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 individual income tax, sales tax, and corporate excise tax. 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. When enforcing unpaid sales tax, the DOR may also assess personal liability, seize business assets, or take away your sales tax permit. 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, including income tax, MA sales tax, and corporate excise tax. 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. For example, if you're applying to settle unpaid sales tax, the DOR will stop enforcement actions if you meet basic eligibility criteria such as having past returns filed, but if not, the DOR will continue with sales tax collection enforcement actions like levies. 

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.

How the Click to Call Works & How to Update Phone Number

Click to Call Video Tutorial

What to Know About Call Button

Did you know that when prospects are given the option between calling and filling out an online lead form, they are far more likely to call? Calls generally have a higher close rate than data leads as well.

With the Tax Pro membership, you now have a call button that is live on your profile as well as in the search results. The call button will increase the number of prospects that reach out to you. The call button also helps your profile stand out since it is an extra bright button on your profile to differentiate your profile from other profiles.

How to Edit the Call Now Number

You likely already have a phone number that is associated with your call button that was inputted when you initially set up your profile. You can edit this phone number or check to make sure you have the number going to the best place by following the steps below. Make sure this phone number is a number that someone will answer to increase your chances of getting the deal.

Step 1: Login to your account and click "edit" on your profile from the account dashboard.

Step 2: Scroll all the way down to the contact information section of your profile. When you hover over that section, you will see the pen icon appear, and clicking the pen will allow you to edit the call button as seen below.

Step 3: Verify, add or modify the phone number that is shown to prospects. Once you are done, click save to have the change updated.

How the Call Button Works & How Analytics Works

For the taxpayer to see your number, they will have to click the call button. The button by default does not show the phone number. The click to reveal your phone number is tracked in analytics. While this isn't an actual phone call that is tracked in analytics, it is still a good measure of engagement of people looking for your phone number.

The call button is displayed in the following areas of the site.

• Search Results
• Top of profile
• Contact information on profile
• Content pages where your profile shows

Accessing Analytics Data on Calls

To access your analytics data, click on "Analytics" in the top navigation bar while logged in. This data shows the number of website clicks, click to reveal phone number, and messages as seen below.

Other Tips to Consider

With TaxCure receiving visitors from mobile and desktop users, it isn't possible to track calls that were generated from desktop users. The main metric we use is click to reveal phone number to track engagement with your phone number. In order to accurately track phone calls generated from your TaxCure profile, you would need to use a unique phone number that you can track on your end. You can use services like CallRail, or Google Voice to do this. 

 

How to Edit Your Byline Tutorial

Tutorial Video on Editing your Byline

What is the Byline?

A subtle, but powerful feature we have added for pro members is the ability to edit your byline. The byline is the text that shows under your name in search results on your profile card as well as on the top of your profile.

Having a custom byline will differentiate your profile from other profiles, which will help increase the interest in your profile and will result in more prospects. This feature, in combination with the call now button and obtaining reviews, make it a sure thing that prospects will gravitate to your profile over others in the search results.

With the basic membership, this defaults to your tax designation and your company name. With pro members, you can be creative and edit this with up to 15 words of your choosing to help your profile stand out even more.

Below are details on how to edit your byline as well as some examples of things you can add to this byline.

How to Edit Your Byline

Step 1: Login to your account

Step 2: Click on edit profile from the professional dashboard. As seen in the image below.

Step 3: Click the pen icon under your name. This will allow you to add in your byline. Add in something creative here to help your profile stand out.

Step 4: Click save, and your byline will be updated

Some Examples of Potential Bylines to Consider

• Lead Tax Professional at Company – Free Consultation
• CPA at XYZ Tax Resolution, call Now for a Free Consultation!
• Enrolled Agent at ABC Resolution – Request a Free Quote Now!
• Owner & Lead Tax Pro at XYZ Tax Relief – Free Qualification Analysis
• Tax Attorney at ABC Resolution – Helping Taxpayers Since 2007
• Former IRS Agent at XYZ Resolution – Using the IRS Knowledge Against Them

Be sure to take advantage of this feature to maximize your TaxCure Pro Membership. If you have any questions, don't hesitate to reach out to us.

Oklahoma Back Taxes: Resolution Options and Collection Activities

The Oklahoma Tax Commission (OTC) administers personal and business taxes in Oklahoma. You can file individual, corporate, franchise, and partnership income tax returns with the OTC as well as Oklahoma sales and withholding tax returns. 

