In Louisiana, residents have to pay both federal and state taxes. Many people, especially those who are self-employed or run small businesses, have struggled to meet their obligations in recent years because they lost income during the pandemic and are now facing increased costs due to inflation. The best way for residents to deal with tax issues is to reach out to a Louisiana tax resolution specialist who can help them to access federal and state tax debt relief.
Louisiana Tax Resolution: Can a Tax Consultant Help Me with State Tax Problems?
Louisiana residents have to pay state and local taxes in addition to their federal taxes. Everyone who lives or works in this state full-time or part-time has to file a return and pay individual income tax. Currently, the rate is 1.85% for the first $12,500 of earned income and 3.50% for the next $37,500. People who earn more than $50,000 have to pay 4.25%.
Those who fail to file their returns or pay their taxes are fined, and they also have to pay interest on the outstanding amount. If they don’t pay for many months, the state can garnish their wages, seize their assets, or take away their driving licenses. To prevent these issues, individuals who are worried about paying their taxes need to contact a specialist as soon as possible.
Filing Your Taxes
Always file your return before the deadline, even if you know that you can’t pay your state taxes. The failure to file penalty is extremely harsh, and it accumulates quickly. You have to pay an additional 5% for every month you don’t file, up to a total of 25%. Reach out to us if you haven’t filed yet. We can help you by filing your return for you. If a penalty has already been added to your account, we can check whether there’s a way to get it removed.
Setting Up a Payment Plan
Like the IRS, the Louisiana Department of Revenue believes that most taxpayers can eventually pay their debts. However, they understand that people sometimes face difficult situations, so there is a payment plan option. This allows residents to spread out their payments over many months or even several years. Individuals who would like to set up a payment plan have to submit Form R-19026, and businesses have to submit Form R-19027.
You might be able to set up your own plan if you already have a LaTAP online account because you can make your request online. However, it’s always best to consult a professional beforehand. Sometimes, the payment plan isn’t the best solution. Taxpayers who have a good credit score can often get a zero-interest or low-interest credit card or loan that is cheaper than the LDR’s option.
Making an Offer in Compromise
Although most taxpayers are asked to pay the full amount, those who have no way of paying off their debts can make the LDR an offer in compromise. An offer is only likely to get accepted if the LDR believes that the taxpayer is unable to pay their debts or the cost of collection would be more than the outstanding amount.
Don’t try to submit an offer in compromise on your own. Instead, speak to a tax professional, who can check whether you’re eligible and then file the necessary forms on your behalf.
Getting Penalties Removed from Your Account
Getting the penalties removed from your account is one of the easiest and most effective tax debt relief strategies. As mentioned, the penalties can amount to 25% of your total bill if you filed your return too late, so they are significant. By asking the LDR to remove them, you can lighten your tax burden and pay off your debt more quickly.
You must request a waiver of the penalties in writing and have the document notarized. Usually, a waiver is only possible if you’ve never had issues with the LDR before. You have to file your return and pay outstanding taxes before you can get your penalties removed from your account. Your Louisiana tax resolution specialist can check whether you’re eligible for a waiver and if so, help you to submit your request.
Resolving Serious Tax-Related Issues
If you’ve failed to pay your taxes for many months, the LDR can place a levy against your bank account and property. This allows them to garnish your wages, take your savings, and seize your physical assets to satisfy the debt. A levy is a serious issue, and it shouldn’t be ignored.
Call a tax professional immediately if you’ve received a letter stating that a levy has been placed against your assets. The expert can contact the LDR on your behalf and resolve the issue.
Dealing with an Audit
Every year, some Louisiana residents are selected for an Individual Income Tax Audit. This isn’t automatically a cause for concern because some taxpayers are selected at random. However, it’s important to get professional help since audits can be stressful and difficult to handle. Reach out to a tax advisor and ask them to submit Form R-7006, the Power of Attorney and Declaration of Representative.
Your tax expert can help you to understand the audit process and compile the necessary documents. They will also communicate with the LDR on your behalf and make sure you meet all the deadlines. Most audits are conducted by correspondence, so you don’t meet the auditor face-to-face. More complex ones take place on-site or at your tax advisor’s office.
Should I Pay My Federal or State Taxes First?
If you have federal and state tax debt, you might wonder which one you should pay off first. The answer is that it depends on your individual situation. Both the state and the IRS have immense collection power, so it’s important not to ignore letters and warnings. However, it is sometimes easier to delay payments to the IRS because the forgiveness program is extensive.
Additionally, state taxes are usually lower, so they are easier to pay off quickly. If you’re not sure how to proceed, reach out to us at Geaux. We can help you to come up with creative solutions and negotiate with the LDR and the IRS on your behalf.
Can I Get Tax Debt Relief on My Own or Do I Need Professional Help?
Although you can try to get your penalties removed or make the LDR an offer in compromise, it’s unlikely that you’ll be successful without professional assistance. Remember, the government believes that you should be able to pay the outstanding amount, so they are not likely to accept a lower amount unless you can prove that you will face hardship if you have to pay your taxes in full.
If you don’t see a way out or the LDR has placed a levy on your property, speaking to a professional is essential. At Geaux, we can analyze your situation, find the best solution, and communicate with the LDR. Because our most experienced employees, Bryon and Kristi, have been working in the tax industry for several decades, they will be able to assist you, no matter how complex your tax problem is.
Highly experienced Louisiana tax resolution specialists can help residents with their federal and state taxes. They can show taxpayers how to access tax debt relief and guide them through the audit process. Contact us at Geaux Tax Resolution to learn more and to schedule your first appointment with our team. We’ve been working in the local area for many years, so we have experience with the local tax laws and regulations.