Oklahoma Back Taxes Settlement Guide: Methods to Settle Taxes
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Each state has its own tax collection agency, which functions in a way that’s similar to the IRS. In Oklahoma, the Tax Commission has the duty of processing tax returns and issuing assessment notices when unpaid taxes are due. If you’ve received an assessment notice for Oklahoma back taxes, you shouldn’t hesitate to contact the Tax Commission to discuss your payment options. Depending on your individual situation, you may be able to set up a payment plan, arrange a settlement of your tax liability or get your penalties waived.
Setting Up a Payment Plan
When you owe back taxes, it’s always best to pay the bill in full if you can. However, if you’re having trouble coming up with the cash, you may be able to set up a payment plan. You’ll still need to file your return on time and you should send a partial payment if you’re able to. You’ll receive a bill, outlining the amount of back taxes owed, along with any penalties or interest that are due. To set up a payment plan, you’ll need to contact the Compliance – Collections Division at (800) 522-8165, ext. 1-3281. If you don’t contact the Tax Commission to set up a payment arrangement, your account will be referred to a state collection agency.
Oklahoma Offer in Compromise
In addition to payment plans, the Tax Commission will also consider an Offer in Compromise under certain conditions, which they call an offer for settlement of tax liability. When you make an Offer in Compromise, you’re effectively asking the Tax Commission to allow you to settle your outstanding tax liability. You pay an agreed-upon amount to cover your tax debt and the remaining balance is erased. The Tax Commission will only consider a compromise offer when any of the following conditions apply:
- Collection of the tax and any penalties or interest owed would reasonably result in you filing for bankruptcy protection
- The tax owed is uncollectible because a financial hardship has rendered you insolvent
- The tax liability was created as a result of the actions of someone else, such as a spouse
- You believed in good faith that collection of taxes wasn’t required with regard to nonpayment of trust fund taxes
To apply for an Offer in Compromise, you’ll need to download Packet S from the Tax Commission website. This packet contains the necessary forms you’ll need to submit your application as well as instructions for providing supporting documenting. For individual income tax, you’ll need to fill out Form OTC-600 and Form OTC-600-A, which is a complete financial statement. You’ll also need to submit Form OTC-600-E to authorize release of your financial data and Form BT-129, which is a power of attorney. The completed application should be mailed to:
Oklahoma Tax Commission
Account Maintenance Division – AMW
Post Office Box 26800
Oklahoma City, OK 73126-0800
Once the Tax Commission approves your offer, you’ll be notified of the date when full payment is due. If the amount forgiven exceeds $10,000, the offer will need to be approved by the Oklahoma District Court before you can proceed with payment.
Requesting a Penalty Waiver
The Tax Commission will automatically apply a penalty when unpaid taxes are due. If at least 90% of the original tax liability has not been paid by the due date, a penalty of 5% will be assessed. You’ll also be assessed interest on the balance due at a rate of 1.25% per month. If you’re hit with a tax penalty, you can request a penalty waiver to reduce what you owe. To request a penalty waiver, you can contact the Tax Commission at (800) 522-8165.
Contact the Oklahoma Department of Revenue
You can get in touch with the Oklahoma Department of Revenue by phone, email or postal mail.
General Inquiries: (800) 522-8165 or (405) 521-3160
Assessment Letters: (405) 522-5737
Payment Plans: (405) 521-3281
Account Maintenance: (405) 521-4271
Oklahoma Tax Commission
Post Office Box 26890
Oklahoma City, OK 73126-0890
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