AZ State Tax Payment Plan: An Option If You Can’t Pay in Full
A tax payment plan or installment payment agreement is the Arizona Department of Revenue’s (ADOR) version of an IRS installment agreement. A taxpayer may consider a payment plan if they do not have funds to pay the ADOR at once but can afford to pay over time. A taxpayer can propose to pay a certain amount every month until the liability is paid.
Duration of the AZ State Payment Arrangement
ADOR sets the length or duration of an AZ payment arrangement by the taxpayer’s total liabilities. Below you find a breakdown of the details:
AZ Tax Payment Arrangement Durations
| Amount Owed | Duration |
|---|---|
| $100 or Less | None. Must pay in full. |
| $101 to $1000 | 6 Months |
| $1001 to $2500 | 9 Months |
| $2501 to $4999 | 12 Months |
| $5,000 or More | May have to call but generally up to 24 months |
If a taxpayer owes $100 or less, he or she must pay in full. For balances between $101 and $1,000, the taxpayer may pay in a 6-month installment plan. If the taxpayer owes between $1,001 to $2,500, he or she may pay in a 12-month installment plan. If the taxpayer owes $5,000 or more, he or she should call the Arizona Department of Revenue at (602) 542-5551 to set up an individualized payment plan or have a tax professional work on their behalf. Generally, ADOR will allow up to a 24-month payment plan for larger liability amounts.
Some Guidelines and Requirements
Collection Information Statement
To approve a payment arrangement, ADOR may ask the taxpayer to complete a Collection Information Statement (CIS) before granting an installment agreement. Consequently, a CIS or the written financial statement helps ADOR assess the taxpayer’s monthly income, expenses, assets, and liabilities. The form helps them understand how the taxpayer can pay. If ADOR thinks the taxpayer can secure a loan to pay off their tax liabilities, they may ask the taxpayer to do so. If the taxpayer can show that they cannot afford to pay their tax liabilities in full, ADOR may grant a payment arrangement.
The ADOR may review payment arrangements at any time and ask for updated financial information.
30 Days to File All Delinquent Tax Returns
The ADOR provides taxpayers 30 days to file all delinquent tax returns. Taxpayers can find returns and forms here.
Other Important Considerations
- Taxpayers need to make payments on www.AZtaxes.gov
- The taxpayer needs to make all payments on time. If a taxpayer cannot pay on time, they will need to contact ADOR asap.
- ADOR may file a tax lien in certain situations
- Interest still accrues during the payment arrangement
- Refund offsets will occur and ADOR will apply it to the taxpayer’s delinquent tax liability
- The taxpayer cannot add future tax balances to the agreement
- ADOR will cancel the payment arrangement for returned payment or insufficient funds
- Defaulting on the payment plan may lead the ADOR to pursue enforcement actions such as filing a levying a taxpayer’s wages, bank accounts or other assets.
Applying for an AZ Payment Arrangement
A taxpayer can apply for a payment plan by filling out an Individual Income Tax Installment Agreement Request form 140-IA or by requesting a payment plan online). The ADOR may ask the taxpayer to provide detailed financial information such as income and employer, spouse’s income and employer, number of dependents, expenses, and banking information. They may also be asked to provide a complete written financial statement, known as the Collection Information Statement (as discussed above).
Taxpayers should send their completed applications to the Arizona Department of Revenue via fax at (602) 542-4771 or by mail to:
Arizona Department of Revenue
Collections District
PO BOX 29070
Phoenix, Arizona 85038-9070.
An agent of ADOR may call and ask for more information. A licensed tax professional can also help you set up a payment arrangement and help you file any delinquent tax returns. There are no application or processing fees to apply for a payment arrangement.
Notification of Acceptance or Denial
Taxpayers will receive a letter to notify them if ADOR has approved their payment plan request. The taxpayer needs to pay their monthly installment payment on the date they proposed on the form until the taxpayer receives a confirmation letter. An agent of ADOR may call and ask for more information.
There are no application or processing fees to apply for a payment arrangement.
If a taxpayer’s request to pay in installments is denied, he or she has the right to petition the Taxpayer Assistance Office to review the decision. The Taxpayer Assistance Office has the authority to change the Department of Revenue’s decision. The taxpayer can also consider other tax resolution options.
Altering, Modifying, or Terminating a Payment Arrangement
As stated above, ADOR can change, modify, or terminate an installment payment arrangement for many reasons. Here are some reasons ADOR make take such actions:
- If you fail to make an installment payment or a payment when a tax liability is due.
- You fail to file a tax return or a report on time
- ADOR makes a request for further information and the taxpayer fails to comply within 30 days
- The ADOR feels the collection of tax is in jeopardy
If a taxpayer disagrees with a decision by the ADOR regarding a payment plan determination, the taxpayer can petition the Problem Resolution Officer.
In Conclusion
Without a doubt, one potential option for taxpayers who can’t pay in full consists of a monthly installment plan or tax payment plan with ADOR. As a practical tip, working with a licensed tax professional can help taxpayers reach the best resolution. For example, the taxpayer may want to consider an Offer in Compromise, a TAO, Innocent Spouse Relief, among other options. Leverage the search below or click here to find tax professionals with experience in working with the Arizona Department of Revenue.
Disclaimer: The content on this website is for educational purposes only. It does not serve as legal or tax advice. For specific help regarding your tax situation, contact a licensed tax professional or tax attorney.