Massachusetts State Unpaid Tax Debt and Penalties

You can locate tax forms and check on the status of your Massachusetts tax, interest and penalties owed by clicking on the links below.

Find Out How Much You Owe

The first step is to find out how much you owe. To find out how much you owe and you haven’t filed, you should file your back taxes. If you’ve already filed, you can use the IRS’s online tool to find out what you owe, or you can call the IRS at (800) 829-1040. Sometimes the online system is not available, in this case, you may want to request a transcript of your tax return.

Alternatively, if you have any notices from the IRS, they should show how much you owe. Usually, you owe more than the letter says because interest and fees are continually accruing on the account.

If you owe state taxes as well, you will likely have to call your state agency to get the details, see below for correct telephone numbers, mailing addresses and required forms.

Consequences Having Unpaid Taxes

The effects of owing taxes vary greatly depending upon the unique tax situation. The consequences you face will be determined by if your tax returns are filed and the tax debt amount owed. The IRS has multiple types of penalties that are charged for unpaid taxes, and the two main ones are the failure to file tax penalty and the failure to pay tax penalty. The failure to file tax penalty is the penalty for owing taxes and not filing your tax return. When your tax returns are filed, but you have not paid, the IRS charges the failure-to-pay penalty.

Penalties for Unpaid & Unfiled or Late Filed IRS Tax Returns

Once you file your tax return(s), the IRS will assess a tax amount owed. The IRS assesses penalties from the date that the tax return was due. The sooner your tax returns are filed and taxes paid, the lower the penalties and interest will be. If you fail to file a tax return at all and the IRS believes that you will owe taxes, they will file a substitute for return. When the IRS files a substitute return, they will file your taxes for you based on info the IRS has from other sources and won’t include any additional expenses or exemptions that you may be entitled to. For this reason, the tax amount the IRS will assess in these situations will be overstated and therefore make the penalties even higher as well.

If you are not fraudulent or negligent with failing to file and failing to pay taxes, then only the failure to file tax penalty will be charged. This penalty is 5% per month that is calculated based on the total tax amount owed. The maximum for this penalty is 25% of the total tax amount owed. If your tax return(s) is filed sixty or more days after the deadline, the minimum penalty is the smaller of $135 or 100% of the tax liability.

Penalties for Unpaid Taxes with a Tax Return Filed on Time

When you file your tax return(s) but fail to "pay in full", the IRS will charge the failure to pay penalty. The failure to pay penalty is .5% (half of one percent). Like the failure to file penalty, the maximum penalty is 25% of the total tax amount owed. Since this is a much lower percentage, it will take a lot longer to accumulate the maximum amount.

Interest Charged on Unpaid Tax Amounts Owed

On top of the penalties, the IRS also charges interest on the tax amount owed. The interest compounds daily. The interest rate charged is equal to the Federal short-term rate, plus 3%. There is no cap on the interest amount like there is for penalties. When the taxpayer pays the balance in full, the interest will stop accruing.

Possible Tax Collection Consequences & Other Punishments

Having unpaid taxes generally will come with consequences other than penalties and interest if no action is taken to get back into compliance. The IRS and other state tax authorities realize there are times where people can’t pay their taxes, and they are willing to work out arrangements. If the taxpayer fails to work with them to make arrangements, they will use various tactics to force the taxpayer to work with them. Below are some of the most common consequences of ignoring requests to work with the tax authorities on an unpaid tax bill.

Tax Lien

A tax lien is a claim against your property which is used to protect the US Government’s or State Government’s interest in the tax that they are owed. Your creditors or potential creditors will see the lien recorded. The lien will make it very difficult to borrow money or get any credit. Both IRS and majority of states use this tactic for unpaid taxes. It will not be a surprise when the notice of tax lien arrives because it is likely that many attempts have been made before this via letters to resolve the taxes owed.

Tax Levy

One of the harshest methods used by the taxation authorities is a tax levy. This is the actual seizure of assets owned by the taxpayer. A tax levy can come in various manners, below are the most common forms of a levy.

  • Wage Garnishment: This is the most common form of levy if you are a W-2 wage earner. The taxation authorities will contact your employer directly and require them to withhold a certain percentage of your pay to apply it towards the tax debt owed.
  • Bank Levy: This is when the taxation authorities contact your bank directly and require them to put a hold on the funds in the account. After a brief hold, the money will be seized and sent directly to the taxation authorities, and the amount they collect will be applied to the unpaid tax balance.
  • Asset Seizure: This is a less common tactic used, but does happen mostly when a bank levy or wage garnishment is not effective. The taxation authorities may seize certain assets and sell them to apply that value to the tax amount owed.
  • Social Security Levy: The IRS can garnish social security payments. This garnishment amount can be up to 15% of the social security payments you receive.
  • 1099 Tax Levy: In some instances, if you are an independent contractor, the IRS may demand that 1099 income owed to the contractor or business be sent directly to the IRS.

