INFORMATIONAL NOTICE MISCELLANEOUS TAX 2013-01 Issued: January 02, 2013 Pennsylvania Department f Revenue Guidelines fr Cllectin and Administrative Bank Attachment Required by Act 85 f 2012 Per the Tax Refrm Cde f 1971 as amended by Act 85 f 2012, Sectin 3003.22 (m) (72 P.S. 10003.22(m)), the Pennsylvania Department f Revenue ( Department ) issues the fllwing guidelines: Tax Cllectin Prcedures A tax liability arises when a taxpayer files a tax return, but fails t remit the amunt due. A tax return can als be created by the department if a taxpayer fails t file a tax return when required t d s. After the liability is established, the taxpayer is issued an assessment ntice (in sme cases a billing ntice may be issued t a taxpayer prir t the issuance f an assessment ntice). The taxpayer is affrded 90 days t cntest the assessment by filing an appeal with the department s Bard f Appeals. Assuming the taxpayer is nt under federal bankruptcy prtectin, nce a taxpayer s appeal rights expire, the taxpayer is sent a cllectin r dunning ntice. If the taxpayer fails t respnd t the cllectin r dunning ntice within a reasnable amunt f time, the department s Delinquent Tax Call Center ( Call Center ) will attempt t cntact the taxpayer via telephne. If the Call Center is unable t cntact the taxpayer, the Call Center will take steps t lcate better cntact infrmatin fr the taxpayer. If the Call Center is successful in reaching the taxpayer, the taxpayer may satisfy the liability via payment in full, r may arrange fr a deferred payment plan ( DPP ) if the taxpayer cannt pay the entire liability. The taxpayer is affrded rughly 90 days t pay in full r t establish a DPP. If the Call Center is unsuccessful in lcating the taxpayer after exhausting all available avenues, r if the taxpayer refuses t pay in full r establish a DPP, the department has several ther enfrcement tls at its dispsal. Initially, prir t using these ther enfrcement tls, the department will file a lien against the taxpayer fr the amunt f tax, interest, penalty, and lien filing fee due. Depending n the size and nature f the liability, the case may be referred directly t a third party cllectin agency. The case is als reviewed t determine if wage garnishment is an apprpriate alternative cllectin tl. Otherwise, the case is referred t the apprpriate district ffice fr an enfrcement agent t cntinue cllectin effrts. The enfrcement agent will cntact the taxpayer via telephne, thrugh ntices t appear at the district ffice, and by visiting the taxpayer s business lcatin r residence (depending n the type f case). If the enfrcement agent is unable t successfully cllect the liability r establish a DPP and the taxpayer has a sales tax license, the department will revke the taxpayer s sales tax license. Office f Chief Cunsel 10 th Flr Strawberry Square Harrisburg, PA 17128 717.787.1382 www.revenue.state.pa.us Page 1 f 7
The taxpayer has 90 days t file an appeal f the revcatin f a sales tax license with the Bard f Appeals. If n appeal is filed, r the appeal is reslved in the department s favr, the enfrcement agent will cntinue t pursue cllectin f the liability. If the enfrcement agent is still unable t successfully cllect the liability r establish a DPP after the revcatin f the sales tax license, the enfrcement agent will issue a summary ffense citatin t the taxpayer (als knwn as an Act 46 f 2003 citatin) fr ffering tangible gds and services withut pssessing a valid sales tax license. The citatin is filed and heard befre a magisterial district judge. If the citatin prcess des nt result in reslutin f the case thrugh a full payment r a DPP, r if the taxpayer des nt have a sales tax license, the department may elect t utilize administrative bank attachment if the case meets the necessary selectin criteria. If administrative bank attachment is unsuccessful r nt apprpriate fr the case, the department may refer the case t a third party cllectin agency, r the Office f Attrney General. Rights and Remedies Available t Taxpayers After the issuance f an assessment, the taxpayer is affrded an appeal perid t cntest the assessment (i.e. t request a reassessment). Taxpayers file this appeal with the Bard f Appeals. In additin t cntesting the assessment, taxpayers have six mnths frm the date f payment f the tax due t pay and petitin the Bard f Appeals fr refund. Taxpayers may prpse a cmprmise t the Bard f Appeals during the appeal prcess. As nted previusly, a taxpayer may cntest the revcatin f a sales tax license with the Bard f Appeals. If the taxpayer s appeal with the Bard f Appeals is nt successful, the taxpayer may appeal t the Bard f Finance and Revenue. If the taxpayer s appeal t the Bard f Finance and Revenue is nt successful, the taxpayer may appeal t the Pennsylvania Cmmnwealth Curt. Taxpayers wh are unsuccessful at Cmmnwealth Curt may further appeal t the Pennsylvania Supreme Curt. Individual taxpayers issued assessments fr persnal incme tax may cntact the Taxpayer Rights Advcate ( Advcate ) ffice fr assistance in reslving their liabilities. The Advcate has brad pwers t assist taxpayers. Fr additinal infrmatin regarding the Advcate please visit: http://www.prtal.state.pa.us/prtal/server.pt/cmmunity/taxpayers'_rights_ad vcate/13152. Taxpayers are advised, either verbally r in writing, f the availability f deferred payment plans t pay their liability ver time. The department makes every attempt t be flexible with the terms f the DPP. The department attempts t ensure that the taxpayer is nt burdened with a DPP that is nt financially feasible, r that will take s lng t fulfill that it causes the taxpayer t incur unnecessary interest charges. Office f Chief Cunsel 10 th Flr Strawberry Square Harrisburg, PA 17128 717.787.1382 www.revenue.state.pa.us Page 2 f 7
