Taxpayers may not enter into an Installment Agreement, nor may they have an Offer in Compromise considered unless they are in compliance with their state and local tax filings. State and local compliance programs also require taxpayers to be current with their estimated tax payments and, where applicable, their tax deposits, including estimated tax payments and required tax deposits. Falling out of compliance by missing future tax payments or filing deadlines can result in a default of the installment agreement or an Offer in Compromise.
Compliance Checks*
Comprehensive Tax Compliance Review
State and local tax compliance is determined by evaluating a taxpayer’s filing history, outstanding liabilities, and timeliness of payments for all applicable state and local tax obligations. To be fully compliant with state and local tax filing and payment obligations, a taxpayer must accurately and timely file returns, pay taxes on time, and have no outstanding tax liabilities.
Why is State and Local Tax Compliance Important?
Compliance is crucial not only to avoid accruing penalties and interest from late tax payments but also because state and local tax authorities require taxpayers to be in compliance before taking specific actions on their accounts. This becomes especially important when facing serious collection actions such as driver’s license holds, professional license suspensions, or bank levies.
Furthermore, evaluating a taxpayer’s state and local compliance history is essential in creating a comprehensive plan to address tax issues. Tax representatives must understand what led to the liability and collaborate with the taxpayer to develop a strategy for addressing current liabilities and a long-term plan for maintaining future compliance.
State and Local Compliance Requirements
Conducting a State and Local Tax Compliance Check
Our state and local compliance check process involves:
Obtaining a comprehensive tax history summary
Review of state and local tax account transcripts and filing history
Identifying missing state and local tax returns
Determining which state or local returns need to be filed
Evaluating outstanding state and local tax liabilities
Assessment of all state and local tax debts and obligations
Calculating interest and penalties
Current calculation of all accrued penalties and interest
Determining Collection Statute Expiration Dates
Timeline analysis for state and local collection limitations
Identifying the stage of each tax year in the collection process
Understanding current status and available taxpayer rights
Determining the cause of noncompliance issues
Analysis of failure to make estimated payments or other compliance failures
Obtaining copies of Account Transcripts
Securing documentation for any year with liability or missing return
Providing a comprehensive worksheet
Detailed summary of all compliance information and recommendations
Requesting a collection hold
Protection from imminent enforcement action (usually 10 – 30 days)
State and Local Tax Compliance Check Service
$1,500
Per entity or individual
Our state and local compliance checks are offered at a fixed fee, providing peace of mind and making expert tax attorney assistance accessible to the average taxpayer. This transparent pricing allows you to address your state and local tax concerns without the worry of escalating legal costs. By working with us, you can confidently navigate complex state and local tax regulations, minimize penalties, and establish a solid foundation for your financial future, all while knowing exactly what our compliance check services
Common State and Local Tax Compliance Issues
One of the most frequent compliance pitfalls for individuals is the failure to make estimated tax payments to state and local jurisdictions. This issue often affects self-employed individuals, independent contractors, and those with significant income from sources not subject to withholding. State and local tax systems operate on a “pay-as-you-go” basis, requiring taxpayers to pay taxes throughout the year rather than solely at filing time. Many individuals mistakenly believe they can settle their entire state and local tax bill when filing their annual return, leading to penalties and interest.
Another significant compliance challenge is the snowball effect of penalties and interest on unpaid state and local taxes. When taxpayers fail to meet their state and local tax obligations throughout the year, they often find themselves facing not just the original tax liability, but also substantial additional costs. State and local jurisdictions impose various penalties, such as the failure-to-pay penalty, failure-to-file penalty, and the underpayment of estimated tax penalty, which can quickly accumulate. Moreover, interest compounds daily on both the unpaid tax and the accrued penalties, causing the total debt to grow exponentially over time.
The Snowball Effect
This snowball effect can turn a manageable state or local tax bill into a daunting financial burden. For instance, a $10,000 state or local tax liability can balloon to over $20,000 in just a few years due to penalties and interest. Many taxpayers, overwhelmed by this rapidly growing debt, may fall into a cycle of non-compliance by avoiding future filings or payments, further exacerbating their tax problems and potentially leading to more severe consequences, including driver’s license holds, professional license suspensions, or bank levies.
Navigating State Tax Compliance
Azarvand Tax Law guides you through the state compliance process, ensuring proper preparation and submission of all necessary forms and documents for both Maryland and Washington D.C. We collaborate with you to create a tailored long-term plan for maintaining compliance with both jurisdictions.
Multi-State Expertise: Our team understands the unique requirements and procedures for both Maryland and Washington D.C. tax compliance, ensuring comprehensive coverage for taxpayers with obligations in both jurisdictions.
Get Your State Tax Compliance Check
Contact us at Info@AzarvandTaxLaw.com or visit our Contact Us page to schedule a free 30-minute consultation and take the first step toward resolving your state tax compliance issues.