If you have a state tax debt, I want to share one crucial bit of information first and foremost: the states are often significantly more aggressive about collecting a past-due tax debt than the IRS. Why, you ask? Because every tax dollar means more to the state than it does to the IRS.

Think about this for a moment: according to the U.S. Census Bureau, the population of the United States as of January 1, 2024, was estimated at 335 million people. Conversely, for example, the population of the State of Illinois was estimated at 13 million people. The states overall have a smaller population, which means a significantly reduced pool of taxpayers to collect the monies needed to fund their budgets. This is why the states are typically more aggressive than the IRS: they need it!!!

Now, when it comes to addressing a past-due tax debt with a state, please remember that every state handles tax collection in a different way. Some immediately outsource the debt collection to a third party, but some never do. Some have similar resolution options to the IRS, such as offer in compromise programs and penalty abatements, some do not. Some will box in the resolution options depending on the type of tax the debt is owed for, while some will accept any type of resolution for any type of tax owed.

One consistent factor I have encountered with the states over the last twenty-four years handling tax debts for my clients is that two types of state taxes really cause the states to flex extra aggression muscles: payroll tax and sales tax.

Payroll tax debts stem from an employer taking taxes out of their employees’ paychecks, but then not paying those taxes over the government. Remember that when your employees file their annual income tax return and ask the state to refund the overages paid, the state will never refuse to pay the refund simply because the employer didn’t submit the taxes. The state will issue the refund to your employee. When this happens several thousand times each year, the state realizes a significant loss.

Though the states are aggressive with payroll tax debt collection, I find that they are MOST aggressive with sales tax. The reason is that those funds are collected by the business from the general public. When those monies aren’t paid over, the states liken it to stealing. The viewpoint I often hear from state agents when negotiating a resolution to a sales tax debt is that the business owner collected those funds from the public and then used them for their own business needs. It’s just not good!

For these reasons, I strongly urge any business owner to prioritize establishing resolution plans to address state sales tax and payroll taxes first. Once those are tended to through resolution plans, then turn your attention to state income tax. And while you are addressing those issues, don’t ignore any federal level tax issues. Stay in communication with them and disclose what you are focusing on. It will be a requirement that you tend to all current tax obligations, but if you convey that the states are threatening aggressive collection actions such as bank account levies or accounts receivable levies if resolutions aren’t negotiated immediately, they should give you the breathing room to do so.

If you have tax debts that are causing you sleepless nights or are threatening your ongoing financial security, please know that there is ALWAYS a solution. You simply need to start taking steps towards addressing them.

If you don’t know where to start, call us or pick up a copy of my book here: https://a.co/d/259FFvy. With over twenty-four years of experience focused solely on tax debt resolution, we have amassed first-hand experience to ensure your tax debts are addressed in the best manner possible, no matter which state you have the issue with or what type of tax it may be for.

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Your future and your family deserve the right protection. Golden Lion Tax Solutions will be your advisor and confidant throughout the entire journey. We guarantee to offer you or your business best-case solutions for your tax debt. We are by your side every step of the way. Start now and get your life back.

For help with your tax debts, email contactus@goldenliontaxsolutions.com or call 833-LION-TAX (833-546-6829)

Disclaimer: There are requirements that must be satisfied in order to qualify for some of the tax solutions we discuss on our website. Not all of our services will be suitable for every client. Golden Lion Tax Solutions is here to help you find the most appropriate solution to fit your situation.