Dealing with state taxing authorities can often be harder than dealing with the IRS when your business has a tax liability. This is not only because a state Department of Revenue, Department of Taxation, or a Comptroller is a smaller entity and has less taxpayers to monitor, but also because all states are organized differently and have different rules and regulations on how to collect taxes.

1. State Business Payment Plans
Dealing with state taxing authorities
can often be harder than dealing
with the IRS when your business
has a tax liability. This is not only
because a state Department of
Revenue, Department of Taxation,
or a Comptroller is a smaller entity
and has less taxpayers to monitor,
but also because all states are
organized differently and have different rules and regulations on how to
collect taxes. In addition, states have sales tax requirements, an issue
that makes the state collection process more complicated and
aggressive.
If you are a business owner and your business has fallen behind on
state taxes, you need to know exactly what to do to take the situation
under control. If you’re not careful it can escalate to the point where
your sales license is revoked, bank account levied, and a state field
officer comes over to put a padlock on your office door. Although there
are many tax resolution companies offering help with the IRS tax debt,
not many of them provide similar services for state tax problems.
First of all, it is important to understand the structure of your state
Department of Revenue. States usually have separate divisions for
each type of tax, such as Sales and Use tax, State Withholding tax,
State Corporate Income tax, Unemployment Insurance, etc. Each
division usually has a regular billing office and a separate collection
department. It is important to know which office has your case, and
who it is assigned to.
After you’ve found a person or an office responsible for collecting your
tax debt, the next question to ask is whether you have to file any tax

2. returns. Each state has its own forms for all tax returns. These forms
can usually be downloaded from the internet.
To be able to move forward with enforced collection activity on periods
with missing tax returns, a state Department of Revenue can assess
you with estimated amounts for each return that you have not filed. For
example, if you operate a painting company in Minnesota and don’t file
your sales tax returns, the State of Minnesota Department of Revenue
can conduct an Audit and assess your business with an estimated
balance based on the Sales tax returns of other painting companies
operating in your area. Therefore, it is a good idea to file your own tax
returns.
Once all missing tax returns are filed and processed by the state, you
are in a position to discuss repayment options with the state. This is
not the easiest process, because states have shorter time frames
allowed for tax debt repayment. The standard response to the state
payment plan proposal is that a tax liability needs to be full paid within
six months. In some cases, however, it is possible to get a longer
payment plan, but it may require a full disclosure of the business
financial situation, including disposable income and equity in assets,
and further negotiations.
Obtaining a payment plan for a state sales tax liability is probably one
of the most difficult processes. Sales tax is not something that is paid
from the business income, it is an additional amount that was added to
the price of the sold merchandise and collected on behalf of the state.
Therefore, sales tax has to be passed on to the state. Failure to pay
sales tax is a very serious issue, because states consider it theft. As a
result, it is problematic to negotiate a payment plan for back sales
taxes with the state taxing authorities.
Read more: Seek help with Tax Debt Experts in Colorado.