Tax Relief Services Arizona

Power of Attorney

You are within your rights to designate someone to provide you with tax help by representing you regarding tax matters with the State of Arizona. You would need to complete an Arizona Power of Attorney Form 285 designating this qualified professional as your representative before the State on tax matters. Once this form is submitted the Department can legally discuss your tax issues with this person.

Demand for Payment

If you are you delinquent in paying your taxes for any of the following reasons you are at risk aggressive collections activities:

• Neglecting to file tax return(s)
• Non-payment or underpaying your taxes
• Dispute on the amount of tax owed
• Errors on your tax return(s)
• Fraudulent tax return(s)

Under any of these circumstances the State or the Internal Revenue Service will send you a Demand for Payment, which is essentially a billing notice. This starts the collection process.

Abatement of Penalties

Arizona allows tax penalties to be forgiven if there is reasonable cause. The following are the most common reasons why the Department of Revenue allows for the Abatement of Penalties:

• Tax records have been lost or totally destroyed.
• Tax return was filed late due to taxpayer’s unexpected illness or that of a family member.
• Death of the taxpayer or that of a family member.
• Tax return filed on time contained a mathematical error.
• Taxpayer was unavoidably absent due to being in prison, taken hostage, shipwrecked, or some other cause.
• And many more possible reasons.

A taxpayer must submit a written request when filing for the Abatement of Penalties. This is similar to the request when filing with the IRS to have penalties abated. For detailed instructions on what the Arizona Department of Revenue requires for this, please refer to their website. But, if you’re smart you’ll hire a qualified professional who has helped other taxpayers successfully navigate this process.

Once you’ve completed your written request for the Abatement of Penalties, mail it off to the following address:

Arizona Department of Revenue
Penalty Review Unit
1600 W. Monroe
Phoenix, AZ 85007

Wage Levy & Garnishment

If the State decides to levy your wages your employer is legally required to hold back a portion of your paycheck and send those funds to the State. This levy would continue on until your tax debt, including interest and penalties, is fully paid. Once you become aware that a tax levy is imminent it would be wise to consult with an experienced professional for tax help and advice.

The State also has the right to intercept any tax refunds that may be coming to you, whether from the State or the Internal Revenue Service. This collection activity is referred to as a refund offset.

Offer in Compromise

If there is no way you can come up with the money to pay your taxes in full, you may want to determine if you would be eligible to request tax relief through an Offer in Compromise. This would allow you to pay less than what you owe to settle your tax debt once and for all.

In order to qualify, the Department has deemed the tax debt to be uncollectible or it’s been determined that it would be more costly to try and collect the tax debt than would be recovered in the end.

There is quite a bit of paperwork required of taxpayers when applying for this tax relief program, which means it would be crucial for you to have an experienced tax professional providing you the assistance you need to succeed with this filing.

If the State accepts your offer and you make payment, the outstanding balance you owed will be forgiven and any liens filed against you will be lifted. If you hope to get your offer accepted, you must offer an amount that reflects the absolute most you could pay.

To be eligible for an Offer in Compromise, you must meet the following requirements:

• Be up-to-date in filing your last three years’ income tax returns.
• If you own or operate a business your license(s) must be current as well as all tax filings for the business.

To request an Offer in Compromise you are required to complete a Statement of Offer and the required financial documentation. The following information must also be provided:

• The amount of your tax liability
• How much you’re offering to pay to settle your tax debt
• The source of the money you’re offering
• How often you will make payments and in what amount
• Any other pertinent information regarding your situation

Before you send your request in, ensure that all responsible persons have signed, such as your spouse or if you’re requesting this on behalf of a corporation, all corporate officers. If all required information is not submitted, the decision will be delayed.

When the Department issues a written decision on whether to accept or reject your offer, that decision is final. From that point on you do not have the right to contest the amount you owe in taxes. The State has the right to withhold any tax overpayments you’ve made or refunds owed to you, plus any proceeds derived from a levy issued before receiving your offer, but not received when your offer was submitted.

