Ohio Taxing Information
When the Ohio Department of Taxation becomes aware of taxes owed, it issues an "assessment." An assessment is a legal billing for an unpaid tax liability. If an assessment goes unpaid for 60 days after issuance, the assessment is sent to the Attorney General's office for collection action.
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 you may get money back. If you have had a bank levy, or anticipate that one is likely, get professional advice immediately.
Prior to taking aggressive collection actions, the state of Ohio will notify of the pending action. If the taxpayer fails to pay the tax after receiving the Notice, tax liens and collections be issued.
Should you think that an assessment has been made in error, you may object by filing a Petition for Reassessment, in writing, to the Department of Taxation. This should be filed within 60 days of receiving the assessment, per instructions that are included with the assessment. You may want professional assistance with this in order to ensure that it is executed correctly. After filing a Petition for Reassessment, an informal conference with a revenue officer may resolve the error, provided that your evidence supports your claims.
Offer in Compromise
If you are unable to pay your tax liability in full and are also unable to meet a payment schedule that will full-pay your liability, you may be eligible to settle your tax liability for less than is owed through the Offer in Compromise Program. This program is managed by the Attorney General, Collection Enforcement Section. You must fall into one of the following categories in order to apply for an Offer in Compromise:
- Economic hardship;
- Doubt of collectability; or
- Collection of the claim would result in a subsequent refund of same taxes (Only applicable in rare circumstances.
Specific forms and supporting documents are required in filing an Offer in Compromise. You will be required to:
- Disclose all debts or obligations to the State of Ohio. Failure to disclose any obligation may result in rejection of the offer or, if previously accepted, reinstatement of the full amount owed plus accrued interest;
- Make payment in full within 60 days of acceptance of the Offer and Compromise Agreement; and
- Stay current on all state tax filing, reporting, and payment requirements for five years after the acceptance of an Offer and Compromise Agreement. Failure on this point will result in reinstatement of the full amount owed plus accrued interest.
Disqualifiers to filling an Offer in Compromise:
- If are in Bankruptcy or have filed a Petition for reassessment, you may not also file an Offer in Compromise.
If you cannot make payment in full, it is possible to arrange payments. This typically requires submitting detailed financial statements, and negotiation with a collections officer from the state of Ohio. You may want professional assistance with this in order to ensure that you receive affordable terms.
Depending upon the type of tax and circumstances, the department of taxation will assess penalties. The most common penalties are:
- Failure or Late Filing: This penalty shall not exceed the greater of $50/month up to a maximum of $500; or 5%/month up to 50%.
- Late Payment: Not to exceed 15% of late payment.
- Estimated Taxes: A penalty may be charge on the delinquent portion of the estimated tax. The DOT defines Estimated Tax for this purpose as the lesser of 100% of last year's tax or 90% of this year's tax.
Power of Attorney with Ohio
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 state of Ohio accepts the Declaration of Tax Representative form for this purpose.
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. If your wages are being garnished, or you have been warned that a garnishment is possible, get professional advice immediately. Also, the state may intercept any refunds that you have due from the IRS.