Resolving Your Unpaid IRS Taxes Owed

Once you have a total tax amount owed and you know you cannot pay in full, you need to decide how to resolve your tax debt. The IRS has a lot of different options, and the right choice depends on how much you owe and how much you can afford to pay. Here are some of the possibilities:

Apply for a Payment Plan

The IRS has a range of payment plans. If you owe less than $100,000, you can usually set up an installment plan. That lets you pay off the tax debt in monthly payments. You can take up to 72 months if you owe less than $50,000 or up to 84 months if you owe between $50,001 and $100,000.

Consider an Offer in Compromise

An offer in compromise is when you pay less than you owe on a debt. The IRS looks at your assets and income to determine how much you can pay. If you offer the largest payment you can afford and can show it is equal to or more than the IRS will likely ever collect from you, the IRS will probably accept it. If the IRS thinks your offer is too low, they will likely reject the offer. If your offer is rejected you can apply again or consider another type of resolution.

Uncollectible Status

If you can’t afford to pay anything, apply to get your account labeled as uncollectible. Uncollectible status is a temporary designation. The IRS reviews your situation every two years, and if you can afford to pay in the future, you have to do so.

Resolving State Unpaid Taxes

State taxes that not paid in full will have to be addressed separately from IRS taxes owed. Each state has their laws and their own set of resolutions. Most states do follow closely to what the IRS has, but they all require separate filings.

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Massachusetts State Tax Forms to reduce or eliminate income taxes and penalties

"The Bay State"

Go to MassTaxConnect and click or tap Where's My Refund? in the lower-left area (in the Quick Links section).

For refund-related questions, contact the Massachusetts Department of Revenue.

State Tax Refund Locators

If You've Been Tracking Your State Refund and it's Taking Longer than Expected:
Click your state below to get the contact information for your state's Department of Revenue, and contact them.
To Track Your State Refund:
Click or tap your state below for refund lookup instructions.
You may be asked for the state refund amount you're expecting, to use your state's tracking tool.

MASSACHUSETTS Tax Forms and Instructions Information
  • Massachusetts Individual Income Tax Forms 
    A Complete List of Current and Previous Year Individual Income Tax Forms 

  • Massachusetts Individual Income Tax Instructions 
    Overview of Individual Income Tax Information. Contains Links and References 

  • Massachusetts Refund Status 
    Check the Status of Your Current Year's Refund Online To find out whether your Massachusetts personal income tax return has been processed and/or when a refund check was issued, use DORs web application (link above), or call the Departments Interactive Voice Response system at 617-887-MDOR or toll-free in Massachusetts at 800-392-6089. 

  • Massachusetts Contact Information 
    Contact Information - Main Information lines: 617-887-MDOR or 800-392-6089 (toll-free in Massachusetts) Taxpayer Advocate: 617-626-2201 Problem Resolution Office: 617-626-3833 

Mailing Addresses
  • Return Mailing Address: 
    Massachusetts Department of Revenue 
    PO Box 7000 
    Boston, MA 02204 

  • Return Mailing Address without Refund: 
    Massachusetts Department of Revenue 
    PO Box 7003 
    Boston, MA 02204 

  • Estimates Mailing Address: 
    Massachusetts Department of Revenue 
    PO Box 7003 
    Boston, MA 02204 

  • Amended Return Mailing Address: 
    Massachusetts Department of Revenue 
    PO Box 7007 
    Boston, MA 02204 

  • Extension Mailing Address: 
    The Massachusetts Department of Revenue offers an Online Form M-4868 for you to submit an Application for an Automatic Six-month Extension of Time to File your Personal Income Tax Return and a Form M-8736 for you to submit an Application for an Automatic Six-month Extension of Time to file your Fiduciary, Partnership or Corporate Trust Return via the Web. Note: Automatic Extension Granted if 100% Tax Due is Paid by Tax Return Due Date You must use the Online Form M-4868 if you meet the following criteria: You owe no tax; or You are making a payment of $5,000 or more with your extension. You must pay using the Electronic Funds Withdrawal payment method. Have your bank's routing and transit number (RTN) and bank account number ready: You will be filing your return for the period January 1 - December 31, 2014. Most taxpayers fall into this category. If you are married and filing a joint return, both you and your spouse must be present to authenticate the submission of this application. 

    Massachusetts Department of Revenue 
    P. O, Box 7070 
    Boston, MA 02204 


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