New Hampshire Back Taxes Overview
Tax Resolution Options and Collection Methods in New Hampshire
The New Hampshire Department of Revenue Administration NH DRA administers and collects taxes in this state. If you have unpaid business or personal taxes, you must work with the DRA to make arrangements to pay your tax liability.
So that you know what to expect, this guide provides an overview of the tax resolution options and tax collection actions used in New Hampshire. It also explains how to get help with your New Hampshire back taxes.
New Hampshire Taxes
New Hampshire does not have an individual income tax, but the state taxes interest and dividend income. It also assesses a real estate transfer tax and private car tax on individuals.
Additionally, the DRA also assesses the following businesses taxes in New Hampshire: Business Enterprise Tax, Business Profits Tax, Meals & Rooms Tax, Communications Services Tax, Electricity Consumption Tax, Tobacco Tax, Smokeless Tobacco Tax, Utility Property Tax, Railroad Tax, Nursing Facility Quality Assessment, and Medicaid Enhancement Tax.
If you are behind on any of these taxes, it can have serious consequences for you and your business. The DRA has broad collection powers in New Hampshire, but luckily, the state is also willing to work with taxpayers who have gotten behind on their tax obligations.
Tax Resolution Options in New Hampshire
The New Hampshire DRA offers several options for people behind on their state taxes. You must apply for these programs, and acceptance is at the department's discretion. A New Hampshire tax pro can help you apply for these programs, and they can also help you select the best option for your situation.
Payment Plan on New Hampshire Back Taxes
The New Hampshire DRA may be willing to let you make monthly payments on your tax debt. But again, installment agreements are at the discretion of the department. To apply for an installment agreement on your New Hampshire taxes, you should file Form CD-400 (Request for Installment Payment Agreement).
This short form simply requires your basic contact details, the tax period, the amount you owe, and your suggested monthly payment. When you request an installment agreement, you are telling the department that you cannot afford to pay the taxes in full and are making a genuine effort to pay the taxes as quickly as possible.
The department has the right to request additional information. If it feels that you're trying to delay the collection of the tax, the department can reject your payment plan request.
The DRA may issue a lien against your assets while you're on a state tax payment plan. The department also has the right to change or terminate payment plans if you break the terms of your agreement or if your financial circumstances change, and you can pay the bill in full. The department must give you a 30-day notice before changing your plan.
You can go online to the NH DRA website to make the payments for your installment agreement. Or you can mail the payment along with Form CD-404 (Installment Payment Agreement Coupon).
New Hampshire Settlement Agreement
In rare situations, the New Hampshire Department of Revenue Administration may be willing to settle your tax bill for less than you owe. In many states, this is called an offer in compromise, but the New Hampshire government uses the phrase settlement agreement.
To apply for a settlement, you should file Form CD-410 (Settlement Agreement Offer). This form requires the following details:
- Type of taxpayer — Individual, sole proprietorship, partnership, LLC, or corporation.
- Taxpayer name and address.
- Type of tax owed — Interest and dividends, business profits or enterprise tax, meals and rentals tax, or other.
- Settlement offer — How much you are offering to pay to settle the tax liability.
- Gross income and wages over the last 12 months.
- A list of monthly expenses, including rent, mortgage payments, utilities, advertising, insurance, and others.
- Cash on hand in all bank accounts, including money market accounts.
- Copies of your two most recent bank statements for each account.
- Receivables — This is money clients or customers owe to your business.
- The value of inventory owned by your business.
- Descriptions and values of your investments.
- Business equipment.
- Real estate addresses and market value.
- Taxes due to the IRS or other entities such as property taxes.
- Credit card debts and available credit lines.
- Accounts payable — Amounts due from your business to your vendors.
- Loans owed to banks.
- Mortgages on real estate.
- Copy of your 1040 (Individual Income Tax Return) if you are an individual.
- Copy of financial statements such as profit-and-loss reports and balance sheets if you are applying for a settlement for a business.
- An explanation of why you cannot afford to pay the balance in full.
Getting a settlement approved can be tricky. Effectively, you have to convince the NH DRA that the amount you are offering is the most that the state would be able to collect. For best results, you may want to work with a tax professional.
A tax pro experienced with the NH DRA knows exactly what the department wants to see on settlement applications. Although a tax pro cannot guarantee if your application will be accepted or not, they can often let you know the likelihood of acceptance. They can also help you pinpoint the right settlement amount to offer.
Hardship Status for New Hampshire Back Taxes
The New Hampshire Department of Revenue Administration does not advertise a hardship program for people or businesses with state back taxes. However, the state does offer property tax relief. In particular, if your income is below a certain level, you can get relief from the state education portion of your tax bill.
As of 2022, your income must be $37,000 or less for a single person or $47,000 or less for a married couple. You need to apply by June 30th, and you must include a copy of your last federal income tax return to verify your income. To apply for hardship relief on other state taxes, you should consult with an NH tax pro.
Penalty Abatement in New Hampshire
You can request penalty abatement if you incur penalties on your New Hampshire tax account. However, the department only has to abate penalties if they were caused by incorrect written advice from the DRA. To be abated, the penalty must not have resulted from the taxpayer's failure to provide the requested information to the department.
Note that New Hampshire offered a tax amnesty program from December 1, 2015, to February 5, 2016. If you have back taxes that were due prior to December 1, 2015, the state cannot waive penalties from those tax bills unless they were applied in error.
