Idaho State Payment Plans
When ranking all the states by their regional tax burdens, Idaho falls somewhere in the middle, coming in at around 29th place. The effective tax rate in Idaho sits around 10.7%. Note that this includes all state and local taxes, not just the state's 5.8% individual income tax.
This tax burden may seem reasonable – until you reach a point where you can’t pay off your tax bill. When you receive a hefty tax bill that you can’t afford to pay right away, you have options. Most taxpayers qualify for an Idaho tax payment plan. This financial arrangement is mutually beneficial for you and Idaho’s State Tax Commission.
With a payment plan, you have more time to pay off what you owe while avoiding collection efforts, and the state receives what they’re owed without having to waste time and money tracking it down. Keep reading to learn more about Idaho’s tax system, the payment plans available to you, and how a tax professional can help you navigate any questions you have below. To get help now, use TaxCure to find a tax pro based in Idaho.
Understanding Idaho’s Tax System
Idaho state collects revenue from taxes to help fund local government activities. These taxes are in addition to the federal taxes you pay. Idaho’s individual income tax and corporate income tax rate are both 5.8%. The state’s sales tax sits at 6%.
You will automatically pay the state of Idaho a sales tax when you purchase goods or services. The provider is meant to withhold the sales taxes and later provide them to the government. So, as an individual, you don't have to worry about sales tax returns, but it’s your responsibility as a citizen of Idaho to file your income taxes every year.
To do so, you’ll need to file the proper forms with the State Tax Commission that prove the income you’ve earned. From there, the tax agency will analyze your situation and provide you with a bill if your withholding and advance payments don't cover your state tax due. In general, you’re expected to pay your bill in full as soon as you receive it.
The Basics of Tax Payment Plans in Idaho
As you can imagine, there are usually a good amount of Idaho residents who receive an unexpectedly high tax bill that they can’t afford to pay off right away. This is especially true when a taxpayer has delayed filing and accumulated several penalties and fees.
The good news is that you have options if you run into this type of circumstance.
Idaho’s State Tax Commission offers payment plans to help those in financial distress. If you’re genuinely struggling to pay off what you owe but are willing to work with the agency, they will likely work with you to resolve the situation.
When you apply for a payment plan, the agency will consider your ability to pay and then provide you with a monthly payment amount. You’ll be able to pay down your overall balance over a long period while the agency agrees not to pursue further collection efforts against you. If you owe federal taxes, you may also be able to set up a payment plan with the IRS for those taxes. Note that you will need different plans for your state and federal back taxes.
Eligibility for Tax Payment Plans
You can qualify for an Idaho state tax payment plan if you owe a tax debt and can’t pay it off right away. On top of these requirements, you must be up to date with your current tax returns. To continue remaining eligible for your payment plan, you’ll need to stay current on payments and continue to file and pay future taxes on time.
How to Apply for a Tax Payment Plan in Idaho
While it’s best to consider talking to a tax pro first, you can handle applying for a tax payment plan on your own if you’d prefer. Navigate over to Idaho's Taxpayer Access Point (TAP) and head towards the “payments” panel. Click on “request a payment plan” to get started and go through the process outlined on the website.
You should create a TAP account if you do not already have one. You will need to go through the signup process, which can take up to 10 days to complete. If you do not want to create an account, you’ll need to provide a Letter ID, which would be visible on any communication from the state tax agency over the past two years. This Letter ID should be in the upper right-hand corner of the letter, and it will start with an L.
Managing Your Tax Payment Plan
It’s critical that you manage your tax payment plan responsibly. If you miss a payment, don’t provide specific information requested by the tax agency, or don’t file future returns, your plan might be canceled entirely. When that happens, collection efforts will resume. You may not be eligible to reapply for another payment plan.
Depending on how you set up your payments, funds might automatically be withdrawn from your bank account. Make sure sufficient funds are always available in your account so you don’t have to face overdraft fees or a refused payment.
On top of that, you’ll also need to stay on top of your future tax situations. Your plan could potentially be canceled if you don’t pay your future taxes on time or don’t file in time like you agreed to do.
Missing Payments, Making Extra Payments
One of the biggest issues you might run into is being unable to afford one of your payments. If this happens, you should contact the state tax agency ASAP. You can reach them by phone at (208) 334-7633. You don’t want your payment plan to get canceled.
There is a chance that your plan could still get canceled if you don’t make a timely payment, but tax agents may be able to give you a brief temporary extension. That said, you need to prioritize your tax debt payments. If you don’t and you continue to be unable to pay what you owe, your plan will likely get canceled, and you may not be able to apply for another one.
Another issue you may experience is getting extra money that you want to put towards your tax debt. This is obviously a good problem to have, and the good news is that you can pay as much as you like before the due date. You can make as many extra payments as you’d like, and every payment you make will reduce your tax debt balance. If you have this problem, simply go online and make an extra payment to decrease what you owe.
Tax Payment Plan Alternatives
One of the best alternatives to applying for a tax payment plan is to pay off your entire tax debt balance in full in one lump sum payment. This type of strategy is best because it will help you completely resolve the situation and will keep you free from facing future penalties, accumulating interest, or collection efforts. However, this isn’t always an option when you don’t have the money to do so.
Another alternative is to ignore your state tax bill and let the collection process play out. Typically, this is a poor strategy because it will result in increasing penalties and harsh collection actions. A minor tax debt can quickly balloon into a much larger one due to fees and other penalties. If you continue down this road, your property could be at risk. You could also face wage garnishment, which would automatically cause money to get taken out of your future paychecks.
