District of Columbia tax payment plan with OTR

OTR self-service limits and when a lien is filed

In the District, a payment plan is a courtesy rather than a right. These agreements are not required by law, but OTR may offer one, according to the OTR installment agreements page. Online you can set up your own plan, provided the balance is under $100,000 and the term runs 24 months or less. File any missing returns before you start.

Some plans also result in a tax lien, a public claim against your property. As soon as the plan balance is over $25,000, OTR files a lien on its own. If the balance is smaller, a plan that continues past 12 months means a lien is filed.

Who is unable to use the online plan?

You cannot use the self-service option if any of these applies:

• An active payment plan already covers this balance
• For that debt, at least two of the online plans had already been cancelled.
• An Offer in Compromise, bankruptcy, garnishment or settlement is active now.
• The debt is tied to another liability, for example an officer assessment.
• The balance has no collectible status or no third-party collection agency can take on the liability.
• You have tax returns that remain unfiled

Requesting a payment agreement through MyTax.DC.gov

Sign up first if you have no account. Next, log in to MyTax.DC.gov. Choose the More tab, then select Request Payment Agreement. Next, accept the terms, look over the debts the plan includes, pick a start date and decide how your payments will be figured. Enter the bank account for automatic withdrawals to finish, then print your confirmation.

For a balance over $100,000 or a term that runs longer than 24 months, request an extended plan on the same portal. For individuals, the paperwork is Form PA-1 (a statement of collection information). Send it along with bank statements covering 3 months, the latest federal return and 2 recent pay stubs, or, as an alternative, a profit and loss statement instead. Businesses send Form PA-2 along with extra records.

Rules that apply to every DC agreement

A 10% down payment and automatic ACH bank debits are required for every plan. Under OTR, payments reach the oldest tax period first and a DC or federal refund lowers the balance until it is paid. The agreement also gives OTR extra collection time, running through your final payment.

Interest keeps accruing as long as the plan stays active. The underpayment rate is 10% a year, compounded daily and DC Code section 47-4201 sets it. The late payment penalty adds 5% of the tax for each month or part of a month. Together, all monthly charges cannot go above 25%. A plan can be cancelled if you pay late, miss a payment, skip filing new returns or ignore a request for financial details.

What happens if DC tax is not paid

OTR’s enforcement actions page sets out the steps listed here. OTR can place a lien on file with the Recorder of Deeds 10 days after a Notice of Tax Due and demand goes out. OTR can do more than levy wages and bank accounts: it may seize a home, a car or business property and sell it at auction and it may refer cases to Harris & Harris and to Pioneer Credit Recovery, which work as its collection agencies. A business can end up losing its sales tax certificate.

Licenses are blocked by debt as well. Under the Clean Hands law, the District will not issue or renew a license or permit if taxes past due are more than $1,000. While you stay on a payment schedule the District has approved, the District does not apply this rule.

Comparing OTR and IRS plans

OTR and IRS run separate programs. A District agreement does not cover federal tax, so owing both means separate plans plus a monthly payment for each. If money gets tight, OTR asks you to reach out without delay to its Collection and Enforcement Administration.

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