Pennsylvania Deferred Tax Payment Plans
Can't afford to pay your Pennsylvania state taxes in full? Then, you may want to consider a payment plan. An installment agreement lets you make monthly payments on personal or business taxes until you pay the balance in full.
Keep reading for a look at the details or use TaxCure to find a PA tax pro today.
How to Apply for a Payment Plan on PA Taxes
The PA DOR uses the same email address, phone number, and fax number for personal and business payment plans. You can apply for payments by emailing [email protected], by faxing (717) 783-4294, or by calling (717) 425-2495. Keep reading for more instructions.
PA Payment Plan Requirements
The PA DOR website says that you can only set up a payment plan if you have filed all previous tax returns. You won't be able to make payments if you're not compliant with your current tax obligations.
As explained below, most taxpayers can easily set up a plan if they can pay off the balance within a year. If you need longer or owe a lot of money, however, you will need to file additional documents about your finances.
Standard Payment Plans on State Income Taxes
If you owe less than $50,000 and can pay off the balance within 12 months, you can apply for a standard plan. You can do so online at myPATH or using the fax, email, or phone numbers listed above.
When applying, you only need to note your name, tax ID number, and the number of months you need to make payments. Generally, you should get a response in 48 hours, and if you don't, you should call the DOR.
Note that when you apply for a payment plan, it only includes the amounts currently in collections. If you've recently filed a return or have a tax assessment from an audit that you want to include, you need to file REV-638 when you apply.
In very simple terms, this form basically says that you know you owe the additional tax and you give up your right to appeal (dispute) that tax bill. This allows you to add recently assessed taxes to a payment plan.
How to Apply for an Extended Plan
If you owe $50,000 or more and/or you need more than 12 months to pay, you can apply for an extended payment plan. You can't apply online, but you can call, fax, or email the DOR at the contact details noted above.
When you need more than a year to pay or owe over $50,000, you also need to file a State of Financial Condition. Individuals should file REV-488, while businesses should file REV-484. Both of these forms require details about your personal or business assets and debts. They also ask about income and expenses.
This info helps convince the DOR that they are collecting the highest payments possible. For example, if you complete this form and the DOR sees that you can easily afford to pay in full, the department will likely demand payment in full. If the DOR believes that you can make larger monthly payments than offered, the agency can insist on bigger monthly payments.
PA Tax Payment Plans for Businesses
The rules for applying for a monthly payment plan on your PA business taxes are very similar to the rules for personal income tax. Again, if you owe less than $50,000 and can pay off the bill in 12 months or less, you can apply for a standard plan.
As long as you're compliant with your tax obligations and don't have an existing payment plan, you should easily be able to get approved. To apply, email, fax, or call the DOR at the numbers noted above.
If any of the following are true, you need to apply for an extended plan for your business taxes:
- You owe $50,000 or more.
- You need more than 12 months to pay.
- You have an existing payment plan.
In this case, you can still apply through phone, email, or fax, but you're going to need to provide the department with some additional details. In particular, you will need to file REV-484 (Financial Condition Statement for Businesses). If your business is a sole proprietorship, you will also need to file REV-484 (Financial Condition Statement for Individuals). If your business is no longer operating, you only need to file the form for individuals.
On top of that, in-operation businesses need to provide an income statement and a balance sheet. The income statement is also called a profit and loss, and it details the amounts of your income and expenses. The balance sheet shows your business's assets and debts.
already in a payment plan
Payment Plan on Inheritance Tax
If you inherit money in PA, you will probably incur an inheritance tax. The inheritance tax in PA is a percentage of the amount you inherit, and the percentage varies depending on your relationship with the decedent. If you can't afford to pay the bill in full, you can apply for payments.
Again, to apply, fax, email, or call the numbers listed above. The DOR doesn't publish any details about the eligibility criteria for inheritance tax payment plans on its website, but if you pay within three months of the decedent's death, you get a 5% discount on your bill.
Realty Transfer Tax Payments
The realty transfer tax in Pennsylvania is 1% of the realty's sale price. If you need to spread out the payments over time, you should call, fax, or email the PA DOR. They will guide you through the process of setting up monthly payments. Unfortunately, the state doesn't publish details about payment plan criteria for this type of tax.
Cost of Making Payments
You can set up payments to come out of your bank account, and there is no fee for that. However, you can also make PA tax payments with a debit card. As of 2023, the fee to use a Visa debit card is $3.95. The fee to use a Mastercard debit card starts at $3.95, and if you pay over $4,500, the fee is 1% of your payment.
Alternatives to Payment Plans
Can't afford monthly payments? Then, you may want to look into a PA offer in compromise. To apply, file Form REV-567. If you prove that you cannot pay, the DOR will let you settle for less than you owe. Alternatively, you may be able to have your account marked as non-collectible, which means you are below the collection standards and you cannot make the required payments with a payment plan. You will need to provide detailed financial information in order to obtain this status on your account.
Get Help with PA State Tax Payment Plans
A payment plan is a good way to pay what you owe over time and not worry about collection actions. If you can afford to pay the required payments from the plans, it is best to set up a payment plan as soon as possible to prevent collection actions and extra penalties and interest.
Need help with a payment plan or finding out if you qualify for other alternatives? Use TaxCure search based on your location and tax problem to find a local tax professional who can assess your tax situation and guide you to the best solution.