State Programs for Delinquent Taxpayers

Options for Those without the Means to Pay

David Seiden, CPA

There are many reasons why taxpayers can owe back state taxes (i.e., sales tax, payroll tax, income tax), penalties, and interest. These reasons may include making bad business decisions, having bad luck, or getting caught doing something inappropriate. If the taxpayer's mistakes were not a criminal matter, many states have programs that enable taxpayers to “wipe the slate clean,” regardless of the reason back taxes are owed. The specifics of these programs vary based on the state, the type of tax, and the taxpayer either voluntarily coming forward or being caught by the state. The four most common programs states offer are 1) payment plans, 2) voluntary disclosure agreements, 3) amnesty, and 4) offers in compromise.