Mississippi’s State Tax Payment Plan or Installment Agreement
When a Mississippi taxpayer cannot pay off their taxes, in certain cases a taxpayer can set up an installment agreement with the Mississippi Department of Revenue. Individuals and businesses can apply. However, the taxpayer must consider other alternatives as an installment agreement does carry interest. Below we will review details on both individual and business installment agreements including eligibility details, typical durations, and how a taxpayer can apply.
Mississippi Installment Agreement for Individuals
If a taxpayer has at least $75 dollars in taxes owed, the Mississippi DOR will allow taxpayers to request an Installment Agreement. An installment agreement will require the taxpayer to file all unfiled tax returns with the state, and pay all taxes due for the last five years. Moreover, to qualify, the taxpayer must not have entered into an Installment Agreement in the last five years. Generally, the state will require the taxpayer to pay the taxes off over 12-24 months in equal installments and requires manager approval. In certain cases, if the taxpayer has an approved IRS installment agreement (IRS IA) for the same year, the duration can be up to 60 months as long as the taxpayer can show an installment agreement approval letter from the IRS. However, make note that if the taxpayer has a bankruptcy case still pending, the taxpayer cannot set up an installment agreement.
Mississippi Installment Agreement for Businesses
For business tax liabilities, the Mississippi DOR will generally require the business put down at 33% with a duration to pay it off around 6 months to 2 years. Of course with manager approval, the duration and down payment can vary so this is not always a hard number. Again, entities must have filing compliance and payment compliance over the last five years.
Reasons for a Mississippi IA Being Terminated
The Mississippi DOR may terminate an IA if payment is not made on time, or if new liabilities are not paid when due.
Interest With an MS Installment Agreement
The Mississippi DOR will charge you interest per month on the balance due during the period of time the installment agreement is in effect. Interest rates change but generally range from .7% to 1% of the amount owed until the taxpayer pays the amount due.
How to Apply for an Installment Agreement as an Individual
Generally, the taxpayer will file the tax return on or before the due date. The taxpayer normally will submit installment agreement Form 71-661 with their tax return. The form requires the taxpayer’s first and last name (spouse’s name if it is a joint return or liability), social security number, address, phone number, preferred call time, bank or financial institution information, and employer’s name and address. Furthermore, the taxpayer will indicate what tax year they are making the request for, the total amount owed, any payment amount they are making with their return, and the amount due each month. The taxpayer will mail this form (normally with their tax return). Because of interest, the taxpayer must call or contact the MS DOR before the final payment to ensure the final payment covers the interest that accrued during the life of the payment agreement.
What If You Can't Afford to Make Monthly Payments
If you can't afford the monthly payments on a payment plan in Mississippi, consider looking into the state's offer in compromise program. Qualifying taxpayers may be able to settle their state tax liabilities for less than owed. To get approved, you must prove that your offer is the most you can afford to pay based on your disposable income and the equity in your assets.
What if You Don't Make Payment Arrangements
You must be proactive about making payment arrangements on your state tax debt. Otherwise, the state can collect the taxes involuntarily. MS DOR collection actions include tax liens, wage garnishments, bank levies, and asset seizure. The State may also take away your business licenses or hold you personally liable for certain business taxes.
For taxpayers looking for help with overdue Mississippi state tax liability or tax problems, consider doing a search from our homepage or visiting this page.