There are many penalties that taxpayers may face for failure to file their taxes in a timely matter. In fact, some state agencies under the state law are now able to suspend a driver license(s) and/or a professional license(s) for owing back taxes. When an individual fails to file and/or pay back state taxes, they run the risk of a driver’s license and/or professional license suspension. This could create more problems for the taxpayer causing possible lack of transportation and/or use of their professional license to work.
Each state has its own requirements for a driver’s license suspension. Some states require taxpayers have a total of $10,000 or more in unpaid taxes, while other states can suspend licenses for as little as $1,000 in back taxes.
Some states recognize that if the taxpayer has their driver’s license suspended, he or she cannot physically get to work. Without being able to get to work, he or she will not be able to generate income to take care of the tax debt. Therefore, some states could offer a conditional release of the driver’s license suspension so that the taxpayer may able to work and enter into a repayment agreement.
If a license has been suspended, it is best to talk to the state taxing authority about what is needed to get the suspension released. Even after the back taxes are paid in full, there could be additional penalties and fees that need to be addressed when attempting to reinstate the license. Therefore, contacting the state taxing agency is the first step to gather the information so that one can determine the best course of action.
Some would think a driver’s license suspension would be a more challenging collection method for the state agency than issuing a wage garnishment. However, suspending a license is a much easier and faster collection method than filing a wage garnishment. Additionally, a garnishment or a tax lien can be fought and overturned. Most taxpayers will be more affected by a driver license or a professional license suspension than by having a tax lien placed on their property or by a wage garnishment.
In many cases, this collection method practiced by the state will pressure taxpayers to take necessary actions to resolve their back taxes in a timely matter. It also prompts a taxpayer to call and communicate with the state agencies and come up with a repayment or a resolution plan.
In addition to a driver’s license suspension, some taxpayers may find themselves facing a suspension of their professional license. Though these cases are rare, those who have large amounts of outstanding back tax liability could get their professional license suspended, leaving them no opportunity to work.
It is always best to communicate with the state tax officials about any past due tax debt long before license suspension. You may be able to set up an affordable payment plan prior to a license suspension. If you are in a financial hardship and unable to pay your tax debt in full, some states may have an offer in compromise or various settlement programs available. In the long run, taking the necessary actions to resolve back tax liability in a timely matter will reduce the chances of a driver license and/or professional license suspension.
Even after having a driver or a professional license suspended, there is still hope for those who are willing to take care of their tax debt. An affordable repayment plan, an offer in compromise or a settlement program are possible options available that can help to resolve tax debt and get a license reinstated. If the entire process of settling a tax debt is overwhelming or too confusing, it is good to be reminded that help is available. Seek the assistance of a tax professional who has success in reducing and resolving unpaid tax liability as well as the expertise and good track record of reinstating suspended licenses.