Indiana Taxing Information
The state can take money out of your bank accounts, up to the amount of money owed to them. This is called a bank levy. Banks are required by tax code to comply with a bank levy if the money is there. There is, however, a holding period during which time you can get professional assistance in getting your money back and/or preventing further bank levies and enforcement actions. Also, the state may intercept any refunds that you have due from the IRS.
Priority One: Stopping Aggressive Enforced Collections
If a tax liability is not paid or protested within sixty days of the first notice, The Indiana Department of Revenue will issue a Demand Notice for payment before issuing a tax warrant. Demand Notices include:
- A ten day notice to either pay the liability or prove reasonable cause for not paying the amount demanded
- The statutory authority of the department to issue a tax warrant
- The earliest date on which a tax warrant (tax lien) may be filed and recorded
- How you may prevent a warrant tax lien from being filed against you
If you receive a Demand Notice For Payment you should pay by the due date on the bill. If you cannot pay, you must call or write the Department by the due date.
You may appeal (protest) a tax bill by giving the state your signed written protest along with a copy of your notice within 45 days of the issue date.
Offer in Compromise in Indiana
If you are unable to full pay a tax liability to the state of Indiana, the Offer in Compromise may be an option for you. The DOR can settle for an amount less than is owed, with either a one-time payment to satisfy your liabilities in full, or a payment plan that will satisfy your liabilities. The DOR will not accept a zero dollar offer.
You may qualify for an Offer in Compromise if:
- You are facing financial difficulties
- Have a terminal or critical medical illness within the immediate family
- Have experienced a personal calamity as a result of a natural disaster or unforeseen event
An Offer in Compromise application includes:
- A completed a Financial Statement, form FS-OIC
- Proof of being current and compliant on all tax filings
- Proof that bankruptcy filings have already been discharged or dismissed
Offer in Compromises are often rejected for reasons including but not limited to:
- The required (extensive) documentation is not correctly prepared.
- Failure to verify income and assets
- Failure to verify sources of funding
- Fraudulent offers
- Accrual of new tax liabilities
- Failure to file current taxes
- Failure to make agreed payments
If you think that you may qualify to submit an offer, get professional advice prior to doing so. Unless the offer is perfectly executed, it will be rejected.
Penalties on Taxes
- Failure to file return or fraudulent intent to evade tax: 100% penalty.
- Failure to file a Return, with return preparation done by the DOR: 20% penalty.
- Liability for penalty: 10% or $5, whichever is greater.
Power of Attorney with Indiana DOR
You may have a qualified professional represent you. This requires that you have a Power of Attorney form completed and signed before any tax matter can be discussed with your representative. The DOR accepts Power of Attorney form POA-1 or Internal Revenue Service Power of Attorney form 2848.
Tax Warrants and Liens
If a tax liability goes unpaid in Indiana, a "Proposed Assessment" or a "Demand Notice" will generate a tax warrant. A tax warrant will appear on any credit report or title search for up to seven years. If you receive a tax warrant , the collection process has entered the phase where enforced collections is an option for the state.
If you do not pay the full amount due, the warrant may be sent to the sheriff's office. Though The sheriff may collect the amount of tax due, plus penalty, interest, clerk's costs, and a collection fee of 10 percent of the base tax due on the bill.
The sheriff may:
- sell your property at an auction
- garnish your wages
- levy your bank account
If the sheriff fails to collect the money within 120 days, the Department of Revenue may turn the past due account over to a collection agency.
Your employer is legally obligated to comply with a garnishment request made by the state or IRS. The state may garnish a delinquent taxpayer's wages until the back-tax liability is paid.