer than federal tax debt. Although the IRS has a universal 10-year statute of limitations for tax collection, each state has its own statute of limitations for tax debt. The time span ranges from three to twenty years! Furthermore, states such as Maryland have regulations in place that allow state agencies to extend liens for a period of 20 years after the tax debt’s expiration date. The basic truth is that states do not readily let tax evaders off the hook.
How can we help?
Do you have a problem with unpaid state income tax? The first step toward resolving your issue is to familiarize yourself with what your state agency has to say about penalties, remedy alternatives, and statutes of limitation. We can assist you in resolving your state tax obligation as soon as feasible. Our state tax relief services will assist you in gaining access to various choices for decreasing and paying off your debt without harsh penalties. We have a team of tax specialists, CPAs, and lawyers ready to provide you with the state tax relief assistance you require. Get in touch with us now to get started.