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State Tax Issues

Income tax debt to a taxpayer’s state can be just as serious as those owed to the IRS. Each state has different statutes and codes concerning state back taxes, and each state has its own policy with dealing with a particular situation.  These differences are important because they require ample knowledge of the laws, procedures, and requirements of the state’s tax division.

What is less known about states is that they are more aggressive than the IRS in their collection process.  For instance, the California Franchise Tax Board will place a garnishment on an unfiled return assessed balance and will not remove it even if a payment plan is offered.  Once this garnishment occurs, the only relief available is to reduce the percentage of the garnishment or to qualify for financial hardship or a state offer in compromise.

As far as tax settlements, most states have a settlement procedure similar to the IRS’ Offer in Compromise.  While each state is a little different, the goal of the offer is the same: convey no disposable income and no liquidable equity in assets.  By doing this, the various states are more likely to settle your tax debt.

If an offer or settlement is not an option, other avenues are still available such as payment plans, penalty abatements, innocent spouse, or other relief, all of which mirror that of the Internal Revenue Service.  These efforts should be accomplished by someone with the experience and knowledge about your state.  For instance, to assist a taxpayer in Oregon, the resolution company needs to tell its taxpayer that unless they have a licensed professional of Oregon, that they can only assist in paperwork negotiations rather than over the phone negotiations.  For New York, most forms require a signed notary and therefore can be more costly in assisting its clients.  For Maryland, the power of attorney form does not exist, and instead, the state accepts the federal 2848 with a couple variations.  This inside knowledge is available here at Platinum Tax Defenders and we are best able to assist you with your state tax issues.

Back taxes owed to the state are a serious issue, just like unpaid federal back taxes, so it is wise to contact the state as soon as possible and arrange to pay off the back taxes so you can move on.  This arrangement should be done by an experienced professional so that your rights can be better served.  Contact us at Platinum Tax today.