Pennsylvania Taxing Information

pennsylvania flag

Bank Levies

When the state issues a bank levy against you, they will take money directly out of your bank accounts, up to the amount of money owed to them. 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 professional help and possibly get your money returned to you.

Deferred Payment Plans for Individuals

You can avoid enforced collections by paying the tax due or making payments on the liability with a Deferred Payment Plan.

Deferred Payment Plan for Individuals

Before the state will consider entering into a Deferred Payment Plan agreement with a delinquent taxpayer, the state will exhaust every avenue of full collections, including urging you to seek conventional lending in order to pay the liability. This can be a catch-22, because it is difficult to get lending after the state has issued a tax lien due to delinquent taxes.

Requirements for a Deferred Payment Plan for individuals:

  • All filings must be up to date
  • Financial Statements must be accurate and signed
  • A down payment of not less than 20% is typically requested (though we have negotiated lower down payments on behalf of clients)

Equitable Relief

If you do not qualify for Innocent Spouse relief, you may qualify for Equitable Relief. To qualify for Equitable Relief, you must meet the following conditions:

  1. You and/or your spouse did not transfer assets to one another as a part of a fraudulent scheme.
  2. You did not file your return with the intent to commit fraud.
  3. It would be unfair to hold you liable for the understatement or underpayment of tax.

Other factors that are considered in judging an equitable relief case:

  1. You are separated or divorced from the spouse with whom the liability was accrued.
  2. Paying the tax would cause an economic hardship.
  3. You were abused by your spouse, but the abuse did not amount to duress.
  4. You did not know and had no reason to know about the items causing the understatement or that the tax would not be paid.
  5. Your spouse has a legal obligation under a divorce decree or agreement to pay the tax.
  6. The tax for which you are requesting relief is attributable to your spouse.

Innocent Spouse

To qualify for Innocent Spouse, you must meet the following criteria:

  1. The Innocent Spouse relief request must be made within two years after the date on which the state first began collection activity against you.
  2. You must have filed a joint return that was underestimated.
  3. The understatement of tax return was due to errors by your spouse or former spouse, and you were unaware of the underestimation or reason for under estimation.
  4. It would be unfair to hold you liable for the understatement of tax.

Notice of Intent to Cite

Prior to taking aggressive collection actions, the state of Pennsylvania will issue a Notice of Intent to Cite. If the you fail to pay the tax after receiving the Notice of Intent to Cite, a lien can be issued. This opens the door to enforceable collection actions.

Offer in Compromise in Pennsylvania

The state of Pennsylvania does not have an Offer in Compromise like the IRS does, but they have a couple programs, detailed below, to help those who otherwise could never pay their tax bill.

Payment Plan for Businesses

If you are behind on taxes owed to the state of Pennsylvania, you may qualify for a Deferred Payment Plan to pay the delinquent tax liability.

Before the state will consider entering into a Deferred Payment Plan Agreement with a business, they will exhaust every avenue of full collection, including urging the business to seek conventional lending in order to pay the liability. This can be a catch-22, because it is difficult to get lending after the state has issued a tax lien due to delinquent taxes.

The requirements for requesting a Deferred Payment Plan for a business are as follows:

  • All filings must be up to date.
  • Financial statements must be accurate and signed.
  • You must make a down payment of not less than 20% if you are an active business, and not less than 10% if you are an inactive (or defunct) business (though we have negotiated lower down payments on behalf of clients).
  • A maximum time frame of 24-months for an active business and a maximum of 48-months for an inactive business (though we have negotiated longer terms on behalf of clients).
  • First payment must be certified funds (subsequent payments may or may not need not be certified, depending upon revenue officer's discretion).

Power of Attorney

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 Pennsylvania accepts the Declaration of Tax Representative form for this purpose.

Tax Collection Agencies

The state of Pennsylvania may outsource the collection of delinquent taxes to a debt collection company. If you are contacted by a collection company, claiming that you owe taxes, verify their identity prior to divulging any personal information such as social security numbers, bank accounts, or tax id numbers.

If the state sends your account to one of these agencies, you will become responsible for collection agency fees in addition to the tax, penalty, and interest that you already owe. The state does this to recoup the cost of retaining private collection agencies. The additional fees range from 19 percent to 29 percent.

Tax Liens

If you have a delinquent tax assessment in Pennsylvania, the state's Collection Division may file a tax lien on your personal property and/or business property. A tax lien is filed at the county courthouse where you live or do business. A tax lien secures the state's interest and allows for enforced collections. A tax lien is a public record and can compromise your credit score, as well as limit the ability to sell or transfer property.

Wage Garnishments

The state may order your employer to withhold money from your paycheck and remit it to the state in order to repay your tax bill. Your employer is legally obligated to comply with a garnishment request made by the state or IRS. 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.

We strive to save our clients money and time, while alleviating stress.  Just as there are many different tax related problems, there are many options for tax resolution.  Call us at 888-589-0955 for a free consultation. In a few minutes we will help you to better assess what options are best for your unique situation.