If you have neglected or failed to pay a tax to the Tax Commission, a tax lien may be issued. Upon issuing and recording of a notice, the lien becomes a judgment against a person's property and property rights. When a lien is filed the Tax Commission will send a certified letter containing a Notice of Lien. It is a public record and can affect your ability to purchase or sell real estate, obtain a loan or gain employment. Even after being satisfied the lien will still be reflected on your credit report for years as either "satisfied" or "withdrawn."
A Warrant for Delinquent Taxes, or state tax lien, allows your personal property (i.e. automobiles, business equipment, etc.) and real property to be attached and sold if necessary to satisfy the tax liability.
If you have entered into a payment agreement with the Tax Commission, a lien may be filed, but as long as you adhere to the terms of the agreement, no action will be taken on the lien.
The Tax Commission will send you a billing notice if you file late taxes, underpay your taxes or do not file your taxes. The billing notice will show the amount due including penalties and interest that will accrue through the due date. If you do not pay the bill by the due date, additional penalties and interest may be assessed and enforcement actions may be taken.
Notice of Failure to File: Businesses that do not file their taxes will receive a Notice of Failure to File.
- Annual filers will receive a Notice of Failure to File for each filing period the taxpayer does not report, for two consecutive periods. If there is no response by the second notice, the Tax Commission will then issue a Notice of Account Closure and License Invalidation.
- Quarterly or monthly filers will receive a Notice of Failure to File for each filing period the taxpayer does not report, for four consecutive periods. If there is no response by the fourth notice, the Tax Commission will then issue A Notice of Account Closure and License Invalidation.
Notice of Taxes Due: A Notice of Taxes Due will be issued if a taxpayer does not respond to a Notice of Failure to File or files a return and does not pay the taxes in full.
Notice of Lien: If you do not respond to a Notice of Taxes Due by the due date, the Tax Commission will send you a Notice of Lien or Notice of Lien and Intent to Offset. The notice informs the taxpayer or business that a lien has been recorded and placed on real or personal property. Where intent to offset has been issued the Tax Commission will request that the U.S. Department of Treasury reduce the taxpayer's federal refund by the amount the taxpayer owes to the state of Utah.
Offer in Compromise
If the Tax Commission determines that a your assets, liabilities, income and expenses make it unrealistic that the tax bill can be paid in the foreseeable future, you may be able to qualify for an offer in compromise. An offer in compromise allows the taxpayer to settle for less than the full amount of the tax liability.
A request for an Offer in Compromise must contain the following written information before it will be considered and must reflect the taxpayer's maximum ability to pay:
- A signed statement from the taxpayer requesting the offer, detailing the terms of the proposal, and providing the grounds for its acceptance.
- A current financial statement from the taxpayer.
- Written evidence to support the offer.
The Tax Commission will review the proposal and notify the taxpayer in writing whether or not it has been accepted or denied.
The Treasury Offset Program (TOP) allows state agencies to intercept any federal refunds due to a taxpayer who has a state tax liability. If the Tax Commission has sent you a Notice of Intent to Offset, you have 60 days to pay the debt or else any federal refund due to you will be sent to the Tax Commission and applied to your delinquent tax bill.
If you cannot pay your business or income taxes in full, you may request a short-term payment plan. If your payment agreement is accepted you will receive a letter with the terms and conditions. The state may still file a tax lien to secure the debt, and penalties and interest will continue to accrue until the tax bill is paid in full.
Power of Attorney
You may choose to have a third-party designee to represent you before the Tax Commission to receive information, make calls to the Tax Commission to discuss state returns or resolve your tax issues. You may authorize a third-party designee on your Utah income tax return, TC-40, page 2. You may also complete and submit form TC-737, Power of Attorney and Declaration of Representative.
Personal Liability: If you are an individual responsible for collecting and remitting trust fund taxes for an LLC, corporation, partnership or other entity, you may be held personally liable for any failure to collect or remit those taxes. The responsible individual may be assessed a penalty equal to 100 percent of the unpaid taxes. The following are trust fund taxes:
- Withholding tax
- Sales and use tax
- Transient room tax
- Resort communities tax
- Tourism tax
- Certain fuel taxes
- Public transit tax
Successor Liability: If you are purchasing a business, the state of Utah requires you to withhold enough money to cover any due and unpaid sales and use, withholding or other trust fund taxes, until the former owner produces a receipt showing those taxes have been paid or a certificate stating no taxes are due. If you fail to withhold the required money and the taxes remain due and unpaid 30 days after the sale of the business, you will be held personally liable.