Kentucky tax payment plan and the 60-day deadline
Any bill left unpaid past 60 days gets a 25% cost of collection fee added to it. Kentucky’s Department of Revenue offers payment plans for qualified applicants through its Division of Collections.
- Collection fee
- 25% after 60 days pass
- Interest for 2026
- 9% each year
- Late payment penalty
- 2% every 30 days
- Cap on penalties
- 20%
Why those first 60 days count in Kentucky
Kentucky calls an unpaid bill a Notice of Tax Due. In general, you have 60 days in which to protest and the clock starts on the date of the original notice. When that window closes, the Department of Revenue bill page states that the debt is turned over to the Division of Collections and 25% is added to each notice as a cost of collection fee.
This is why the payment plan guidance urges you to pay what you can within the first 60 days, even when a plan will be needed for what is left.
What to expect when you request a plan
Kentucky lists a few conditions up front on its plans for qualified applicants page:
- The Department may file a Notice of State Tax Lien.
- You may have to make payments by electronic check.
- A refund that qualifies can be taken and put toward the debt.
- A Statement of Financial Condition may be requested from you and it lists what you earn and what you spend.
How can I pay on a Kentucky plan?
Where you pay depends on the debt. Individual bills go to epayment.ky.gov and business bills to MyTaxes.ky.gov. Call the Division of Collections to set up a recurring electronic plan, then choose the plan option. A revised Notice of Tax Due follows if money is still owed.
Make sure your account holds enough money on every draft date. Cold check fees follow a bounced payment and the plan page says any such payment over $500 is treated as a Class D felony.
Interest, penalties and possible waivers
The interest rate is fixed by law and cannot be waived. The penalties, interest and fees page lists the 2026 rate as 9% a year. When you pay late, 2% of the tax is added for every 30 days and the extra amount stops at 20%. The smallest charge is $10.
The Department may waive some or all penalties plus the cost of collection fee when there is reasonable cause, as the same page explains. That applies to events beyond your control or to situations where strict penalties would cause undue financial hardship. You must send documents that support the request.
What the Division of Collections can do
Failing to make a payment arrangement or to keep one, brings Kentucky’s collection procedures into play: a certified letter named Final Notice Before Seizure, a lien in the county where your property sits and levies against wages, bank accounts or payments under contracts. Social Security and disability payments are beyond the reach of a levy. Refunds from state and federal sources may be taken as offsets. Through a court injunction, a business that is operating can be shut down.
Under its license and registration rules, unpaid tax can lead the Department to revoke professional licenses along with motor vehicle registrations.
Hardship, settlement and your IRS plan
If you cannot pay the full amount, ask about financial hardship. For the Department, hardship and inconvenience are two different things. Under the Offer in Settlement Program, you can settle your case for less than what you owe, based on your financial situation.
IRS payments are not credited toward Kentucky. Kentucky payments are not credited toward the IRS either. Budget two monthly amounts, one per agency.
Nearby states
Do you owe money to DOR and the IRS?
Are you dealing with Kentucky’s 25% collection fee and an IRS bill? A licensed tax pro can help you plan both payments on a free call.
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