>A favorable payment opportunity for taxpayers financially impacted by a weakened economy to pay current outstanding individual income tax debts.

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1 Individual Income Tax Debt Payment Program >A favorable payment opportunity for taxpayers financially impacted by a weakened economy to pay current outstanding individual income tax debts. >Taxpayers can become compliant prior to the Department s full implementation of forced collection tools. >This is a time limited program. Starts 1/17/12 and ends 4/30/12 >Full payment of tax and interest results in waiver of unpaid penalties and collection assistance fee >Taxpayer may save 35% 40% by participating in the Program >Current payment agreements may be restructured under the Program >Garnishments may be released by signing a new installment agreement that results in payment of tax and interest before the end of the Program. >The program is not available to any taxpayer that is the subject of an ongoing criminal investigation or prosecution. >Details of the Program are available at /index.html or by calling the Department s Call Center at Taxpayers may also call one of the Department s regional Service Center locations: Asheville Greensboro Hickory Greenville Charlotte Raleigh Durham Wilmington Elizabeth City Winston Salem Fayetteville

2 North Carolina Department of Revenue Individual Income Tax Debt Payment Program Over the last several years, the weakened economy has resulted in a significant increase to the Department s accounts receivable balance. The most significant portion of the accounts receivable is represented by outstanding individual income tax. Currently, there are a number of automated collection tools utilized by the Department such as auto attachment and vendor garnishment processes that are designed to facilitate the collection of delinquent taxes. Soon, the Department will begin using the Financial Institutions Record Match (FIRM) data and the Collections Case Management System to identify additional levy sources and better prioritize collection cases. While the Department s mission is to administer the tax laws and collect the taxes due the state in an impartial, uniform, and efficient manner, the Department strives to work with taxpayers to resolve their outstanding tax liabilities. In an effort to resolve outstanding liabilities before additional forced collection actions are necessary, the Department will implement the Individual Income Tax Debt Payment Program as a structured opportunity to pay liabilities associated with individual income tax. The program is effective for the period January 17, 2012 through April 30, The column chart below illustrates the growth in the accounts receivable balance from 2007 through Accounts Receivable Trend Values are in millions 1

3 The pie chart below illustrates the portion of accounts receivable related to individual income tax. Currently, 76% of the Department s accounts receivable balance is individual income tax. This balance is comprised of assessments resulting from various examination noncompliance initiatives, delinquent returns, and returns filed with tax due but partial or no payment received. Analysis of Accounts Receivable Program Duration This is a time limited program. The program will commence on January 17, 2012 and conclude on April 30, Benefit to the Taxpayer The full payment by a taxpayer of all outstanding individual income tax and interest due will result in the waiver of all unpaid penalties and collection assistance fee. Tax and interest must be paid no later than April 30, Only the civil fraud penalty assessed pursuant to N.C.G.S (a)(6) is not subject to waiver under the conditions of this program. 2

4 In the pie chart below, the components of the individual income tax accounts receivable are illustrated. Based on an analysis of the component data, the average taxpayer could save as much as 38% if they elect to participate in the program. Analysis of Individual Income Tax Liability A further analysis of the individual income tax accounts receivable noted in the column chart below inidicates that 185,926 taxpayers have outstanding individual income tax liabilities ranging from less than $250 to over $15,000. These taxpayers owe for 496,461 tax periods. Several key points that should be noted include: 57% of taxpayers who owe individual income tax owe less than $2, % of taxpayers who owe individual income tax owe between $2,000 and $3,999. The average taxpayer has a balance due of $4,674. Asessments by Dollar Range 3

5 The pie chart below illustrates the age of the individual income tax accounts receivable. Assessments by Age Program Goals To create a favorable payment opportunity for individual income taxpayers that have been financially impacted by a weakened economy. To provide an opportunity for taxpayers to become compliant prior to the full implementation of the Department s forced collection tools. To address the accounts receivable balance. Program Highlights This program only includes amounts of income tax liability assessed prior to January 1, It does not include tax due from any outstanding returns not properly filed with the Department. The Department will provide conditional lien release letters at the taxpayer s request. Taxpayers currently on installment agreements may restructure those agreements to participate in the program. Taxpayers currently under garnishment may request that the garnishment be released if the remaining balance of tax and interest is paid in full or a new installment agreement is provided that provides for the full payment of the tax and interest within the program period. A taxpayer may participate in the Small Business Taxpayer Recovery Program and the Income Tax Debt Payment Program at the same time. 4

6 Restrictions No penalty or collection assistance fee paid before the date the program begins will be waived or refunded. The program will not be available to any taxpayer that is the subject of an ongoing criminal investigation or prosecution. Participation in the program does not prevent the Department from auditing returns or referring potentially fraudulent returns for criminal prosecution. During the program period, the Department will continue to claim federal and state, income tax refunds, lottery winnings, and State vendor payments for unpaid accounts. 5

7 Frequently Asked Questions about the Individual Income Tax Debt Payment Program 1) How can a taxpayer participate in the Individual Income Tax Debt Payment Program? Contact one of the Department s Service Center locations located across the state. Click here for a map of office locations and phone numbers. 2) How does a taxpayer benefit from participating in the program? Taxpayers who pay the balance of tax and interest will have unpaid penalties and fees waived. 3) How long does the program last? This time limited program begins on January 17, 2012 and concludes on April 30, ) Who can participate in the program? Taxpayers who have received a notice and have an unpaid individual income tax liability may be eligible to participate. 5) Can a taxpayer pay only one year of liability if multiple tax years have unpaid balances? No. All assessed individual income tax liability must be paid for a taxpayer to participate in the program.

8 6) Will all penalties be waived? The Department will waive all unpaid penalties except for a civil fraud penalty assessed pursuant to N.C.G.S (a) (6). 7) What happens if a taxpayer participates in the program and fails to make a scheduled payment? As long as the balance of tax and interest is paid by April 30, 2012, a taxpayer will still have eligible penalties and fee waived. 8) Can a taxpayer participate in the program if a Certificate of Tax Liability (state tax lien) has been recorded by the Department? Yes. The lien will not be satisfied until the tax and interest has been paid. However, at the taxpayer s request, the Department will provide a conditional lien release letter if the taxpayer is attempting to borrow the funds from a financial institution. 9) Will penalties and collection assistance fees that were paid prior to the start of the program be refunded if a taxpayer participates in the program? No. Only unpaid penalties and fee will be waived upon payment of tax and interest. Refunds will not be issued on previously paid penalties and fees. 10) Can taxpayers that are the subject of an ongoing criminal investigation or prosecution related to individual income tax participate in the program? No

9 11) Can taxpayers that have been convicted of criminal offenses related to individual income tax participate in the program? Yes. If the conviction is not related to the tax year(s) the taxpayer wishes to pay through the program. 12) Can a taxpayer that is currently in bankruptcy participate in the program? Taxpayers currently in bankruptcy should consult their legal counsel regarding participation in the program. 13) Can a 2011 individual income tax refund be used as part of the payment agreement when a taxpayer participates in the program? No. A 2011 tax refund cannot be included in the payment plan for an unpaid balance. However, refunds may be automatically applied by the Department and the unpaid balance will be reduced by the amount claimed. For additional information or to participate in the program, click here for a list of office locations and phone numbers.