Alaska tax payment plan for business tax debts
Alaska has no personal income tax and Alaska’s Tax Division has posted no installment program. So a business that owes corporate or excise tax arranges payment directly with that agency. Penalties for late payment can go as high as 25%.
- Individual income tax
- No tax is charged
- Late payment penalty
- 5% for each 30 days
- Cap on the penalty
- 25%
- Interest
- 5.25% plus the Fed rate
Who has to pay tax to Alaska?
A state tax bill is something most Alaskans never get. There is no individual income tax in Alaska, the Tax Division says on its personal income tax page. On its sales and use tax page, the Tax Division also says Alaska has no statewide sales tax. Some cities and boroughs charge their own local sales tax. That tax is paid to the local government.
Business taxes work another way. On its tax types list, the division names taxes on tobacco, vehicle rentals, corporate income, oil and gas, alcoholic beverages, marijuana, motor fuel, mining licenses and fisheries. Usually, a debt owed to the state begins with one of them.
Is a set payment plan available?
No formal installment program appears on the Tax Division’s published pages or in the general tax regulations. There is no online application, no posted fee and no set number of months.
When paying a business tax bill in full is not possible for you, write to the division or visit it next. Offices in Anchorage and Juneau are listed by the Tax Division on its contact page. Before you make contact, have a realistic monthly amount, your notice and your account number ready.
Penalties and interest on a late balance
Waiting, in this case, costs a lot. The corporate income tax FAQ says each 30-day period of late payment adds a penalty of 5% of the underpayment, capped at 25%. The marijuana tax FAQ shows the same 5% and 25% pattern for returns filed late.
Interest is set by AS 43.05.225. If tax became delinquent on January 1, 2018 or later, interest runs at 5.25 percentage points above the 12th Federal Reserve District rate that member banks pay. Each quarter, the interest compounds.
What can the Tax Division do about unpaid tax?
The collection rules are available in Chapter 43.10 of the Alaska Statutes. Those rules give the state several tools:
- A lien is a legal claim the state has on property you own. One arises when tax is assessed and you do not pay after a demand. It reaches real and personal property and lasts until the debt is paid off. A notice counts against lenders and buyers only after it is recorded in the district covering where the property is located.
- The state may seize property to cover the debt, which is called distraint.
- To recover the amount, the state may sue in civil court or foreclose the lien.
- Your state business license may be suspended and it remains suspended until you pay the tax, the interest and the penalties in full.
Can you settle for less in Alaska?
Sometimes. If there is doubt that you owe the tax or that it can be collected, AS 43.05.070 lets the department compromise it once the attorney general approves. When cause is shown, the penalty may also be compromised. After a notice is mailed, within 60 days, you can ask to meet informally with an appeals officer if you think the amount is wrong.
Timing helps you in one way. The same chapter generally allows the department 3 years to assess tax on a return, counting from the filing.
When debts to Alaska and the IRS overlap
Each of your debts, federal and state, follows its own path. Two agreements come into play: one with the IRS and the other with Alaska. Every one of them needs a separate monthly payment. Alaska’s penalty grows every 30 days, so settle the state terms early. This makes it possible to build the federal plan around them.
Nearby states
Do you owe money to both the Tax Division and the IRS?
Does your Alaska business owe the Tax Division and also the IRS? A licensed tax pro can assist with both payment planning and preparing your request on a free call.
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