Guide to Tax Issues and Resolution Options for Georgia Taxpayers
The Georgia Department of Revenue (GA DOR) collects personal and business taxes in the Peach State. This includes personal income tax as well as corporate income tax, partnership tax, sales and use tax, withholding tax, and several special business taxes.
If you get behind on your taxes, the GA DOR can take severe collection actions against you, but there are multiple ways to resolve your tax issue before it gets that far. To get help now, contact the experienced tax attorneys at Wiggam Law. We provide our clients with high-quality tax legal services customized to their unique needs.
In the meantime, read on to learn more about Georgia’s most common tax problems and potential resolution options.
Georgia Tax Problems
The biggest tax problems in Georgia tend to be unfiled tax returns, penalties, collection actions, and tax audits. If you are dealing with any of these issues, you are not alone, and there is hope. The following sections provide an overview of each of these problems.
Unfiled Georgia Tax Returns
If you haven’t filed taxes in a few years, you run the risk of the GA DOR coming after you and assessing taxes against you. If you were due a refund, you have three years from the filing deadline to claim it. If you owe, you typically only need to file the last six years’ worth of returns to catch up.
However, that doesn’t apply if you’re dealing with taxes you collected from others. If you have unfiled withholding returns or sales tax returns, the Georgia DOR will require you to file for any year that you collected those taxes from your customers or employees.
Penalties
The GA DOR will assess penalties if you pay or file late. However, the penalty for late filing is ten times higher than the penalty for paying late. In almost every situation, if you can’t afford to pay, you should still file.
The late filing penalty is 5% of the tax owed. If you owe $2,000, that’s $100. The late payment penalty, however, is just 0.5%. That’s only $10 on a $2,000 tax bill. Both of these penalties accrue monthly and can max out at up to 25% of your bill.
Interest on Georgia Back Taxes
The GA DOR has several policies similar to the IRS’s, including the interest rate on back taxes. The GA DOR and the IRS both apply the federal funds rate plus 3%.
State Tax Liens
A tax lien is a legal claim to your assets. If you try to sell an asset, the lienholder has the right to the money — not you. The GA DOR has the right to issue tax liens (also called state tax executions) 30 days after the issuance of a notice called “Official Assessment and Demand For Payment.”
Liens attach to your current and future assets. For instance, if you inherit a house or receive a car as a gift, the lien attaches to those assets. Liens also stay attached to your assets after your death. Additionally, the GA DOR adds a 20% collection fee when it issues a tax lien. To avoid this fee, you need to appeal the tax assessment or make payment arrangements before the GA DOR issues a lien.
Tax Levies
When the Georgia DOR has exhausted all other channels, it may turn to levies to recoup your unpaid taxes. A levy is an asset seizure. In Georiga, this may include wage garnishments, bank account levies, or seizing your assets and selling them at auction.
Individual Income Tax Audit
Generally, an individual income tax audit is not an analysis of your tax return by the GA DOR. Instead, the GA DOR adjusts your return internally based on information from other parties. Then, it sends you a notice about the changes.
For example, say that the IRS audits your return, and that increases your income. Then, your taxable state income will also increase, and the GA DOR will send you a bill. Or, say that you report different information on your Georgia state tax return than your IRS return. The computers will catch that and send you a bill.
However, just because this isn’t the traditional process doesn’t mean you can’t appeal. Once you receive the notice of the proposed assessment from the GA DOR, you have 30 days to appeal.
Business Tax Audits
A business tax audit is where the GA DOR reviews your tax return and asks for supporting documents. The auditor may come to your place of business or ask you to come to their office. You are allowed to bring representation, such as a CPA or a tax attorney, and you can even request to meet with the auditor in your representative’s office.
After the meeting, the auditor will let you know if they need any more details. Then, they will mail you a notice with the audit results. If you owe tax, you need to make arrangements to pay it as soon as possible. You have the right to appeal if you disagree, but you must ensure you appeal by the deadline.
Tax Solutions in Georgia
Whether you’re dealing with personal or business taxes, the GA DOR has numerous options to help you. Here is an overview of some of the most popular relief options offered in the state of Georgia. You can apply for any of these programs on your own, but if you contact a tax attorney, they will help you find the best resolution option for your situation.
Penalty Abatement
The GA DOR always assesses penalties on late tax payments. So, in addition to making payment arrangements on your debt, you should also request penalty abatement. The GA DOR will almost always remove penalties if you have “reasonable cause,” which means that a serious event (death, illness, etc) prevented you from paying on time. But the agency will also remove penalties for other reasons on a case-by-case basis.
Installment Agreements
The GA DOR may let you make monthly payments on your tax debt. Here are the requirements:
- Pay at least $25 per month.