If a taxpayer receives a ntice f attachment frm the department, the taxpayer is affrded 10 days t file a petitin with the cunty curt f cmmn pleas where the taxpayer resides, r in the case f an entity where the entity is lcated, t halt the attachment. The department will nt utilize bank attachment against any member f the U.S. Armed Frces, including members f the PA Natinal Guard that are n federal active duty status, that are n active duty t avid vilatins f the federal Sldiers and Sailrs Civil Relief Act. Fr additinal infrmatin n the rights and remedies available t taxpayers, please see the department s disclsure statement n the department s and taxpayers rights and bligatins at: http://www.prtal.state.pa.us/prtal/server.pt/dcument/628125/rev-554_pdf. Circumstances fr Administrative Bank Attachment The use f administrative bank attachment is fr: Entities that are engaged in business and have prperty subject t the department s lien r liens in excess f $1,000; An individual perating as a sle prprietr and have prperty subject t the department s lien r liens in excess f $1,000; A sharehlder, member r partner f a pass-thrugh entity and have prperty subject t the department s lien r liens in excess f $1,000; r A crprate fficer r ther respnsible individual wh has been assessed and have prperty subject t the department s lien r liens in excess f $1,000. The Department will nly select a case fr administrative bank attachment if: The liability has been assessed; The appeal rights have expired r if the liability has been sustained thrugh the appeals prcess; The taxpayer has defaulted n a duly executed DPP r declined t execute a DPP; A lien has been filed; and The taxpayer has been advised f all ptential enfrcement actins, including administrative bank attachment. Additinally, if the liability is fr sales tax, the department may revke the sales tax license and issue an Act 46 f 2003 citatin prir t utilizing administrative bank attachment. The department will nt pursue an administrative bank attachment if the taxpayer files fr federal bankruptcy prtectin. The department will prmptly stp any such attachment prceedings nce the department is ntified f a bankruptcy petitin filing. Office f Chief Cunsel 10 th Flr Strawberry Square Harrisburg, PA 17128 717.787.1382 www.revenue.state.pa.us Page 3 f 7
Plicies Regarding Spusal Relief and Severe Ecnmic Hardship Taxpayers assessed fr persnal incme tax, may cntact the Advcate fr spusal relief. In additin, Act 85 prvides fr spusal relief f the attachment by petitining the curt f cmmn pleas within 10 days f receiving the attachment ntice frm the department. If a taxpayer is facing severe ecnmic hardship due t an inability t pay the liability in full, the department will prvide relief via a DPP. In additin, the department will enter int a cmprmise due t severe ecnmic hardship upn the acceptance f an accurate and timely cmpleted Statement f Financial Cnditins if this dcument establishes hardship t the satisfactin f the department. Ntificatin t Financial Institutins The department must have a reasnable belief that a specific financial institutin is maintaining an accunt r accunts fr an bligr. An accunt is defined as: Funds frm a demand depsit accunt, checking accunt, negtiable rder f withdrawal accunt, savings accunt, time depsit accunt, mney market mutual fund accunt r certificate f depsit; Funds paid tward the purchase f shares r ther interest in a depsitry institutin as defined in Sectin 3 (c) f the Federal Depsit Insurance Act, Title 12 U.S.C. Sectin 1813 (c); Funds paid tward the purchase r ther interest in a federal r state credit unin as defined under Sectin 1752(i) f the Federal Credit Unin Act, Title 12 U.S.C. Sectin 1752 (i); r Funds r prperty held by a benefit assciatin, safe depsit cmpany, mney market mutual fund r similar entity ding business in Pennsylvania that hlds r maintains accunts reflecting prperty belnging t thers. A financial institutin is defined as: A depsitry institutin as defined in Sectin 3 (c) f the Federal Depsit Insurance Act, Title 12 U.S.C. Sectin 1813 (c); A federal r state credit unin as defined under Sectin 1752(i) f the Federal Credit Unin Act, Title 12 U.S.C. Sectin 1752 (i); r A benefit assciatin, safe depsit cmpany, mney market mutual fund r similar entity ding business in Pennsylvania that hlds r maintains accunts reflecting prperty belnging t thers. Accunts r funds that fall int the fllwing categries are nt subject t attachment: An individual r ther entity, ther than the bligr that wes the cllectible state taxes, is listed as a part-wner n the accunt prir t the attachment rder being received by the financial institutin; Office f Chief Cunsel 10 th Flr Strawberry Square Harrisburg, PA 17128 717.787.1382 www.revenue.state.pa.us Page 4 f 7