With these two starkly different approaches, you can see how applying for a payment plan is the perfect middle ground. You won’t have to come up with everything immediately, and you won’t have to face compounding penalties.
However, if you cannot afford a monthly payment plan, you may want to look into an Idaho offer in compromise. Similar to the IRS's offer in compromise program, this option lets you settle your taxes for less than you owe. They don’t offer a formal way to apply for this program, so you would need to contact a tax professional to assist or contact the Idaho State Tax Commission.
Legal and Financial Implications
When you sign up for a payment plan, you’re entering into a legally binding agreement with the Idaho State Tax Commission. If you fail to uphold your side of the arrangement by making timely payments the agreement will be considered null and void. That gives the Idaho State Tax Commission a right to re-initiate collection efforts against your account.
You also need to consider the financial implications of the payment plan. Do not enter into an agreement if you don’t think you’ll be able to afford the payments. You also shouldn’t agree if you know making the payments will cause you significant financial strain. Again, in that case, you may want to look into an offer in compromise. Make sure that the plan is reasonable and something you can manage to avoid future issues.
Resources and Support in Idaho
Are you ready to get started on resolving your tax issues but you’re not sure how to file your taxes in Idaho? Many Idahoans can get free income tax help by visiting the Idaho State Tax Commission website and clicking on the “Free Income Tax Help” link on the homepage. This resource can help those with moderate incomes file their taxes for free. AARP also provides in-person or virtual tax help to anyone in need in Idaho.
FAQs Regarding Idaho State Payment Plans
Do you have more questions about Idaho state tax payment plans? In general, it’s best to get your questions answered by a tax professional who will be able to fully consider your unique circumstances, your finances, and the local laws in your area. That said, we have compiled some general answers for some of the most frequently asked questions about Idaho state payment plans below.
What Are the Eligibility Criteria for an Idaho Tax Payment Plan?
To qualify for an Idaho tax payment plan, you must be current on all your recent tax returns, owe a tax debt to the state of Idaho, and lack the financial ability to pay off the balance in full. Payment plans are awarded on a case-by-case basis based on your finances. If the commission determines that you do have the ability to pay, they may not approve you for a plan.
How Do I Apply for a Tax Payment Plan in Idaho?
To apply for an Idaho tax payment plan, you can start on the Idaho State Tax Commission's website. Scroll down until you see a payment panel in the middle right of the page. You should see a link that says “Request a Payment Plan”. Click on that and enter the requested information into the system.
You don’t have to create an account if you have a Letter ID. This number is located on every letter sent to you from the Idaho State Tax Commission. You can also contact the compliance division of the Idaho State Tax Commission at (855) 556-4230 to speak directly when an agent. A representative can help walk you through the process step-by-step.
Are There Any Penalties for Defaulting on an Idaho Tax Payment Plan?
Yes. If you default on an Idaho tax payment plan, your whole plan could be canceled. Once your plan is canceled, the Idaho State Tax Commission might also begin to pursue collection efforts on your account.
You might already have an existing lien on your property, depending on the type of payment plan you agreed to, and if that’s the case, the agency may decide to act on the lien. If you don’t already have a lien, the agency might take one out on your property or attempt other collection efforts.
What Alternatives Exist to Tax Payment Plans in Idaho?
Rather than setting up a payment plan, you can look into an offer in compromise. The state does not have a currently not collectible program like the IRS, but if you are experiencing hardship, you should contact the State Tax Commission and ask them to stop collection actions against you.
How Can I Manage My Tax Payment Plan Effectively in Idaho?
You can manage your payment plan by setting up an online account with the State Tax Commission. The best way to manage your tax payment plan effectively is to make timely payments. If possible, make your payments before the due date to ensure they go through before becoming delinquent. Keep up with what you owe. Make occasional extra payments to bring down your balance if you can.
What are the Long-Term Financial Impacts of Idaho Tax Payment Plans?
Once you enter into a tax payment plan in Idaho, you need to work those monthly payments into your budget for several months. You need to make sure to allocate enough money to your tax payment plan, and you may even need to prioritize this debt over other types of debt.
You don’t want your tax plan payments to create financial distress, but you also need to pay this bill before less necessary ones. The consequences of not paying are too steep to let a tax account become delinquent.
Can Businesses in Idaho Apply for Tax Payment Plans?
Yes, if a business owes income tax they can’t pay off right away, they can apply for a payment plan. If you don’t have a TAP account, you can use the ID number from any letter that was sent to you from the Idaho State Tax Commission to apply for your plan. You can set up automatic payments from your bank account using their online system.
Are There Idaho Tax Pros Who Help with Tax Payment Planning?
Yes. There are many tax pros in Idaho who are ready to help you set up a tax payment plan. These professionals can also give you solid advice to help you navigate future tax situations or more complicated tax matters.
What Legal Considerations Should I Be Aware of When Entering a Tax Payment Plan in Idaho?
An Idaho state tax payment plan is a legally binding agreement, so making your payments every month is a legal obligation once you enter into a tax payment plan. You need to understand that if you fail to uphold your side of the deal, the tax agency will no longer be obligated to uphold theirs. They may simply cancel your plan, re-initiate collection efforts, and deny you for future payment plans.
Get Connected with a Tax Pro Today
Have you fallen behind on filing or paying your taxes in Idaho? Have you received communications from the Idaho State Tax Commission about your delinquency or potential collection efforts? Are you considering applying for an Idaho tax payment plan?
Depending on your situation, it might be best to connect with a tax professional in Idaho who can help you make a solid decision on navigating your state taxes. Use our search box now to find tax pros in your area that can help you.
Resources:
https://tax.idaho.gov/online-services/compliance/payment-arrangements/