How Illinois Collects Taxes & Programs for Those Needing Tax Help
The Illinois Department of Revenue is responsible for administering the tax laws of the State and that means collecting taxes. When taxpayers are delinquent in paying their taxes, they are subject to a whole series of collection activities.
If you fail to file your taxes or pay what you owe, you will get a bill from the State that includes accrued interest and penalties. Your initial tax bill will provide a breakdown of taxes and charges owed, an explanation of why you owe this amount along with your legal rights and obligations with regard to the collection process. If you neglect to pay what you owe or if you cannot pay the full amount, the Revenue Department will start the collection process, as follows:
The Illinois Department of Revenue has a number of enforced collection activities it uses to collect unpaid taxes. If you have unfiled returns and/or owe back taxes you may find a lien placed against your property, have your personal and/or business assets seized, your bank account(s) levied and/or wages garnished.
Depending on the type of business you have, the State can refuse to issue a license or renew your business license. It may also use other collection activities, including private collection agencies. You may also find your name on the Delinquent Taxpayer List, which is posted on the Department’s website.
When the Revenue Department files a lien against a delinquent taxpayer, it represents the first in a series of aggressive collection activities. If you have gotten behind on your taxes and are at risk of a tax lien you need to know that it will negatively impact your credit rating, make it difficult if not impossible for you to sell or transfer the ownership of any assets, give the State legal grounds to levy your bank account(s) and/or seize and sell your assets.
A lien can be enforced for 20 years. Once your tax debt is paid in full the State will lift the lien. Rather than risk all these consequences, it would be best to hire an experienced tax professional or CPA so that you can get the tax help you need to resolve your tax problems once and for all.
Garnishment of Wages
If your employer receives a garnishment request he/she has no choice but to comply and withhold up to 15% of your gross wages. Your wages can be garnished until the full amount you owe in back taxes is paid. If your paycheck is currently being garnished, or if you are at risk for having your wages garnished, it’s time to contact an experienced tax professional for tax help in resolving the matter.
The Department of Revenue has a legal right to seize the money in your bank account(s), up to what you owe in back taxes. If the State levies your bank account(s) your bank has no choice but to comply with the order. However, there is a waiting period that allows you enough time to get professional tax help so your money can be returned and/or to prevent additional collection activities.
If you are expecting a federal tax refund, it may be at risk if you owe back taxes to the State of Illinois. The State is within its rights to ask the IRS to send your federal tax refund to the Illinois Department of Revenue to offset what you owe in State taxes. If you have had your bank account(s) levied or expect it to be levied, you need to consult with a reputable tax expert or CPA immediately.
Private Collection Agencies
The Illinois Department of Revenue does on occasion use private collection agencies to collect delinquent taxes. If a collection agency contacts you about your tax debt, you must be careful about revealing any personal or financial information until you’ve verified their identity and perhaps sought tax help from an experienced professional or CPA on how best to resolve your tax problems.
If the Department turns your account over to a private collection agency you will end up being responsible for the collection agency’s fees as well as your tax debt and the interest and penalties you’ve accrued.
The State of Illinois is within its rights to seize your assets, including any real estate you own and/or personal property if you have failed to pay your taxes and any interest and penalties that you’ve been charged as a result. The Department of Revenue will be notify you of how much you owe at least 10 days prior to seizing your property. Once the property is seized it will be auctioned off to pay your tax debt.
Before things get this far out of hand it would be wise to consult with a tax professional or CPA for any tax help and expertise they could provide. If the Department turns your account over to a private collection agency you will end up being responsible for the collection agency’s fees as well as your tax debt and the interest and penalties accrued.
Personal Liability for Unpaid Business Taxes
Corporate officers or anyone with the “power of the purse” may end up being liable for unpaid business taxes, along with any accrued interest and penalties. Furthermore, corporations in Illinois that are delinquent in paying State taxes may have their corporate charter renewal denied. Every business should have an experienced tax professional offering tax help and advice on a regular basis so that the business is never in jeopardy due to unpaid taxes.
Suspension of Revocation of Sales Tax Permit
If sales tax is collected by your business and payments are made to the Revenue Department, you are required to have a sales tax permit. If you do not fulfill your tax obligations the State has the right to suspend or revoke your sales tax permit.
Tax Help & Tax Relief Programs Available to Illinois Taxpayers in Need
The Illinois Department of Revenue Services offers a couple of programs to eligible individual and business taxpayers who cannot pay their taxes in full or who have back taxes they are behind in paying. Approval for these options depends on the particulars of each situation.