Funds r prperty depsited int an accunt subsequent t the date the financial institutin attaches the accunt; An accunt in which a financial institutin has a present right t exercise a setff either under an agreement executed by the financial institutin and the bligr r therwise under applicable law; An accunt in which an bligr des nt have an uncnditinal right f access; An accunt subject t a security interest, cntrl agreement, r pledged as security fr a lan r bligatin, r subject t a lien r judgment that was effective prir t the financial institutin receiving ntice t the prpsed administrative attachment; r Any accunt that is specifically exempted frm attachment under any currently applicable federal statutry r regulatry prvisin. Financial institutins that receive an administrative bank attachment rder will be prvided with clear instructins regarding their cmpliance with Act 85. Ntice t the financial institutin will include: The name f the bligr; The amunt f the cmmnwealth s lien(s) with interest and penalty calculated t 45 days frm the attachment ntice date; A statement t the financial institutin rdering the attachment f the bligr s accunt(s); The date the attachment rder was issued; The last knwn address f the bligr; and The scial security r emplyer identificatin number f the bligr. In additin, the department will ntify financial institutins in writing thrugh trade grups r t individual financial institutins regarding plicies and prcedures fr administrative bank attachment. Plicies and Prcedures t Attach and Seize Accunts The department will fllw the cllectin prcedures detailed abve. After ther less invasive measures t cllect have failed, the department will ntify financial institutins in writing r electrnically depending n the financial institutin s preference. Within 5 business days, the department will ntify the taxpayer via First Class U.S. Pstal Service that the department has rdered a financial institutin t attach the taxpayer s accunt(s). This ntice will include: The address f the department; A pint f cntact at the department, with cntact infrmatin; The scial security r emplyer identificatin number f the bligr; The last knwn address f the bligr; The amunt f the cmmnwealth s lien(s) with interest and penalty calculated t 45 days frm the attachment ntice date; The date the attachment rder was issued; A statement by the department that a financial institutin has been rdered t attach ne r mre f the bligr s accunts; Office f Chief Cunsel 10 th Flr Strawberry Square Harrisburg, PA 17128 717.787.1382 www.revenue.state.pa.us Page 5 f 7
The name f the financial institutin that has been issued the attachment rder; and A statement that the administrative bank attachment rder may be appealed with instructins n hw the appeal is t be filed. The taxpayer is affrded 10 days t appeal t the curt f cmmn pleas where the taxpayer resides r in the case f entity where the entity is lcated. A cpy f the appeal ntice must be served via first class mail, pstage prepaid, under a certificate f service t the department s legal ffices at the fllwing address: Pennsylvania Department f Revenue Office f Chief Cunsel Bankruptcy/Cllectins Unit 10 th Flr Strawberry Square 4 th & Walnut Streets Harrisburg, PA 17128 Telephne Number: 717-787-1382 The mtin will be prmptly assigned t a department attrney. If either the department r the bligr believes that the rder f the curt f cmmn pleas entered after a mtins hearing shuld be appealed, then such an rder must be timely appealed t Cmmnwealth Curt by the party that feels aggrieved by the rder handed dwn by the curt f cmmn pleas judge. A challenge t the administrative bank attachment rder must be based n ne r mre f the fllwing grunds: A mistake f fact regarding the identity f the bligr, the wnership f the accunt, and the cntents f the accunt; the amunt f the lien bligatin due; The exclusin f the accunt frm attachment because the accunt is utside the type f accunt that can be attached by the department; The failure f the department t prperly recrd the lien(s) upn which the attachment is based; The failure f the department t ntify the bligr f the liability; Severe ecnmic hardship that wuld result due t the executin f the administrative bank attachment rder; Request fr spusal relief frm the jint liability; r Other gd cause. The bligr, the financial institutin, r an accunt hlder f interest may nt challenge the actins f the department based n a mistake r errr in the riginal assessment underlying a lien against the bligr. Office f Chief Cunsel 10 th Flr Strawberry Square Harrisburg, PA 17128 717.787.1382 www.revenue.state.pa.us Page 6 f 7
If n appeal is taken, the department will rder the financial institutin t seize and remit funds t the department in a manner agreed t by the financial institutin and the department. The financial institutin will first deduct its fee frm any seized funds, and will then remit the remaining funds t the department. The department will apply the frwarded funds t the liability under a lien r liens, and will apply the funds first t tax, then interest, then penalty, and then lien filing fee. A financial institutin is nt required t ntify bligrs that the department has rdered an accunt r accunts t be attached. In additin, a financial institutin is nt required t reimburse fees assessed against an accunt r an bligr as result f the department issuing an administrative bank attachment rder in errr. Hwever, a financial institutin that des nt hnr a valid administrative bank attachment rder will be subject t the penalty prvisins included in Act 85, which is five percent f the amunt f funds which shuld have been attached r frwarded fr each mnth r fractin theref frm the date the funds shuld have been attached r frwarded t the date the funds are attached r frwarded. The ttal amunt f the penalty shall nt exceed fifty per cent f the prper amunt f funds which shuld have been attached r frwarded. Office f Chief Cunsel 10 th Flr Strawberry Square Harrisburg, PA 17128 717.787.1382 www.revenue.state.pa.us Page 7 f 7