But what if you can't afford to pay your Oklahoma tax liability? The state offers several options for taxpayers who cannot pay their tax bills in full, but you need to act promptly. The OTC outsources tax collection to private collection agencies, and once your account has been assigned to an agency, you can no longer make arrangements with the OTC. 

To help you out, this guide explains the resolution options for back taxes in Oklahoma. Then, it looks at what can happen if you don't pay your back taxes. 

Oklahoma Back Tax Resolution Options

If you cannot afford to pay your taxes, the OTC recommends filing your return and paying what you can. Then, the OTC will send you a billing notice outlining the tax, penalties, and interest due. At that point, you need to contact the OTC directly or work with a tax professional to make arrangements for your tax liability. 

Oklahoma Tax Commission Contact Information:

• Individual Taxes: (405) 521-3160
• Business Taxes: (405) 521-3160
• General Inquiries: (405) 521-3160
• Other Inquiries: (405) 521-3160
• Website: Oklahoma Tax Commission

The options vary based on your situation. Here is an overview of the essentials as well as links to pages with more information on OK payment plans and offers in compromise. 

Payment Plans for Oklahoma Back Taxes

The OTC is willing to let taxpayers pay off their back taxes in monthly installments. To set up a payment plan, you must owe more than $100, and you must meet the eligibility criteria. 

Most importantly, you must contact the OTC to set up the payment plan before your account is placed with a third-party collection agency. To learn more, check out our overview of an Oklahoma tax commission payment plan.

Oklahoma Offer in Compromise

If you meet strict qualifications, you may be able to settle your OK taxes for less than you owe through the state's offer-in-compromise program. To apply, you must complete a lengthy application process and convince the OTC that your offer is the most the agency is likely to be able to collect. Find everything you need to know on the OK state offer-in-compromise page. 

Innocent Spouse Relief

Oklahoma offers innocent spouse relief to taxpayers who are divorced, separated, widowed, or deserted. To qualify, you must prove that your spouse understated the tax on your state return without your knowledge and that it would be unfair to hold you responsible. 

Note that innocent spouse relief relieves you of state income tax related to your spouse's income. You still must pay the tax due to your own income. When assessing your application, the OTC considers your involvement in your family's financial affairs, your business or educational background, and whether or not you benefited from the unpaid tax. 

The application asks questions about all of these issues. It also has a space where you can include information about domestic violence and abuse. 

To apply for this program, submit Form L-21 (Request for Innocent Spouse Relief in Oklahoma). You also need to include copies of your divorce petition, divorce decree, or late spouse's death certificate as well as your federal income tax returns for the years you're requesting relief. If you have received innocent spouse relief from the IRS, you should include your determination letter with your application. 

Hardship Status

The OTC does not advertise a hardship program for state income taxes. If you cannot afford to pay your state income tax, you may want to consult with a tax professional about the best options for your situation. 

However, at the time of writing, the OTC has a hardship plan in place for sales tax. If you had a hardship or a good reason for not filing a sales tax return, you can get an abatement on penalties and interest until April 10, 2023. This program was designed to help businesses as they get into compliance with the state's new sales tax rules implemented in 2018 after the South Dakota Vs. Wayfair ruling. 

Penalty Abatement

You can request a waiver of your penalties once you have paid the tax in full. The OTC will consider why you paid the tax late as well as your previous history of compliance. Typically, you cannot request penalty abatement if you still have an outstanding balance. 

Appeals Process for Oklahoma Taxes

If you disagree with an order, ruling, or finding of the OTC, you have the right to appeal. You can request an appeal trial de novo in the district court of Oklahoma County or in the county where you live. You must appeal within 30 days of receiving a notice from the OTC. If you disagree with the results of the appeal trial, you can appeal directly to the Oklahoma Supreme Court. 

Appealing assessed taxes can be a complicated process. You have the legal right to represent yourself, but to protect yourself and your assets, you may want to work with a tax attorney or another tax professional such as a certified public account (CPA) or enrolled agent (EA). 

Enforcement Actions for Oklahoma Back Taxes

If you ignore your Oklahoma back taxes, the OTC Collection Division can pursue involuntary collection actions against you. The state has many different collection options at its disposal. Take a look at the enforcement options that you may face if you owe back taxes in Oklahoma. 

