Randolph Law Firm, P.C.

States get aggressive with collecting tax debts

If our state follows in the footsteps of several other states, Nevada may soon request that the tax man get tougher on collecting tax debt as a way to avoid raising state taxes. A senior care facility operator was surprised when he received a $350,000 bill that charged a 9 percent restaurant tax on meals he served to seniors in the dining room. Others received tax bills of staggering amounts after being taken by surprise with changing tax laws. However, states that are struggling financially are now becoming very aggressive about collecting a tax debt to avoid having to raise taxes.

One state justifies the crackdown as a way to ensure that those who are required to pay taxes have paid them before a tax increase is ever considered. Some states who have attempted to aggressively pursue overdue taxes have had mixed results, and others experienced greater success. One state turned to public embarrassment as a collection tactic. The state publishes a list of any individuals or businesses that are behind in either sales or income taxes.

Other states have hired temporary auditors and collectors to go after delinquent taxpayers, while yet another state has a program that may forgive portions of back payments that are due from economically stressed taxpayers.

However, citizens in some of these states are not impressed with the new tactics and are reaching out to lawmakers in an effort to slow what they feel are overly aggressive collection actions. While some business owners have been successful in having amendments to the laws after receiving outrageous tax bills because they were unaware of changing tax rules, a state tax commissioner doesn't appear to be sympathetic, stating business owners have a responsibility to understand the tax rules. If Nevada follows the other states' leads, business owners across the state may want to start reading up on current law.

Source: Bloomberg Businessweek, "Some states asking the tax man to get tougher," Dave Gram, May 27, 2012

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