Power of Attorney
Taxpayers are entitled to designate a qualified professional to represent them in tax matters before the Illinois Revenue Department. You would need to complete and submit Power of Attorney Form IL-2848 before the Revenue Department would discuss matters involving your taxes with your representative.
Installment Payment Plans
Illinois taxpayers who cannot pay their taxes in full can request approval to go on an Installment Payment Plan. To request tax help through an Installment Payment Plan, do the following:
- Complete Installment Payment Plan Request Form CPP-1.
- If your tax debt exceeds $5,000, including interest and penalties, you need to complete Financial and Other Information Statement for Individuals Form EG-13.1.
- If you want your payments to be automatically transferred from your checking account, complete ACH Authorization Form CPP-1-A.
You can either fax your request for an Installment Payment Plan to (217) 785-2635 or you can send your packet to the following address:
Illinois Department of Revenue Installment Contract Unit
P.O. Box 19035
Springfield, IL 62794-9035
There is no information on how long it will take the Department of Revenue to make their decision, however you may phone them at (217) 785-8556 if you have questions or concerns.
Offer in Compromise
Illinois taxpayers who qualify may be able to totally settle their tax debt for less than what they actually owe if they are approved for an Offer in Compromise. In Illinois, these cases are not handled like they are with the IRS. The only criterion that Illinois considers is the uncertainty of collecting the entire tax debt.
If you have no way of paying what you owe in Illinois State taxes, an Offer in Compromise could potentially give you a tremendous amount of tax relief. Illinois has a record of turning down more than two-thirds of offers coming in for the program, which means this program won’t be easy to qualify for. In submitting your offer, make sure it is the most you could possibly pay, whether in installment payments or a lump sum, otherwise your offer will likely be rejected.
Your best chance of having your offer approved would be to seek tax help from a reputable professional or CPA with a record of success with other clients seeking an Offer in Compromise.
In deciding whether or not to accept a taxpayer’s offer to settle their entire tax debt, the State examines 27 separate criteria. They must be convinced that the offer is the most that can be collected from you within a reasonable period of time; otherwise your offer will be rejected.
When requesting an Offer in Compromise, you must submit the following:
- Completed Board of Appeals Petition Form BOA-1 with your signature
- If you are designating someone to represent you in matters before the Department of Revenue, you must include a signed Power of Attorney Form IL-2848 with Form BOA-1.
- Financial Statement for Individuals Form BOA-4
- Copies of your State and Federal tax returns for the last 3 years
- Copies of your bank statements for the last 6 months
- Your last 2 pay stubs
If you have already submitted or are also requesting an Offer in Compromise from the IRS for back federal taxes, you need to include a copy of the offer you made the IRS and whether or not they accepted it.
Send your packet to the following address:
Illinois Department of Revenue Board of Appeals
100 W. Randolph Street, Suite 7-339
Chicago, IL 60601-3274
If you want to do all of this over the Internet, you can download the forms and file your request online. There is no information on how long the Board of Appeals will take to make a decision. If you have any questions, you can call them at (312) 814-3004.
Tax Help Available to Illinois Taxpayers in Resolving IRS Tax Matters
If you live in Illinois and are behind in paying your taxes to the IRS, you need to know that this can get serious. The first thing to do is to get up to date in filing all your returns so that you know exactly how much you owe in back taxes.
Once you have determined how much you owe the IRS, you can take a look at your payment options. If you have the money to pay the full amount, this would be your best option because it would keep you from accruing any more interest and penalties than you may already owe.
If you cannot get your hands on enough money to fully pay your IRS tax liability, your best course of action would be to make monthly installment payments. As a resident of Illinois you are legally entitled to ask for an Installment Payment Plan so that you can pay over a period of time rather than in one lump sum. While this may be more feasible, you must remember that it will cost you more in the end due to interest and penalties.
If you cannot file your tax return by April 15th, you can always request an extension. Although this may seem like a clever way to defer paying your IRS taxes, it doesn’t work that way. An extension only allows you to delay sending your forms in, but you are still required to pay what you owe in taxes by April 15th. The extension just gives taxpayers more time to organize their paperwork and avoid the fee for filing a late return.
If all of this seems overwhelming to you, we offer tax help to Illinois residents with any issues they have regarding their State and IRS taxes. We can help resolve your tax problems in these specific areas:
- Filing back tax returns
- Help with an audit
- Having IRS penalties removed
- Settling back taxes
- Having a tax lien released
- Lifting a wage garnishment
- And much more