The best way to avoid tax debt is to stay current on your taxes. Filing returns and paying taxes on time will save you from the headache of having to pay interest, penalties, and fees that stem from being delinquent on your taxes.
When you are facing state tax debt, it’s often best to seek out professional assistance with your tax woes. Solvable is revolutionizing the process of connecting with reputable tax professionals, and we encourage you to take advantage of our user-friendly platform.
If you live in Illinois and are struggling with tax debt, don’t give up hope.
State tax debt is a bit more complicated than Federal tax debt which involves the Internal Revenue Service (IRS). With Federal tax debt, there is consistency in the way the IRS works to collect the debt. The IRS has rules and regulations that apply to each taxpayer regardless of the state in which you reside or do business.
States do have some consistency concerning tax laws, but they also have unique tax laws that only apply to their residents. If you have lived in one state all of your life, then you should have a grasp of the tax laws specific to you.
If you haven’t dealt with tax debt before or have moved to a different state, you may not understand the precise nature resolving tax debt. If your experience involving tax debt is lacking, you should make a conscious effort to learn all you can about handling tax debt in your state.
Depending on the particular circumstances regarding your Illinois tax debt, even if you can’t pay your balance due, requesting a payment plan may be the best option. If you find yourself in financial hardship and you can’t pay your taxes in full to the Illinois Department of Revenue (IDOR), you can request an Installment Payment Plan from the IDOR.
As with any revenue service, the Illinois Department of Revenue is very cryptic with how they make decisions when considering an Installment Payment Plan request. However, IDOR does have specific application steps to follow.
First, you must complete the Form CPP-I, the Installment Payment Plan Request. You may also need to complete Form EG-13-I, Financial and Other Information Statement for Individuals or Form EG-13-B, Financial and Other Information Statement for Businesses. Requests totaling more than $5,000 require all of your tax returns to be up to date. You must also include all of your tax debts from the past and present in the payment plan.
Payment methods available for approved Installment Payment Plans are the Automated Clearing House (ACH) debit program, MyTax Illinois, credit card, pay-by-phone, and mailing in a payment via check. You can authorize the ACH debit program by completing Form CPP-1-A. Cancelation of the ACH authorization is possible at any time with written notification to the IDOR. The IDOR encourages using the ACH debit program to help reduce the risk of having late payments.
MyTax Illinois is a free account management program that allows you to, manage your tax account, view balances, file returns, and make payments. Credit card payments are accepted for individual income tax. MasterCard, Discover, American Express, and Visa are all accepted. Each of the card service providers assesses convenience fees.
Pay-by-Phone allows you to use an automated system that can help you authorize payment via electronic withdrawal from your checking or savings account. The phone number for this service is (866) 490-2061. You can also mail in payment via check to the following address:
After you have taken steps to request an Installment Payment Plan with the IDOR, you can’t do anything other than wait for them to contact you back to inform you of their decision. If you receive word from the IDOR that they are declining your request, It could be due to several factors. We are going to equip you with a brief overview of those factors so you can prepare in advance before applying for an Illinois Installment Payment Plan.
If you can pay the tax debt outright or you can secure a loan from a financial institution to cover the full amount of the debt, the IDOR may decline your request. You should research these options thoroughly before applying. The IDOR may also reject your application if they determine that you are NOT trustworthy to make payments in an installment agreement. If this is the case, they may approve an Installment Payment Agreement but will place tax liens on your assets.
Even if the IDOR determines that you ARE trustworthy to make payments in an installment agreement and approve your request, they still reserve the right to enact tax liens at any time and for any reason. If your paperwork for the request has incoherencies, they can request more information from you or decline the application altogether.
You could make a positive impact on the IDOR’s decision concerning your Installment Payment Plan request by implementing specific strategies. These strategies include paying a down payment of 20% or more on the tax debt, agreeing to the highest payments that you can afford, and keeping the payment plan at or less than 24 months.
Ultimately, the IDOR has full autonomy when it comes to approving you for an Installment Payment Plan. Taking steps to improve your chances of approval are always best but doesn’t guarantee that the outcome will be to your liking. When requesting this type of payment plan with the IRS or a State Revenue Service, there is always a risk of rejection.
Handling the process alone could be more stressful than you might want to endure. If that is how you feel, hiring a tax professional to take some of the pressure off may be the right choice for you. Do your homework and learn the facts of your circumstances, determine if the complexity of the situation is beyond your comprehension, and implement a plan of action to resolve your Illinois tax debt. Remember that taking advantage of Solvable’s services is just a click away.