The law requires all taxes to be paid in full. When the Department sees that you cannot make a payment in full by a certain date, the Department may enter into a payment plan that allows you to make installment payments to pay off tax debt. Please note that interest and penalty continue to accrue.
A payment plan is a contract between you and the Department. When you are on a payment plan, the Department does not actively seek collection. If, however, you default on the agreement, the Department resumes collection of the tax. The Department offers different types of payment plans depending upon your specific case.
Type of Payment Plans
- Short-Term: Short-term payment plans, or pay plans, allow you 12 or fewer months to pay off taxes. The Department sets up short-term payment plans normally without filing a lien. If a payment is missed, the Department terminates the agreement and proceeds with further collection action.
- Installment Agreements: Installment agreements are formal, written agreements between you and the state. Installment agreements allow you up to 72 months to pay taxes. This type of agreement requires liens or acceptable security prior to being granted. You declare definite liability when signing an installment agreement.
Please note that records of installment agreements in excess of $1,000 must be available for public inspection.
An agreement can be established for:
equal payments throughout the length of the agreement;
fluctuating payments when you have seasonal income, and
increased payments through the length of the agreement to draw upon monies available when you have paid off other debt.
You may be required to complete a financial packet that details assets and monthly income. In some cases, credit denials from lending institutions may be required.
If you do not make the minimum payment, make payments late, establish new debt, or do not file required returns, the Department sends a Delinquent Agreement letter. If you do not respond to the letter, the Department sends a Defaulted Agreement letter. Delinquent taxpayers on a short-term agreement will have a lien perfected on their debts. Further collection action follows. This may include serving levies to seize assets including motor vehicles. If you are a delinquent taxpayer and a business owner, collection actions may include court orders to close a business or seize its assets.