Oklahoma Warrants for Unpaid Taxes

Oklahoma can issue tax warrants for unpaid taxes. Also called tax liens, the warrants declare that the state has the right to a taxpayer's personal or real assets. Oklahoma state tax warrants supersede any other liens placed against the assets after the warrant. 

Once a warrant has been attached to your property, you will not be able to sell or take loans out against the property. To get the lien removed, you must pay the tax, interest, and penalties in full. If you pay with a debit card, electronic funds transfer, or automatic withdrawal, there will be a 30-day hold for lien removal. The state will immediately release the lien if you pay by credit card, cash, money orders, or certified check. 

Liens expire after 10 years. But as long as the state acts before the lien expires, it can issue a new lien. The second and all other subsequent liens also last for 10 years. 

Oklahoma Tax Levy

Once the state has issued a tax warrant, the sheriff in the county where the lien has been issued has the right to sell your personal or real property. The sheriff does not have to evaluate or appraise the assets prior to selling them, and the sheriff has the right to collect unpaid taxes, penalties, interest, advertising costs, and collection fees through the sale. 

The state also has the right to garnish wages and seize bank accounts for unpaid taxes. In Oklahoma, wage garnishment is called a "continuing garnishment" because it continues until the tax liability has been paid in full. A bank account garnishment is called a "one-time garnishment".

Tax Penalties Charged

The OTC assesses a one-time penalty of 5% of the tax due for unpaid taxes. The penalty applies if you are even a day late, but it can also apply if you don't pay your quarterly taxes on time. 

There is a 10% one-time penalty for paying business taxes late. The state also charges interest at a rate of 1.25% per month on both personal and business taxes. If you owe over $1,000 and underpay your estimated taxes, the interest rate is 20% per year. That is 1.667% per month. 

Other Enforcements for Unpaid Oklahoma Taxes

The state publishes a list of the top 100 tax delinquencies over $25,000. This list is on the OTC's website, and Oklahoma-based newspapers often reprint the list. To be on the list, your total amount due must be over $25,000 and more than 90 days delinquent. 

However, you do not necessarily get a spot on the list if your unpaid taxes are over $25,000. Instead, you need to be in the top 100, and at the time of writing, every person or business on the list owed over $450,000. Appearing on this list can hurt your personal and business reputation significantly. 

In the past, the state dismissed employees who owed state back taxes. Luckily, this law was overturned (almost unanimously) in 2020. Now, state employees can keep their jobs, but the state has the right to garnish their paychecks for unpaid taxes. 

Statute of Limitations on Oklahoma Tax Liabilities

Under Section 53 of Article 5 of the Oklahoma State Constitution, the state legislature does not have the right to extinguish any debts to the state. There is an exception for property taxes, but the state cannot extinguish other tax liabilities. In other words, Oklahoma has no statute of limitations on tax liabilities. The state has the right to collect them indefinitely. 

In 2005, the state legislature proposed amending the constitution to place a 10-year statute of limitations on state tax liabilities. But, unfortunately for people with Oklahoma back taxes, this amendment did not pass. 

Third-Party Collections for Oklahoma Back Taxes

As of 2022, the OTC outsources income tax collection to Harris & Harris LTD (H&H) and Linebarger, Goggan, Blair & Sampson, LLC (LGBS). These are private collection agencies, and they have different options available to help you negotiate arrangements for your tax liability. Once your tax liability has been placed with a collection agency, you cannot set up a payment plan with the state. 

If a collection agency contacts you and you want to ensure that they are legitimate, you can contact the OTC Collections Division directly at 405.521.2212. They can let you know how much you owe and whether or not your account has been referred for third-party collections. 

Get Help With Oklahoma Back Taxes

If you owe back taxes in Oklahoma, you should get help from a tax professional. Don't call the big-name tax resolution firms that charge excessive fees and make promises they can't keep. Instead, reach out to a local tax pro. 

Using the search feature on TaxCure, you can look for Oklahoma tax professionals based in your area who have experience with your specific tax concern. To learn more, contact an OK tax pro for help today. 

How To Qualify and Setup an Oklahoma State Tax Payment Plan

Qualifying taxpayers can pay off their Oklahoma personal or business taxes in monthly installments. 

If you cannot afford to pay your individual or business tax in full, you may want to apply for a payment plan. An Oklahoma installment agreement allows you to make monthly payments on your tax liability until it is paid in full. To set up a payment plan, you must meet the eligibility criteria and stay current on your filing and payment requirements while the plan is in effect. 

