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Installment Agreements for Texas Tax Liabilities

State governments are notorious for being tough on delinquent tax liabilities because the state statutory and administrative codes lack the procedural guarantees so inherent in the federal government's Internal Revenue Code. The State of Texas is no exception.

If a Texas business is overdue on any number of the various taxes owed to the state, Enforcement Officers from the different taxing entities often threaten to close down businesses entirely unless the liability can be paid in full. In this situation, it's important to know your options.

Section 33.02 of the Texas Tax Code states that a Texas tax collector "may enter into an installment agreement with a person delinquent in the payment of the tax for the payment of tax penalties, and interest in installments. The agreement must be in writing and may not extend for a period of more than 36 months." The statute further provides that interest and penalties will continue to accrue both while the agreement is being considered and throughout the agreement term. However, the statute prohibits the tax collector from seizing and selling a taxpayer's property to settle the delinquent debt during these time periods as well - something that can be a great assurance to a business owner trying to get back on their feet.

Ultimately, whether an agreement for installment payments can be reached depends upon each taxpayer's particular circumstances. Additionally, the tax collector will often compile a list of requirements and deadlines with which the taxpayer must comply before an agreement can be reached. These requirements can range between something as simple as bank statements to something as difficult as certified loan applications showing that the taxpayer has attempted to secure loans to pay off the tax liability. Most often, the agreement also requires a down payment consisting of some percentage of the total liability.

Delinquent tax liabilities are intimidating - especially when an Enforcement Officer knocks on your door and seems unwilling to discuss alternatives. Knowing your options helps to protect your rights and your business.

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