How Alaska Collects Unpaid Taxes & How Taxpayers Can Get Tax Help
The State of Alaska does not impose income taxes on individuals or collect sales tax, but the Department of Revenue Tax Division does collect the following taxes: estate tax, property tax, corporate income tax, withholding tax, employment tax, tobacco tax, oil and gas tax, fisheries and gaming tax, alcohol tax and more.
The Tax Division is also charged with the task of enforcing State tax laws. Any individual or business experiencing tax problems must work directly with them to resolve their issues. The State takes the collection of taxes quite seriously. Any individual or business that does not file or pay their taxes on can face very aggressive collection activities that may include the following:
If you do not pay your taxes in full when they are due, you will have a penalty added onto your tax bill. The penalty will be 5% of what you owe for every 30 days or fraction thereof that goes by without full payment, up to a maximum of 25%. If fraud was committed, a penalty of 50% of the amount due will be added to the tax bill or $500, whichever ends up being greater.
Tax Penalties for Employers
If an employer in Alaska doesn’t file a report or pay employee contributions when they are due, they may be charged with interest and penalties. Every employer in Alaska should have a tax professional onboard providing tax help on a regular basis in order to remain in compliance with tax laws. Penalties are dealt with differently depending whether they are being applied to a contributory or reimbursable employer.
Penalties for Contributory Employers
Failing to file its tax contribution report: A 5% penalty will be charged of the contributions owed for each 30 days or fraction thereof that goes by after the due date, up to a maximum of 25% of the total tax contributions owed to the State of Alaska.
Failing to pay its tax contributions: A $10 or 10% penalty will be charged of the tax contributions owed, whichever ends up being greater.
Misappropriation of employees’ tax contributions: A penalty of 5 times the employees’ share of tax contributions is owed, not less than $25. Overdue interest owed on contributions: This accrues 12% interest each year it remains unpaid.
If you own or run a business and are the one with responsibility for collecting and paying State taxes and fail to do so or are dishonest in doing so, you may be held personally liable for the unpaid taxes. You could be charged with a civil penalty for the amount of money in taxes you failed to collect, did not account for, did not pay, or evaded taxes. This is also a Class C Felony, of which you would also be guilty.
Every business should have a tax professional or accountant on the payroll to provide ongoing tax help and advice so that no one is ever at risk of getting into this situation.
Reimbursable Tax Penalties for Employers
Failing to file a tax report: For each 30 days late or fraction thereof there is a 0.1% late tax penalty on total reportable wages on each quarter that the report is due.
Unpaid interest on contributions: Unpaid interest on contributions accrues 12% interest a year that starts building up 30 days after the employer has been billed for the quarter.
If you are unable to pay your taxes and any interest or penalties you’ve been assessed with a lien may be placed against you, which would remain in place until you’ve paid what you owe in full or a judgment against you results from your tax liability. Rather than risk this, hire a CPA or professional with solid experience in dealing with the Department of Revenue Tax Division for the tax help you so clearly need.
If you neglect or refuse to pay your taxes including interest, penalties and any other charges you owe within 10 days of receiving the Notice, the State Attorney General has the right to enforce the lien against you through distraint and sale. Having a lien filed against you can adversely affect your credit, which would hinder your ability to get a loan, buy or sell property.
The Tax Commissioner may collect unpaid taxes by issuing a warrant to enforce the taxpayer to comply with all State tax laws.
Levies & Seizures
Once you’ve been assessed with taxes and if you fail to file an appeal before the time allowed for doing that runs out, collection efforts may begin. If you find yourself in this situation, you should try to get some tax help from an experienced tax professional. Otherwise, collection activities could start with a levy being placed on assets you own or partly own, including real estate, stocks and bonds, bank account(s), cars and more.
Such property may be seized starting with the date the levy is placed on your assets or when you receive the Notice of Seizure. Any costs associated with placing the levy on you may be added to your tax bill. Property that’s been seized may be sold anywhere from 10 days to 60 days from the date of the Notice of Seizure.
Outside Collection Agencies
The Tax Commissioner has the right to hire outside collection agencies to help collect delinquent taxes owed to the State.
Suspension of Licenses
In addition to interest and penalties being added to what you owe in taxes if you don’t file and pay your taxes when due, your license that permits you to run your business in Alaska would be at risk of suspension until your taxes are paid up, including interest and penalties.
