How To Qualify and Setup an Oklahoma State Tax Payment Plan
Qualifying taxpayers can pay off their Oklahoma personal or business taxes in monthly installments.
If you cannot afford to pay your individual or business tax in full, you may want to apply for a payment plan. An Oklahoma installment agreement allows you to make monthly payments on your tax liability until it is paid in full. To set up a payment plan, you must meet the eligibility criteria and stay current on your filing and payment requirements while the plan is in effect.
Want to set up monthly payments on your OK taxes? Here is an overview of the process.
How to Apply for an OK Tax Commission Payment Plan
You can apply for an Oklahoma tax payment plan online through the Oklahoma Taxpayer Access Point (OKTAP). The online application asks a few basic questions about your situation and then guides you through the process of setting up a payment plan.
You need a collection letter to use the application — you won't be able to move forward with the process unless you have the letter ID and your Social Security Number. If you don't meet the criteria to request a payment plan online, you can contact the OTC directly at (405) 521 2212, or find a tax pro to help you.
Eligibility Requirements for OK Tax Payment Plans
To qualify for a payment plan, you must be able to pay at least $25 per month. You also must pay off the tax liability in two to 12 months. To calculate your minimum monthly payment, divide your state tax liability by 12. For instance, if you owe $2,400, you need to pay at least $200 per month.
The OTC may be willing to offer longer terms and smaller monthly payments. But if you need smaller payments or longer than a year to pay, you need to contact the agency directly or work with a tax professional. The agency also requires you to meet the following criteria:
Set Up the Plan Before Collection Agency Assignment
The OTC uses private third-party collection agencies to collect unpaid state taxes. You cannot work with the state to set up a payment plan if your account has already been assigned to a collection agency. Once your account has been assigned to a collection agency, you must work with that agency to make arrangements on your tax liability.
As soon as one of your tax balances is assigned to a collection agency, you lose the ability to set up payment plans with the state. For instance, imagine that you owed state taxes for 2019, and the OTC sent that year to a collection agency. If you go online to request a payment plan for 2020 taxes, you will not be able to.
Even though the tax liability for that particular year has not been assigned to a collection agency yet, you lost the chance for a payment plan when the other account was sent to the collection agency. Because of this, it's critical to contact the state before they outsource the collection on your account.
You Must Owe More Than $100
The OTC does not advertise an upper threshold for payment plans. In most cases, as long as you can pay off the tax liability in 12 months or less, you can make payment arrangements on tax liabilities of nearly any amount. However, you must owe more than $100.
If you owe less than $100, you are not eligible to set up a payment plan. But you still owe the tax so you should try to send the state as much as you can.
Don't Have a History of Default on Oklahoma Payment Plans
If you have defaulted on an Oklahoma payment plan in the past, you may still be eligible to set up a payment plan, but you must make a 50% down payment. For example, if you owe $10,000, you can make a down payment of $5,000 and then make payments on the rest.
You are not eligible for a payment plan if you have defaulted twice in the last five years. Once you default three times over any time period, you are no longer eligible for a payment plan on state taxes.
Be Up-to-Date on State Tax Filing Requirements
For the best results, you should be up to date on your state tax filing requirements. The OTC is willing to accept payment plans from some people who are not up-to-date on their state tax filing requirements. However, the rules vary based on your situation and the number of returns you have missed.
When you apply for an OK payment plan online, the application tool will request additional information about your filing gaps and missing returns. Then, it will let you know if you are eligible for a payment plan or if you have to do anything special like make a down payment.
Rules for Oklahoma Payment Plans
If the OTC accepts your request for a payment plan, you need to make the payments as directed to keep your plan active. Missing payments can put your plan into default, and again, once you start defaulting on OK payment plans, you reduce your ability to set up payment plans in the future.
You also need to stay compliant with your new filing and payment requirements. If you assume new tax liabilities while on a payment plan, your plan may go into default. To ensure you don't get behind on your income tax requirements, you may need to increase your withholding or send in larger quarterly payments.
What to Expect from an Oklahoma Tax Payment Plan
While you're making payments, interest will continue to accrue on your balance. You may want to make slightly larger payments to compensate for the interest. If you apply for another program, you should continue to make payments while the OTC assesses your application.
For instance, if you apply for an OK offer in compromise while you're already on a payment plan, you should continue making payments as agreed upon. Then, if your offer is accepted, you can quit making payments at that time. If the state rejects your offer, your payment plan will still be active. If you had stopped making payments, you would be in default.
Get Help with Oklahoma Payment Plans
If you want help setting up a payment plan or talking about other resolution options for Oklahoma back taxes, reach out to an OK tax pro today. On TaxCure, we made it easy to search for high-quality tax pros in your local area with the experience you need. To find a tax pro experienced with the OTC, search for an OK tax pro today.