Guide to Setting up Missouri Tax Payment Plan
The Missouri Department of Revenue (DOR) offers payment plans to qualifying taxpayers who cannot afford to pay their personal or business tax bills in full. If you owe back taxes to the DOR, here is what you need to know about installment plans.
Benefits of a Tax Payment Plan
A tax payment plan lets you pay off your Missouri tax liability in installments. Instead of paying taxes in a lump sum, you make monthly payments until you have paid off the balance. Qualifying for a payment plan is relatively easy and is available to most taxpayers. Other resolution options are available if you cannot afford the payment plan, but they require more financial documents & filings.
Payment Plans on Missouri Back Taxes
The MO DOR offers payment plans on a 24-month term, and you may be required to make a downpayment. For example, if you owe $2,800, the state may be willing to accept a $400 down payment followed by 24 monthly payments of $200. Note these are just sample numbers.
You may be able to negotiate a longer payment plan in some situations, but the MO DOR does not advertise longer terms on its website. You will need to contact the DOR directly if you need more than 24 months. To get more time, you usually need to submit extensive financial information.
How to Apply for a Tax Payment Plan in Missouri
You can apply for a payment plan by calling the MO DOR at (573) 751-7200. Or, you can request an Internet Installment Agreement online. Ensure you have your Social Security Number and the PIN from your last notice if you want to complete the online application.
Alternatively, you can apply using Form 4338 (Individual Income Tax Payment Installment Request). Form 4338 is a concise one-page form. It requires your name, Social Security Number, and contact information. Then, you note the tax due, your downpayment, and the amount you want to pay every month.
Making Payments on Missouri Back Taxes
The state generally requires you to make payments with a direct debit from your bank account. If you submit the paper application, you must include your checking account details so the payment plan can begin immediately if accepted.
You can also make payments with a debit or credit card online. The MO DOR charges a convenience fee between $1.25 and $2.15 for payments under $100. If your payment is $100 or more, the processing fee is 2.15%.
Interest and Penalties on Payment Plans
Once you set up a payment plan, the state will not assess additional penalties on your account. Typically, the state's penalties are 5% of the balance for unfiled returns, up to 25% of the balance. The state also assesses a one-time 5% penalty for paying taxes late.
Interest will continue to accrue on your account while you make payments. The MO DOR adjusts its interest rate annually, and as of 2021, the interest rate is 3%.
Additional Documentation Required for a Payment Plan
Generally, the state does not require any additional documentation if you apply for a payment plan. Again, however, if you need more than 24 months to pay off your balance, you may be required to make full financial disclosure.
In this case, you should be prepared to provide proof of income and bank statements for the last three months and any other information requested by the MO DOR.
Conditions for a Missouri Payment Plan
You can only receive a payment plan if you are current on all filing obligations. If you have unfiled returns, you can file them online. Or, you can submit your unfiled returns with Form 4338. If the state has already filed a tax lien against you, the lien will generally stay in place until you have completed the payment plan and paid the tax liability in full. However, if you set up a payment plan with direct debit before the state issues a tax lien, you may be able to avoid it.
In most cases, the state will not accept your payment plan if you have a history of defaulting on payment plans. Typically, you will not get a payment plan if you have defaulted on more than one agreement in the past.
Defaulting on Your Payment Plan
If you miss a payment, your Missouri tax payment plan may go into default. You will also go into default if you fail to file or pay a current tax liability. If your payment plan goes into default, the MO DOR can start collection actions against you.
Get Help With Missouri Back Taxes
If you owe back taxes in Missouri, you may want to reach out to a tax professional. They can help you identify the best resolution method for your situation, and they can negotiate with the MO DOR on your behalf. To learn more, contact a Missouri tax pro today.