- Pay off the balance within five years.
- Be current with the last five years of filing requirements.
- Not be in bankruptcy.
- Not have an Offer in Compromise pending with the state.
While you’re making payments, the GA DOR will keep your tax refunds and apply them to your bill until your account is paid in full. Interest and penalties will continue to accrue on your account, but the GA DOR won’t pursue wage garnishment, asset seizure, or other collection actions.
Offer in Compromise
If you can’t afford to pay your tax bill, you may be able to arrange a settlement with the state. This is called an Offer in Compromise, and you must provide the GA DOR with very detailed financial information when you apply. This type of settlement is based on doubt as to collectability.
The GA DOR also offers tax settlements based on doubt as to liability. This applies in cases where there is a credible doubt that you owe the tax, but for some reason, you’re unable to appeal. To apply for this program, you need a strong knowledge of the tax code and a compelling reason why the tax debt isn’t really your responsibility.
An Offer in Compromise with the Georgia DOR functions similarly to an OIC with the IRS. To find out more about how OICs work and whether you may be eligible, download our free whitepaper, “Demystifying the Offer in Compromise: Understanding the Frequently Misunderstood Tax Liability Solution:”
Download Our Free OIC Whitepaper
Innocent Spouse Relief
This program is designed to help spouses or ex-spouses in situations where it would be unfair to hold them responsible for their spouse or ex-spouse’s tax liability. For example, this may apply if one spouse coerced the other into filing a fraudulent return or if one spouse hid income and didn’t report it on the return.
Only some states have this program, but it’s always available on the federal level. If you get approved for IRS innocent spouse relief, the GA DOR will automatically approve you. If you don’t need relief on the federal level, contact the Georgia DOR about how to apply for state relief.
Appealing a Tax Assessment in Georgia
If you receive a tax assessment, you have 30 days to appeal. Typically, this happens if the DOR audits or adjusts your return and you disagree with the changes. It can also occur if the DOR assesses a tax against you related to an unfiled return.
After an audit or adjustment, you will receive a proposed assessment. You can send a response to the GA DOR if you disagree, but you can’t start a formal appeal yet. You need to wait until you get the final assessment.
Voluntary Disclosure
The Georgia Voluntary Disclosure program helps people who have unfiled taxes. To qualify, the GA DOR must not have contacted you first. Then, in exchange for you coming forward voluntarily, the GA DOR limits the look-back period of tax returns that have to be filed and waives penalties.
Bankruptcy
Bankruptcy is not a direct solution for back taxes, but in some situations, it can help. Generally, to be discharged in bankruptcy, tax debts must be income taxes that are a certain age. If you’re considering bankruptcy, it’s imperative to note that in Georgia, tax liens continue to exist even after you’ve discharged taxes in bankruptcy. Always consult with an attorney before taking this route.
FAQs About Georgia State Taxes
How do you pay Georgia state taxes?
You can pay Georgia individual income taxes online. The GA DOR website has links to online payment options for state tax liens, estimated taxes, and assessments. Alternatively, you can pay through the mail. Send a check or money order along with Form 525-TV when you file your return. Use Form IT-560 to pay taxes related to an extension and Form 500-ES for estimated quarterly taxes.
When you file online, you can pay business taxes with a direct debit from your bank account. If you file through the mail, you can send a payment with your return. Or you can make a quick payment online through the Georgia Tax Center.
What if you don’t file taxes in Georgia?
If you don’t file taxes, the state will add interest and penalties when you do file. If you never file, the GA DOR may decide to assess estimated taxes against you. Then, you will be responsible for paying or contesting the assessment.
What if I didn’t file sales tax returns in Georgia?
If you didn’t file a sales tax return, you may face interest and penalties. The GA DOR may rescind your sales tax license for not filing. If you haven’t registered for a sales tax license, and you should have, the state can also assess penalties against you.
What if you commit tax fraud in Georgia?
In Georgia, if you underreport tax due to fraud, the state assesses a penalty of 50% of the underreported tax. To explain, say an auditor discovers fraud on your tax return and you underpaid by $20,000. The fraud penalty will be half of this amount, so $10,000.
Get Help With Georgia Tax Problems
When dealing with state tax problems, you should avoid reaching out to the big nationwide firms. Instead, you should get help from a local tax attorney who has experience with the Department of Revenue in your state.
Our firm, Wiggam Law, is based in Atlanta, GA, and our experienced tax attorneys have helped clients resolve issues with the GA DOR and the IRS for years. Whether you’re dealing with unfiled returns, tax audits, state tax debt, or any other tax issue, contact us today to see how we can help you. Call us at (404) 233-9800 or fill out our online contact form to schedule a consultation.