If you owe state income taxes, one of the best things you can do to resolve your debt is to tackle the problem quickly and directly. In general, states collect taxes more aggressively than the IRS and offer taxpayers fewer chances to pay the tax. Each state has different rules and statutes for income tax collection, but each state allows taxpayers an opportunity to pay the tax in installments. You may also have to provide additional information and documents to establish your payment plan depending on the state you owe taxes to and the size of your balance.
Ensure all income tax returns have been filed, including the tax return for the current year. If you have outstanding income tax returns, you must file the returns before you may request a payment plan. Each state requires you to complete all tax returns to verify that the payment plan includes all income tax you may owe.
Contact your state Department of Revenue (see Resources). If a specific revenue agent is working your case, you must contact the agent directly. If there isn’t an agent working your case, look under the “Contact” tab of the Department of Revenue website for the phone number of the collection division. If a collection division number is not listed, call the general number and ask to speak with collections.
Verify your identity with the collection division representative. Request a payment plan to resolve your state taxes. Depending on your balance, you may be able to request the monthly payment amount of your choice. If your balance is too high, you may have to complete a financial statement to determine how much your monthly payment should be. Some states only have a certain amount of time to collect your tax debt. In this case, the state may tell you how much you must pay each month. If you can’t afford the amount the state tells you to pay, you may complete a financial statement to demonstrate hardship, regardless of the amount you owe.
With a background in taxation and financial consulting, Alia Nikolakopulos has over a decade of experience resolving tax and finance issues. She is an IRS Enrolled Agent and has been a writer for these topics since 2010. Nikolakopulos is pursuing Bachelor of Science in accounting at the Metropolitan State University of Denver.