Kentucky Tax Relief Guide – Resolve Back Tax Problems

The Department of Revenue is part of the Finance and Administration Cabinet of the Commonwealth of Kentucky, whose role is to prove support for all state government agencies, other government organizations, and citizens of Kentucky. The Department of Revenue is specifically charged with administering tax laws, collecting tax revenue, and providing related services to the benefit of the Commonwealth and its residents.

Payment Agreements

If you owe taxes at the time that you file your individual tax return, and you cannot pay the full amount that you owe, you can complete Form 12A200 – Kentucky Individual Income Tax Installment Agreement Request and attach it to your tax return. In your request, you should specify the number of installment payments that you intend to make on a monthly basis. Otherwise, if the taxes owed is currently handled by the Division of Collections you can set up a payment plan online here.

In determining whether you are eligible for a payment agreement, the Division of Collections may require that you complete a Statement of Financial Condition for an Individual. This form gives the Division of Collections detailed information about your income, assets, liabilitys, and living expenses so that the Division can determine what type of payment agreement you can afford.

If the Division approves your request for a payment agreement, you most likely will be required to make your payments electronically. The Department of Revenue may file a Notice of State Tax Lien in order to protect its interest. Also, the department will add a 25% cost of collection fee will be added to the Notice of Tax Due.  Any tax refunds to which you are entitled during the term of your payment agreement will be applied to your taxes owed. Penalties and interest will continue to accrue on your unpaid taxes owed.

In some cases, the Division of Collections, after examining your Form 12A638, will determine that under your current financial circumstances, you are unable to pay any amount toward your taxes owed. Although interest and penalties will continue to accrue on your taxes owed, the Division may delay collections on your taxes owed until your financial condition improves and you have some ability to repay your liability.

Offer in Settlement

In some cases, you may be unable to pay your taxes owed in the foreseeable future, but you are able to pay a certain amount toward your taxes owed. If you are otherwise eligible for an offer in settlement, the Division of Collections may allow you to simply pay a portion of the taxes owed that you owe instead of the full amount if it accepts your request for an offer in settlement. An offer in settlement must be based on doubt that the Division will be able to reasonably collect the entire taxes owed from you, or doubt that you are liable for the entire taxes owed. You are eligible to submit an application for an offer in settlement if you:

• Have filed all required income tax returns or had no filing requirement,
• Do not have an open personal bankruptcy proceeding, and
• Have made all of the required current years estimated tax payments.

If you meet these criteria then you can submit an Offer in Settlement Application. Along with your application, you must also submit the following:

• A completed and signed Form 12A638 – Statement of Financial Condition for an Individual
• Copies of all bank statements on household accounts for the last three months
• Copies of all pay stubs for all household earners for the last three months
• Copies of your most recent federal and state income tax returns, including all schedules, W-2 forms, and 1099 forms
• If you are self-employed, you must submit a completed and signed Form 12A369 – Statement of Financial Condition for Businesses
• A copy of a power of attorney if you are represented by someone else
• A copy of a recent credit report

You can submit your Offer in Settlement Application and attachments directly to the collector who is assigned to your case, or you can submit these materials by mail at:

Division of Collections
Offer in Settlement Section
P.O. Box 5222
Frankfort, Kentucky 40602
Phone: (502) 564-4921
Fax: (502) 564-7348
Website: www.revenue.ky.gov

Taxpayer Ombudsman

The Taxpayer Ombudsman is an advocate for taxpayers who have a problem or complaint about their taxes. If you are unable to resolve your problem through normal channels, the Ombudsman can confer with Department of Revenue employees in order to help solve your problem.

You can contact the Taxpayer Ombudsman as follows:

By mail: PO Box 930
Frankfort, KY 40602-0930
By telephone: (502) 564-7822
By fax: (502) 564-3058
By TTD: (502) 564-3058
By email: KRCWEBResponseOMBUD@ky.gov

If you cannot make your payment in full, the Department will consider installment payment agreements, provided that you can show financial hardship and all payments are made in full no later than May 31, 2013. In order to be considered for a payment agreement, you also must attach a letter explaining your current financial circumstances, and payment of at least 25% of the amount of the total tax liability due. Interest will continue to accrue on any unpaid portions of your taxes owed until the liability is paid in full.

These materials should be sent to:
Kentucky Department of Revenue
PO Box 6950
Frankfort, KY 40602

You also can contact the Kentucky Department of Revenue about tax amnesty as follows:

By telephone: 1-855-KYTAXES (598-2937)
By email: KY.TAXES@ky.gov

Our Simple Tax Relief Process