Overview of Indiana’s State Tax Payment Plan
Unable to pay an Indiana state tax bill in full? Just like the Internal Revenue Service, Indiana’s Department of Revenue (DOR) offers taxpayers who cannot pay their state taxes in full the ability to pay it off over time. Generally, taxpayers who qualify with the DOR’s guidelines can pay their taxes off over a series of monthly payments. We discuss details below such as payment plan durations, requirements, and other considerations.
Payment Plan Durations
Individual Payment Plan
Indiana’s DOR offers payment plan durations that vary based on the amount the taxpayer owes. Below you will find a breakdown of how durations change depending on the tax balance. Keep in mind before the Covid-19 crisis, Indiana’s DOR allowed payment plans from 12-36 months generally and the taxpayer had to have a balance over $100. However, because of the Covid-19 pandemic, they have relaxed the general guidelines whereby under special circumstances taxpayers can obtain payment plans if they owe under $100 dollars up to 4 months. Moreover, they extended the payment plan durations based on the tax balance up to 60 months. The chart below gives some details.
Indiana Individual Income Tax Payment Plan Duration By Tax Balance
| Tax Balance Range | Payment Plan Duration (Months) |
|---|---|
| $100 or Less | Up to 4 Months |
| $101 to $1000 | Up to 36 Months |
| $1001 to $5000 | Up to 60 months |
| $5001 or More | Up to 60 months |
If a taxpayer owes less than $100 and wants a payment plan, they will have to call the DOR directly at 317-232-2165
Business Tax Payment Plan
Businesses can also set up tax payment plans with Indiana’s DOR. Just like individual tax payment plans, the amount owed generally determines the duration of the tax payment plan.
Indiana Business Tax Payment Plan Duration By Tax Balance
| Tax Balance Range | Payment Plan Duration (Months) |
|---|---|
| $500 or Less | Must Pay In Full |
| $101 to $1000 | Up to 12 Months |
| $1001 to $5000 | Up to 24 Months |
| $5001 or More | Up to 36 Months |
Penalties Associated With Payment Plans
Indiana’s DOR will still assess a 10% percent penalty on the unpaid balance during the life of the payment plan. Furthermore, they will tack on interest as well. Therefore, if a taxpayer can pay off the entire balance in full without setting up a payment plan, this can result in the avoidance of interest and penalties. Taxpayers can also reduce penalties and interest by paying more than their minimum monthly payment amount (if they can). Taxpayers need to weigh all options including receiving a personal loan from a bank, refinancing their mortgage with cash out along with other options to determine the most inexpensive way to pay off their taxes.
How to Apply for an Indiana Tax Payment Plan
Taxpayers can set up a state tax payment plan with Indiana’s DOR in a variety of ways. Taxpayers can request a payment plan by leveraging Indiana DOR’s website call INtax Pay or by calling the DOR. Individuals with income taxes and businesses who conduct retail sales can leverage the website. However, if a taxpayer owes less than $100 dollars, they cannot use the website and must call DOR at 317-232-2165. Taxpayers can select the day of the month they want to make a payment on their plan.
Because of policy changes in 2018, Indiana’s DOR provides more flexibility for individuals looking to set up a payment plan with little or no down payment. Unlike some other states, taxpayers need to login into their INtax Pay account each month and make a payment as the department does not do automatic payments.
If You Cannot Make Monthly Payments
If the taxpayer cannot make minimum monthly payments with a tax payment plan, he or she may want to look at Indiana’s Hardship Program, an Offer in Compromise, or some other type of resolution. With a large tax balance, working with a licensed tax professional can ensure optimal results.
If a taxpayer starts a tax payment plan and misses a payment, Indiana’s DOR will most likely cancel the payment plan and refer the case to an outside collection agency. If you miss a payment or foresee yourself having trouble making a monthly payment, call the DOR immediately.
Future Refunds
Taxpayers need to understand that DOR can seize any federal or state tax refunds due to the taxpayer and apply it to any tax balance they have with the state. If a refund covers the entire balance on the payment plan, then the payment plan will come to an end. Otherwise, the balance simply gets reduced and the taxpayer needs to continue making payments.
When in doubt, reach out to a tax professional that has experience in resolving cases with Indiana's Department of Revenue. You can find a list here, or you can start your search below.
Disclaimer: The content on this website is for educational purposes only and does not serve as legal or tax advice. For specific help regarding your tax situation, contact a licensed tax professional or tax attorney.