by Jay Freeborne , Enrolled Agent
September 27, 2012

We at Washington Tax Services are now seeing an onslaught of levies and letters from California, NY, and North Carolina state tax agencies to pursue very old debts. Even ACROSS state lines! In this day of big state budget deficits, states are trying to balance their budgets by getting their oldest tax debt clients to pay up.

Yesterday, I spoke with a lady in California who just had her bank accounts frozen by the State of New York - $8000 was frozen to pay her $17,000 debt for tax years 1991, 1992 and 1993! This came out of the blue.

I saw the exact opposite with a customer in New York. Who is receiving bills from California for debts incurred in 1997 and 1998.

Another customer of mine in California - just received a wage levy from North Carolina for a tax year in which he didn't live in North Carolina. Apparently, North Carolina considered him a resident for 2006 and charged him a large balance by filing the return for him.

Exempting bankruptcy court, you are going to see a few different resolutions with these States:

1. Offer in Compromise - showing your inability to pay them in full and settling for a fraction of what you owe.

2. Hardship status - you might be able to show them that you CAN'T pay and have the case closed as "uncollectible" - however this is not as easy to achieve as it is with the IRS.

3. Payment plan and penalty abatement - setting up a payment agreement that you can afford and then petitioning them to waive penalties.

4. Full payment and penalty abatement - writing out a check for the original tax plus some interest and showing them that you had good reason to fall behind.

5. Correcting the tax return - in the example above - my client is going to prove to the state of NC that he didn't live there and get his balance due reversed.

Are you getting letters from California Franchise Tax Board, New York Dept of Taxation and Finance, and/or North Carolina or another state? For 30 years, WATAX has been solving every kind of tax problem. Call us at 1-888-282-4697 or email a description of your tax issue and we’ll contact you.

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