Did you know that the Virginia Department of Taxation is authorized to conduct a number of collection actions against you if you fail to meet your tax obligations?
It’s important to take action quickly to avoid the potential penalties the department can enforce when unfiled returns or unpaid taxes are in play. The consequences of failing to pay your state taxes on time in Virginia without putting a payment plan in place can include wage garnishments, property levies, property liens, interest, and other penalties.
You have options available even if you can’t afford to pay your tax bill in full right away. By getting in touch with the Virginia Department of Taxation, you could qualify for a Virginia tax payment plan. This type of plan can help you overcome your tax debt while also avoiding the collection efforts available to Virginia tax collectors.
Are you ready to learn more? Empower yourself with the knowledge you need to stay in good standing with the IRS by learning more about what it takes to get onto a Virginia tax payment plan below.
Can You Make Payments on Virginia State Taxes?
Yes, the Virginia Department of Taxation allows for Virginia state tax installment payments under certain conditions. However, you must request enrollment in a payment plan. In addition, you must receive your tax bill before you can set up a Virginia tax payment plan.
Can You Pay Virginia State Taxes in Installments?
You have the option to make installment payments on the taxes you owe if you meet certain conditions. First, you must owe less than $25,000 in taxes, penalties, and interest to be approved using Virginia’s online “fast track” for installment plans. You also cannot have any disqualifying collection actions tied to your account. This includes a revocation, criminal warrant, or bond. A tax lien issued to an employer or bank may also disqualify you from online registration. Bankruptcy could also be a barrier.
The good news is that it’s possible to activate an installment agreement even if you have a barrier in place as long as you follow the correct steps for setting up a plan with help from a Virginia Department of Taxation representative. It becomes crucial to seek help from a tax professional if there are obstacles in place that require extra steps before approval.
What Are the Conditions of the Virginia Tax Payment Plan?
Payment plans are generally available to anyone who owes $25,000 or less in taxes. It’s important to manage your payment plan carefully to avoid defaulting. This means making all required payments on time. You’ll also need to file all returns on time without missing any future tax payments to keep your payment plan current, as your payment plan may be canceled if you fail to stay current or meet all future tax obligations during its lifespan.
You must also agree to allow the Virginia Department of Taxation to apply all future state refunds toward your balance until the end of your payment plan. Please note that you may be subject to penalties and collection efforts if your plan is canceled due to your failure to comply with the terms of the agreement.
Who’s Eligible for a Virginia State Tax Payment Plan?
Both individuals and businesses are eligible for tax payment plans in Virginia. Being unable to pay your tax bill in full is the main requirement. Generally, you’ll need to owe less than $25,000 to enter into a payment plan.
What Is the Process for Creating a Tax Payment Plan in Virginia?
You will be asked to supply some basic information when enrolling in a payment plan. You’ll need to supply your Social Security number, date of birth, and a copy of your most recent Virginia tax return to become enrolled as an individual. For businesses, the requirement includes your Federal Employer ID Number (FEIN), your 15-digit Virginia tax account number, and your most recent Virginia tax return.
Once you’re on a plan, you may wonder how to find details of Virginia tax payment plan agreements. You should be able to get details about your plan by signing into your Virginia taxpayer’s account, but you can always inquire directly with the agency if you have more questions.
How Long Will a Virginia Tax Payment Plan Last?
If you get onto a tax payment plan, then it’s important to be as vigilant as possible about making your payments on time. Missing a payment can set you back financially and result in further action from the Virginia Department of Taxation. Even one missed payment can result in the restarting of collection efforts, which might be very difficult to remove.
What’s more, failing to make a payment could invalidate your tax payment plan. Rather than being in good standing with the tax agency, you’ll once again be considered in delinquent status.
You might be wondering how long your tax payment plan will last. The length of your payment plan will vary from case to case, as the overall amount you owe will play the biggest factor in how long you have to pay off your debt. In most cases, taxpayers are given 12 months to pay the full amount of their tax burden. Of course, if this type of plan isn’t possible for you, the Virginia Department of Taxation will be happy to work with you. In some situations, the agency is willing to provide up to 24 months to pay back your debt in full.
Keep in mind that the interest rate for tax payment plan agreements can range and vary. You’ll want to know whether your interest rate will remain stable throughout your agreement. So, what is the interest for Virginia state tax payment plan agreements?
Right now, the IRS has a set 6% interest rate, but this gets adjusted every quarter. Interest rates for Virginia plans are assessed at the federal underpayment rate interest rate for tax payment plan agreements, in other words, might vary depending on when you get onto your plan and what the current underpayment rate is set at. The Department of Taxation is the ultimate authority that will decide how long your payment plan will last. In some cases, though, the department decides to sell off your taxpayer debt to a third-party collection agency. If this happens to you, you might be able to negotiate a plan that lasts longer than 12 months.
Potential Consequences of Ignoring a Tax Debt
In Virginia, taxpayers are expected to pay everything they owe in back taxes. This is especially true when they sign up for a Virginia tax payment plan. If a taxpayer ignores their debt, then they could incur the following penalties:
- Increasing penalties and interest
• Garnishing your wages
• Garnishing your bank account
The best way to avoid these consequences is to pay your tax bill on time. Do everything you can in order to remain current with your payment plan, too.
How Can Tax Group Center Help You With a Virginia State Income Tax Payment Plan?
Tax Group Center is here to help if you’d like to set up Virginia state tax installment payments. There’s no need to put off requesting a Virginia tax installment agreement when the state’s tax department is so reasonable about providing options. Failing to take action as quickly as possible with the help of a qualified, knowledgeable tax professional could leave you vulnerable to unnecessary penalties and complications.
Our team is equipped to help you get a payment plan in place because we have 30 years of experience doing exactly that for our clients. In addition to helping you set up your payment plan, we can also help you stay current with all future tax obligations to ensure that you stay in good standing with the Virginia Department of Taxation. Reach out to Tax Group Center today to get started!