States can Pursue Taxpayers for Allegedly Owed Taxes Too

At first blush, a state or local tax controversy may seem to be less scary than an audit by the IRS. However, state tax officials in Washington, D.C. are often very aggressive, maybe even more so than their equivalents at the federal level.

Besides state income tax, you could find yourself dealing with property tax matters. Businesses could be in trouble for allegedly failing to pay sales tax, use tax, withholding tax or unemployment tax.

One reason that state authorities can be aggressive about tax matters is that they might consider themselves to be competing with the IRS, if the taxpayer also is accused of owing federal income taxes. Because states often assess their income taxes or file tax liens before the IRS, they can get priority.

Defending against a state agency’s claims that you failed to pay your taxes in full can be difficult. The process can be significantly less formalized than how the IRS operates. While every tax problem has a solution, resolving a tax dispute at the state level may take carefully planned strategy combined with a healthy dose of creativity.

One possible option can be entering into a payment plan. Most states offer something similar to the IRS’s Offer in Compromise program, which allows taxpayers to settle their tax liability, often for less than the full amount, and possibly avoid expensive penalties and interest.

Having the right tax attorney on your side can help you reach the end of your tax problems as smoothly and quickly as possible.

Tags: Blog, IRS