Lastly, if your offer is accepted, you are required to comply with all Arizona tax laws related to filing your returns and fully paying what you owe in taxes for the following three years. If you do not comply with all the terms laid out in your Offer in Compromise, you would be considered in default of the agreement.

Personal Liability for Business Taxes

If you’re a corporate officer or are the one in charge of seeing that the corporate taxes are paid you may find yourself held personally liable if the taxes are not paid. You would also be liable for the interest and penalties. In addition, corporations with outstanding taxes are at risk of their corporate charters being denied when they come up for renewal.

Programs for Arizona Taxpayers in Need of Tax Help or Tax Relief

Payment solutions for Arizona taxpayers who cannot pay the full amount they owe very nearly mimic the tax help and tax relief programs set up by the IRS. If you are having problems paying both your State and Federal taxes, you should find it fairly easy to complete the paperwork because both require essentially the same information.

The Arizona Department of Revenue offers the following solutions for taxpayers having difficulty paying their taxes in full:

Installment Payment Plans

An Installment Payment Plan is the most commonly used program offered to taxpayers who cannot fully pay their back taxes. Taxpayers who qualify are generally given up to 24 months to fully pay what they owe in taxes. The basic requirements that must be met are the following:

• You are not allowed to incur any new debts in addition to what you already owe.
• You must make all your installment payments on time.
• You must agree to provide up-to-date financial statements when requested during the term of your Installment Payment Plan so that the Department of Revenue can review.
• You must have not defaulted on more than two Installment Payment Plans in the past except under extraordinary circumstances.

If your financial situation does not permit you to pay your taxes in full, the State does allow individual taxpayers and businesses to make installment payments on their tax debt under certain circumstances. Here is what you will need to submit when making your application:

• Employer’s name
• Monthly expenses
• Bank account information
• Number of dependents
• Spouse’s name, income and place of employment
• Other financial information as needed

For Businesses: You will likely need to provide all of the above information, plus the following:

• Owners’ name(s)
• Owners’ social security number(s)
• Owners’ address(es)
• The business’ tax ID number(s)
• Current financial statement
• Profit and loss statement

If you’re an individual wanting to request an Installment Payment Plan you are required to complete Tax Form 1040IA. The State may also request a Collection Information Statement providing details of your financial situation. Businesses are required to complete this Financial Statement. If you have questions or concerns about these forms, you can phone the Office of Collections’ Phoenix office at (602) 542-5551 or the Tucson office at (502) 628-6442.

This information will be used in determining whether you, as an individual or business, have the means to pay the full amount you owe in taxes. Once a State Revenue Officer analyzes your financial information the State will propose a payment plan.

However, when it comes to businesses, the State is often unrealistic about ongoing expenses and how much income and money for reinvestment is needed to stay operational. It would be very risky on your part to enter into an installment payment agreement without first consulting with an experienced tax professional and getting their tax help and advice about what you can and cannot afford in monthly payments.

If the Department does agree to an Installment Payment Plan with you, it has the right to change or terminate the payment plan if you do not live up to the agreement by failing to do any one of the following:

• Failing to make an installment payment on time or pay any other tax debt when due
• Failing to file your tax return or report when due
• Failing to provide information within 30 days of the department asking for the information
• Failing to notify the department if and when your financial situation materially improves
• The Department of Revenue under highly unusual circumstances may approve a payment plan that extends beyond 24 months, but this is very rare.

An application for an Installment Payment Plan must include the following in addition to everything listed above:

• A copy of your income tax return
• Completed Individual Income Tax Installment Agreement Request Form 140-IA. For those with more than one employer, include the names of the companies or the names and contact information for the relevant individuals
• A copy of your Application for Filing an Extension, if applicable
• Mail this information to the address listed at the bottom on Form 140-IA.
• You will be contacted if the Department of Revenue is going to require you to fill out a Collection Information Statement. The Department will notify you within 60 days with a decision as to whether they’ve approved or denied your request.
  You will be charged interest on your unpaid tax debt from the date that your taxes were originally due. Interest will continue to accrue until your taxes are paid in full.