How to Set Up a Wisconsin State Tax Payment Plan
Worried that you can't afford to pay your Wisconsin taxes? Wondering what to do? Don't worry. You have options. If you can't afford to pay your tax bill in a lump sum, you may be able to make monthly payments until you pay off the bill in full.
The Wisconsin Department of Revenue allows qualifying business and individual taxpayers to set up payment plans for their delinquent taxes. To help you out, this guide explains the rules for Wisconsin tax payment plans and how to apply. Then, it looks at alternatives to setting up monthly payments on your tax debt.
How to Make Payments on Wisconsin Taxes
Individuals and businesses can make payments on Wisconsin's My Tax Account website. If you're an individual who wants to make a one-time payment, you can do so without creating an account. However, you may need to provide identifying details about yourself, such as your Social Security Number, or information about your tax bill such as a number from your billing notice.
To make periodic payments, you will need to set up an account. You will also need to set up a My Tax account if you want to request a Wisconsin tax payment plan online.
How to Request a Payment Plan on Wisconsin Back Taxes
You can request a payment plan on your Wisconsin back taxes online or through the mail. To apply online, go to My Tax Account and set up an account. Then, log in and select "Manage My Collection." Look at the options under "Payment Plan" and choose "Request New Payment Plan," Then, follow the prompts to request a payment plan.
Be prepared to share a lot of details about your financial situation. To ensure you have the information you need to apply for a WI tax payment plan online, gather your monthly bills, checking account and credit card statements, and any loan paperwork that you have. Also, make sure that you have details about your household income.
Alternatively, you can request a payment plan through the mail using Form A-771 (Request a Payment Plan). Simply fill out the form and send it to the following address:
Wisconsin Department of Revenue
PO Box 8901 \
Madison WI 53708-8901
Keep in mind that you don't have to do all this paperwork on your own. If you want help, you can work with a Wisconsin tax professional. They can handle the paperwork for you and help you set up a tax payment plan that works with your budget.
How to Fill Out Form A-771 (Request a Payment Plan)
This form request basic information about you, your spouse, and your taxes owed. It also asks you to specify a payment amount, whether you want to pay monthly, bi-weekly, or weekly, and the date of your first payment.
Once you fill out the basics, this form requires detailed information about your financial situation. Compared to many other states, Wisconsin requests a lot of details on its payment plan application. You need to include the following:
- The balance in all bank accounts including, checking, savings, money market, CDs, IRAs, etc.
- The value and amount owed on all motor vehicles, boats, motorcycles, TVs, ATVs, etc.
- The value and amount owed on all real estate.
- Your monthly living expenses including mortgage, rent, food, insurance, and entertainment.
- How much you owe in debt.
- Whether or not you are behind on any of your monthly bills.
- The amount of monthly payments being made to the IRS.
- Your income.
After you write down your expenses, you will subtract that from your income and note the difference. This shows the WI DOR how much disposable income you have. The DOR uses this information when deciding whether or not to approve your payment plan. The DOR may reject your payment plan request if the state believes that you can pay in full or make larger payments.
Requirements for Wisconsin Tax Payment Plans
The WI DOR can cancel your payment plan if the WI DOR learns that you included false information in your application. The DOR can also cancel your plan if there are significant changes in your financial situation. This generally only happens if the DOR learns that you can pay your tax bill in full.
To avoid defaulting on your Wisconsin tax payment plan, you must make your payments by the due date. You also must stay current on all new tax reporting and payment obligations. If you default on your payment plan, the WI DOR has the right to pursue collection actions against you without any additional notice.
What Happens If the WI DOR Accepts Your Payment Plan
The department will add a $20 fee to your account if the WI DOR accepts your payment plan. The state will also assess a collection charge of 6.5% on the tax balance. The minimum charge is $35. If the WI DOR decides to file a warrant against you while you have a payment plan, the department will also assess a fee for filing the warrant.