New Hampshire Appeals Process
If you disagree with the assessment of tax, penalties, or interest in New Hampshire, you have the right to appeal. You can also appeal if your claim for a refund of tax, penalties, and interest is denied. You must appeal within 60 days of receiving the notice of assessment or refund denial. To appeal, file Form A-101 (Appeals) and send it to the following address:
NH DRA Hearings Bureau
109 Pleasant Street
PO Box 1467
Concord, NH 03302-1467.
When you appeal, you must explain the reasons for the appeal. In New Hampshire, you have the burden of proof to demonstrate that the department made an incorrect decision about your situation. A Hearing Officer will review your case.
If you don't agree with the officer's determination, you can appeal to the Board of Tax and Land Appeals or to the Superior Court in your county. You must file this appeal within 30 days of getting a decision from the Hearing Officer.
Inheritance tax has its own appeals process. To appeal an issue related to inheritance tax in New Hampshire, you should file the appeal with the Probate Court in the county where the deceased person resided.
Bond Required for New Hampshire Appeal
In some cases, if you have an appeal pending, the Board or Court may require you to post a bond. The bond covers the amount of tax due, and it protects the state's interest in the debt.
If you win the appeal, the department may be required to compensate you for attorney's fees and related costs. This only happens if the department's actions were unjustifiable. On the flip side, the courts may order you to pay for the department's legal fees if your actions were unjustifiable.
Tax Amnesty Program in New Hampshire
At the time of writing, there is no tax amnesty program available in New Hampshire. The last time the New Hampshire DRA offered tax amnesty was from December 2015 to February 2016.
The DRA gave taxpayers a very small window of time where they could file unfiled returns and pay tax debts without repercussions. Taxpayers who participated in the amnesty program had their penalties removed and their interest cut in half.
New Hampshire Back Taxes Collection Process
The state can use a range of enforcement actions to collect unpaid taxes. Here is an overview of all of the collection actions you or your business may face if you have unpaid state taxes in New Hampshire.
New Hampshire State Tax Liens
The New Hampshire Department of Revenue Administration can issue liens against your property if you don't pay your state taxes. Liens can go against bank accounts, real estate, accounts receivables, security interests, and other real or personal property.
New Hampshire state tax liens can make it very difficult and potentially impossible to sell or take loans against assets. Liens attach to all of your current property as well as to any property you acquire once the lien is in place. For instance, if the state issues a tax lien and then you inherit a boat, the lien attaches to the boat.
If you sell an asset while there is a state tax lien in place, the NH DRA has a right to the proceeds. Once there is a lien against your property, it can also be subject to a tax sale.
Tax Levy or Distraint in New Hampshire
The New Hampshire Department of Revenue Administration has the right to seize your property for unpaid taxes. This is called a tax levy or distraint. The DRA may issue a distraint to notify you about the seizure of your property. Then, the department can sell the property and apply the proceeds to your unpaid tax bill.
After sending the required notices, the DRA can keep distrained properties for four days. Then, if you don't pay the tax in full, the tax collector can auction off your property within 48 hours of the expiration of the four days. The DRA must post public notices about the sale in at least two places, at least 24 hours before the sale. The notice must contain a description of the property and the time of the auction.
The DRA cannot take tools of the trade or necessary household utensils. There may also be other assets exempt from levy. Talk with a New Hampshire tax pro to learn more.
License Revocation or Suspension
If the DRA sends a demand for payment and you ignore it, the DOR can notify the Division of Motor Vehicles (DMV) that you are in default. Then, the DMV can revoke your vehicle registration.
If you don't pay your New Hampshire state taxes, the DRA can also suspend or revoke licenses issued by the department. The DRA issues the following professional and business licenses:
- Meals and Rentals Tax Operator's License — Required for businesses such as restaurants, grocery stores, bakeries, hotels, and car rental companies.
- Tobacco Tax Operator's License — Required for any business that sells tobacco products in New Hampshire.
- The Communication Services Provider's Tax License — Required for businesses that collect and remit communication services taxes.
Bond Required for Unpaid Taxes Collected From Others
If you have unpaid NH taxes, you may have to post a bond to guarantee payment of taxes collected from others. For instance, if you collect sales tax from your customers and you have unpaid taxes, you may be required to post a bond. This gives the government a financial guarantee that you won't collect and spend the taxes.
Fees and penalties will accrue on your account if you don't pay your taxes. If you make a partial payment, the state will apply the payment against fees and penalties first. Then, it will apply the remaining amounts to the interest on your account. Finally, the remainder will apply to your delinquent tax debt. As of 2022, the DRA charges 5% interest on unpaid state taxes.
Statute of Limitations on Tax Collection in New Hampshire
Generally, the New Hampshire DRA has three years from the return due date to assess taxes. However, if the taxpayer underreported their income or profits by more than 25%, the department has up to six years to assess a tax.
Once the taxes have been assessed, the department can collect the tax by lien or court proceedings as long as the lien or proceeding was commenced within 12 years from the date of the tax assessment. In New Hampshire, the Attorney General may also have the right to bring judgments or actions against you if you have unpaid taxes.
Get Help With New Hampshire Taxes
Owing back taxes to the New Hampshire DRA can be stressful and confusing. To get help dealing with the NH DRA, you should contact a tax pro based in New Hampshire. Using TaxCure, you can search for tax professionals who have experience with the NH DRA.
Then, you can filter your results based on specific types of tax problems. To get help now, contact an NH tax pro today. They'll start with a no-cost conversation about your tax issues. Then, they'll outline how they can help you.