Want to set up monthly payments on your OK taxes? Here is an overview of the process. 

How to Apply for an OK Tax Commission Payment Plan

You can apply for an Oklahoma tax payment plan online through the Oklahoma Taxpayer Access Point (OKTAP). The online application asks a few basic questions about your situation and then guides you through the process of setting up a payment plan. 

You need a collection letter to use the application — you won't be able to move forward with the process unless you have the letter ID and your Social Security Number. If you don't meet the criteria to request a payment plan online, you can contact the OTC directly at (405) 521 2212, or find a tax pro to help you.

Eligibility Requirements for OK Tax Payment Plans

To qualify for a payment plan, you must be able to pay at least $25 per month. You also must pay off the tax liability in two to 12 months. To calculate your minimum monthly payment, divide your state tax liability by 12. For instance, if you owe $2,400, you need to pay at least $200 per month.

The OTC may be willing to offer longer terms and smaller monthly payments. But if you need smaller payments or longer than a year to pay, you need to contact the agency directly or work with a tax professional. The agency also requires you to meet the following criteria:

Set Up the Plan Before Collection Agency Assignment

The OTC uses private third-party collection agencies to collect unpaid state taxes. You cannot work with the state to set up a payment plan if your account has already been assigned to a collection agency. Once your account has been assigned to a collection agency, you must work with that agency to make arrangements on your tax liability. 

As soon as one of your tax balances is assigned to a collection agency, you lose the ability to set up payment plans with the state. For instance, imagine that you owed state taxes for 2019, and the OTC sent that year to a collection agency. If you go online to request a payment plan for 2020 taxes, you will not be able to. 

Even though the tax liability for that particular year has not been assigned to a collection agency yet, you lost the chance for a payment plan when the other account was sent to the collection agency. Because of this, it's critical to contact the state before they outsource the collection on your account. 

You Must Owe More Than $100

The OTC does not advertise an upper threshold for payment plans. In most cases, as long as you can pay off the tax liability in 12 months or less, you can make payment arrangements on tax liabilities of nearly any amount. However, you must owe more than $100. 

If you owe less than $100, you are not eligible to set up a payment plan. But you still owe the tax so you should try to send the state as much as you can.

Don't Have a History of Default on Oklahoma Payment Plans

If you have defaulted on an Oklahoma payment plan in the past, you may still be eligible to set up a payment plan, but you must make a 50% down payment. For example, if you owe $10,000, you can make a down payment of $5,000 and then make payments on the rest. 

You are not eligible for a payment plan if you have defaulted twice in the last five years. Once you default three times over any time period, you are no longer eligible for a payment plan on state taxes. 

Be Up-to-Date on State Tax Filing Requirements

For the best results, you should be up to date on your state tax filing requirements. The OTC is willing to accept payment plans from some people who are not up-to-date on their state tax filing requirements. However, the rules vary based on your situation and the number of returns you have missed. 

When you apply for an OK payment plan online, the application tool will request additional information about your filing gaps and missing returns. Then, it will let you know if you are eligible for a payment plan or if you have to do anything special like make a down payment. 

Rules for Oklahoma Payment Plans

If the OTC accepts your request for a payment plan, you need to make the payments as directed to keep your plan active. Missing payments can put your plan into default, and again, once you start defaulting on OK payment plans, you reduce your ability to set up payment plans in the future. 

You also need to stay compliant with your new filing and payment requirements. If you assume new tax liabilities while on a payment plan, your plan may go into default. To ensure you don't get behind on your income tax requirements, you may need to increase your withholding or send in larger quarterly payments. 

What to Expect from an Oklahoma Tax Payment Plan

While you're making payments, interest will continue to accrue on your balance. You may want to make slightly larger payments to compensate for the interest. If you apply for another program, you should continue to make payments while the OTC assesses your application. 

For instance, if you apply for an OK offer in compromise while you're already on a payment plan, you should continue making payments as agreed upon. Then, if your offer is accepted, you can quit making payments at that time. If the state rejects your offer, your payment plan will still be active. If you had stopped making payments, you would be in default. 

Get Help with Oklahoma Payment Plans

If you want help setting up a payment plan or talking about other resolution options for Oklahoma back taxes, reach out to an OK tax pro today. On TaxCure, we made it easy to search for high-quality tax pros in your local area with the experience you need. To find a tax pro experienced with the OTC, search for an OK tax pro today.