Guide to Settling & Resolving North Carolina Tax Liability

Similar to the IRS, the North Carolina Department of Revenue (DOR) has specific policies in place for dealing with individuals who unpaid or unfiled taxes. The DOR makes every effort to work with residents who need help with back taxes owed, which includes offering several repayment options. North Carolina residents who owe unpaid taxes need to know what the alternatives are for resolving an outstanding tax liability.

North Carolina Installment Agreement

The NC Department of Revenue expects all taxpayers to pay any taxes owed by the April deadline, however, this is not always possible. If you can’t pay your balance in full, the DOR may be willing to let you make payments through an Installment Agreement. To apply for a payment plan, you’ll need to complete Form RO-1033, Installment Agreement Request. Generally, if you only owe a small amount or you need a short-term arrangement, the DOR doesn’t require any additional paperwork to approve your request. If you have a large tax liability or you need a longer repayment period, the Department of Revenue may require you to provide additional financial statements before you can qualify. To qualify, you must:

• Be current with all your tax return filings at the time you request the payment plan
• Pay in full any additional returns that come due during the repayment period
• Agree to an automatic bank draft from your checking or savings account
• Assume that any future tax refunds or NC Education Lottery winnings will be applied to your taxes owed
• Agree to have a tax lien entered against your property for the duration of the repayment period

North Carolina Offer in Compromise

The North Carolina Offer in Compromise Program makes it possible for taxpayers to eliminate their taxes owed by making a lump-sum payment for less than the full balance owed. To make an Offer in Compromise, you must complete Form OIC 100 and give the DOR a 20% down payment towards the settlement proposal. The DOR grants an Offer in Compromise when one of five conditions applies:

CT Taxpayer Services Options

If you were not able to resolve your tax problems through the normal channels that are provided on the DRS website, you write to the Taxpayer Advocacy Office in Hartford and explain your problem in detail and be sure to include your contact information for them to get back to you, or you can call them at (203) 297-5603. The address you can reach the Taxpayer Advocacy Office is the following:

• Be current with all your tax return filings at the time you request the payment plan
• You have doubts about whether you owe the amount in question
• Agree to an automatic bank draft from your checking or savings account
• You’re insolvent, making it unlikely that the DOR could collect any additional funds beyond the amount offered in compromise
• Collection of the full balance is unlikely because you have income or assets that are protected from seizure
• You’ve already completed an offer in compromise with the IRS
• Collecting an amount greater than what is offered would create a financial hardship or otherwise unjust result

NC Penalty Waiver Policy

If the DOR has assessed a penalty against you because of an unpaid tax obligation, you have the right to request a penalty waiver if you believe it’s unfair. Penalty waivers are typically only granted if you meet certain criteria. For example, you may be able to get a waiver if you or a family member has experienced a sudden illness that has resulted in a loss of income. You may also be able to get a compliance waiver if your tax returns are up-to-date, you have no other outstanding tax liability, you don’t have any prior waivers on record and the penalty was not the result of any deliberate attempt to avoid paying the taxes due. To apply for a penalty waiver, taxpayers need to complete Form NC-5500 and submit it to the DOR.

Our Simple Tax Relief Process