Collection Actions When You're on a Payment Plan
When you set up a payment plan, the Wisconsin Department of Revenue will not pursue collection actions against you. That means the state won't seize your assets, garnish your wages, or take other involuntary measures to collect your unpaid tax.
However, the State of Wisconsin can issue a tax warrant against you even if you're on a payment plan. A tax warrant is a lien against your assets. It secures the state's interest in your debt. If you sell your assets while there is a warrant against them, the state has a right to the proceeds.
Note that the Wisconsin Department of Revenue doesn't always issue warrants when you set up a payment plan. To reduce the risk of a tax warrant, try to apply for a WI tax payment plan before a warrant gets issued. Although this doesn't ensure that a warrant won't get issued, being proactive helps your chances.
Can You Get Tax Refunds When on a WI Tax Payment Plan?
A tax refund can be offset if you don't pay your tax bill in full. While you're making payments, the Wisconsin Department of Revenue will seize any tax refunds due to you from the IRS, The Wisconsin Department of Revenue, and any other state. The refund will reduce your balance, but it will not cover your monthly payment.
Here's an example, imagine that you're making payments on Wisconsin state taxes. Your monthly payment is $300. The IRS sends you a tax refund for $2,000. The WI DOR will seize that refund and apply it to your balance, but you will still need to make your monthly payment of $300.
Lottery Winnings When You're on a WI Tax Payment Plan
The state also has the right to seize lottery winnings over $600. To give you an example, imagine that you buy a scratch ticket and you win $50. When you redeem the ticket, the cashier will just give you the $50 in cash. However, if you win $1,000, the cashier will ask for your ID. Then, they will send the funds to the DOR.
Just as the WI DOR does with tax refunds, it will apply the lottery winnings to your account. The payment will reduce your balance due. But you will still need to make your regularly scheduled monthly payment.
Interest With Wisconsin DOR Payment Plans
While you're making payments, the WI DOR will assess interest on your account. As of 2022, the interest rate on Wisconsin back taxes is 1.5% per month.
Other Options for Making Payments on WI Back Taxes
Because the interest rate is so high, you may want to look into alternatives for paying your Wisconsin back taxes. For instance, you may want to apply for a loan from your bank. If you can't get a signature loan, you may want to put up collateral such as your home or a vehicle.
Historically, the interest rates on these types of loans can be a lot lower than the interest charged by the state of Wisconsin. In some cases (but not all), paying your state tax bill with a credit card can be cheaper than making payments through the DOR.
Should You File Your WI Tax Return If You Can't Afford to Pay?
If you cannot afford to pay your personal or business tax bill, you should still file the Wisconsin state tax returns. Not filing can lead to much higher penalties than if you file but can't pay. Also, by filing, you acknowledge that you're aware of the situation.
The DOR is much more willing to work with people and businesses that are upfront about their tax liabilities. Once you file the tax returns, you can reach out to the state to request a tax payment plan.
Get Help Applying for a Tax Payment Plan In Wisconsin
You don't have to deal with the WI DOR on your own. A Certified Public Accountant (CPA), tax lawyer, or enrolled agent (EA) can help you apply for a payment plan or look for other resolution options on your WI back taxes.
Why should you work with a local WI tax pro? Because they have the experience you need, they're able to give you individualized attention, and they are bound by professional ethics that help to protect you.
In contrast, big tax resolution firms can't make these same claims. They don't focus on your state, so they may not understand all of the rules and procedures of the WI DOR. They often lack state-specific experience. Additionally, with the big companies, you often end up working with a salesperson who is not bound by professional ethical standards.
How to Find a WI Tax Pro
To find a local WI tax pro, use TaxCure to search for options. Using our search engine, you can search for local tax professionals with extensive experience with the WI DOR. They can review your situation, help you identify the best resolution options, and help you move forward with your life.
To get help today, search for a local WI tax pro. Select Wisconsin DOR as the tax agency, input your zip code and find a local pro. You can even narrow down your results based on their experience with your particular WI tax problem. Don't let the state start extreme collection actions against you. Instead, contact a tax pro for a free consultation today.