Alaska Helps Individuals & Businesses in Need of Tax Help & Tax Relief
If you receive a Notice from the Department of Revenue and do not believe the amount it claims you owe or the penalty assessed is correct, you can ask for an informal hearing or conference within 60 days of the date the Notice was mailed. Your hearing would be held before an appeals officer.
To start the appeals process you would need to fill out and submit Form 04-775. It would be wise to have an experienced tax professional provide you with direction and the specific tax help needed to navigate the appeals process. Throughout your informal hearing you may present your evidence and argue your case against the amount you’ve been assessed in taxes and penalties.
If you disagree with the decision made by the appeals officer in the informal hearing, your next step would be to file a Notice of Appeal asking that a formal conference be held with the Office of Administrative Hearings within 30 days of the decision in the informal hearing or conference.
Power of Attorney
You are within your rights to have someone else provide you with tax help by way of representing you before the Department of Revenue Tax Division regarding your unpaid taxes. You would need to complete an official Alaska DOR Power of Attorney Form 04-775.
The person representing your interests must be officially recognized as such through being appointed as your attorney-in-fact via a power of attorney. He/she must also be one of the following:
- A lawyer in good standing in any U.S. state
- A certified public accountant with an active license in any U.S. state
- Someone actively enrolled to practice before the U.S. Internal Revenue Service
- Someone who holds a special position with you, the taxpayer
- At the Department of Revenue’s discretion, someone else may be allowed
- Any other person than those stated above could represent the taxpayer in a through a written application, which would be approved at the sole discretion of the Department of Revenue.
Offer in Compromise
The Tax Division, with the State Attorney General’s approval may agree to an Offer in Compromise for unpaid taxes, penalties and interest if there is a question about whether the taxpayer actually owes the amount assessed or if they don’t think the debt can be fully collected. You would be wise to hire a reputable tax professional or CPA to help you with this so that you have a good chance of getting the tax relief you need via an Offer and Compromise.
If there is no way you can pay the State taxes you have been assessed you may decide to seek an Offer in Compromise. Before applying for an OIC you must have the approval of the Attorney General. This might be a good time to get some tax help and advice from an experienced CPA or tax professional. The Department of Revenue Tax Division may agree to this if you meet the following qualifications:
- It is doubtful that you owe the full amount you have been assessed.
- It is highly unlikely that the Tax Division will be successful in collecting the full amount.
The Tax Division can also compromise on the penalties that have been accruing as long as the Attorney General approves. If you meet the qualifications you would likely have a good chance of getting the tax relief you need via an Offer and Compromise. It is illegal to misrepresent or hide your true financial situation or the extent of your assets when asking to be considered for an Offer in Compromise.
How Employers Can Resolve Their Alaska Tax Problems
The Alaska Department of Revenue Tax Division may offer employers some tax relief options if they cannot pay the full amount the business owes or if doing so would cause severe hardship to the business, impairing it’s ability to remain in business. These options are stated below and would depend entirely on each business’ circumstances:
Waiver of Employer Penalties for Contributory Taxes
In certain circumstances the State will agree to waive penalties that contributory employers have been charged with as long as the employer has a reasonable reason for not complying with State tax laws. The following causes would be considered reasonable:
- Mail was delayed: You mailed everything on time but for some reason it didn’t get there on time. You may be asked to show some form of proof.
- The Department gave you wrong information: You were charged penalties in error because the Unemployment Insurance Office provided you with wrong information.
- Severe illness or death: The death or severe illness of the employer or an immediate member of the family.
- Disaster occurred: This could be a fire, natural disaster or any other form of destruction that caused the loss of financial records or prevented the filing or paying on time.
- Unemployment Insurance Office caused the delay: If the UI caused the penalties.
- You need to work with the Division of Taxation in order to have your penalties waived. You can phone the number on your Assessment Notice for help.
Tax Appeals for Unemployment Insurance
If an Employer disagrees with the amount of a UI tax assessment or adjustment and/or another tax issue he/she can file an appeal. Information on how to file an appeal is detailed in the Alaska Tax Book on page 42. However, rather than doing this on your own it might be wise to hire an experienced tax professional or CPA who can provide you with the tax help and/or tax relief you need in this precarious situation.
Compromise of Contributions
The State has the option of lowering the amount the business owes in tax contributions, interest and penalties if being forced to pay the full amount would cause the employer or person owing the taxes to become insolvent. If you are in this situation and want to arrange tax relief through a compromise it is up to you to reach out to your Unemployment Insurance Tax Office. You can phone their main office toll free at (888) 448-3527 or (807) 465-2757.Contact Us