Idaho Taxing Information
If the Tax Commission determines a tax shortage a Notice of Deficiency will be sent and the additional tax will be assessed at the time the determination becomes final. If the taxpayer does not timely petition for redetermination of the deficiency or does not timely appeal the decision, the determination will become final and a Notice and Demand for payment shall be issued.
If all demands for payment have been ignored, the Tax Commission is authorized to use the services of a qualified collection agency or attorney. Any fees for the collection services will be deducted from monies recovered from the delinquent taxpayer.
Levy or Distraint
If a taxpayer fails to pay assessed taxes or deficiencies, a notice of levy may be served on property belonging to the taxpayer. In general levy or distraint is a method used to satisfy a tax liability through sale or liquidation of property that is seized. A levy on wages, bank accounts or a seizure of assets may be used to enforce collection of an unpaid tax debt. Additional costs related to any sale proceedings may also be incurred and are the responsibility of the taxpayer.
If you have received a demand for payment from the Tax Commission for any assessed shortage in tax, penalty, interest or other charges and you do not pay the assessment, a notice of lien will be filed in the Secretary of State's office. A lien is a public notice of debt and will generally remain in effect for 5 years from the date of filing. A tax lien can affect your credit rating along with your ability to sell or buy property.
A state tax lien is required for all payment arrangements to protect the interest of the state of Idaho.
If you cannot pay your income tax liability you can request a payment agreement with the Idaho State Tax Commission. You may be required to provide a financial statement and in order to be eligible you usually need to be up to date on all other tax returns and filings and agree to file and pay all future taxes on time. Penalties and interest will continue to accrue on the debt until paid in full.
If you default on your payment agreement you will receive a default notice and be required to pay within 30 days otherwise enforced collections, which may include a levy on wages or accounts, will begin.
Penalties can create a large portion of the liability you may have with the state of Idaho. You may be subject to penalties if you forget to file your tax returns, fail to pay, have negligent or fraudulent returns or don't have the proper tax permits. Some penalties in the state of Idaho are as follows:
- Negligence penalty: If you fail to keep proper records, fail to respond to requests for information, or have a careless disregard of tax obligations you may be imposed a 5% penalty.
- Withholding: If you or your business do not file withholding payments on or before the due date you will be imposed a penalty of 5% of the tax due for each month the liability is unpaid. Underpayment of taxes due is subject to a penalty of one half percent for each month until the liability is paid. The minimum penalty is $10 and the maximum penalty is 25% of the tax due.
- Sales Tax: If you do not file your sales tax returns on time a 5% penalty (maximum 25%) or $10 penalty will be imposed, whichever is greater.
- Fraud: if any part of a tax liability is due to fraud with intent to evade, a 50% penalty of the total deficiency will be assessed.
The Tax Commission may occasionally accept a settlement offer on tax liability when the taxpayer meets one or more of the following conditions:
- A disputed liability where there is a reasonable disagreement as to the existence or amount of the correct tax liability under the tax code.
- Doubt as to collectability where it is unlikely that the tax can be paid in full and the offer reasonably reflects the amount that could possibly be collected through other means.
- Economic hardship of the taxpayer where collection of the liability would make the taxpayer unable to pay basic living expenses.
- Promotion of effective tax administration where, in extreme cases, collection of the full liability may undermine public confidence that tax laws are being handled in a fair and reasonable manner.
Power of Attorney
You may authorize a qualified representative to act on your behalf before the Idaho Tax Commission by filing an Idaho Tax Commission Power of Attorney Form. This form can be used for any issue affecting a tax administered by the Tax Commission, including audit and collection matters. It does not apply to matters before any other state or federal agencies, including the IRS.