A payment agreement may be set up with the Minnesota Department of Revenue when a debtor is unable to pay a debt in full. View the statute (Minnesota Statutes, section 270C.52).
Only individuals, including assessed officers, can set up an Internet payment agreement. Corporations, partnership businesses or sole proprietors with business debt cannot utilize this service. Businesses can make payments using e-Services; however, they cannot set up a payment agreement online. They must call the department to set up an agreement. A link to the list of eligible payment types is included on the e-Services login screen.
A debtor can set up a payment agreement online using e-Services or by contacting the department directly. Terms of the payment agreement will be based on a debtor’s circumstances and ability to pay. A $50 nonrefundable fee is assessed to enter into a new payment agreement for a tax debt. A debtor who makes voluntary partial payments towards a balance due does not have a payment agreement with the department.
Debts requiring more than one payment require a formal installment payment agreement. Debtors are required to use electronic funds transfer (EFT) unless they do not have a bank account and are unable to establish an account. The formal payment agreement includes:
- Amount of debt, penalty, interest and other charges owed.
- Length of the agreement, date the payments are due, and when the agreement ends.
- A signature page and EFT authorization, if required.
Online Payment Agreements
Debtors who owe individual income tax or other agency debts have the option of setting up a payment agreement online using the department’s payment agreement system. Before a debtor can set up a payment agreement using this option, a bill or letter must have been sent to the debtor by the department.
Certain conditions need to be met to qualify for this payment option, and the system notifies debtors if they do not qualify. Debtors are directed to either complete a financial statement or contact the department. Financial statements, Form C58P, Personal Financial Statement, are used by the department to assess a debtor’s ability to pay. The form provides details of assets, income and expenses.
Liens and Payment Agreements
A lien may be filed when a debtor enters into a payment agreement. The decision to file a lien is made based on the circumstances of the debtor, the debt amount and time needed to pay. The department can file a lien without notice to the debtor at any time during the collection process. The department will release the lien after the debt is paid in full.
Determining an Adequate Plan
Denying a Payment Agreement Request
A Payment Agreement Denial letter is sent if the debtor fails to provide requested information or the department denies the request for a payment agreement. The letter explains why the request was denied. The denial letter also offers the debtor the opportunity to request, within 20 days of the denial, reconsideration from the Taxpayer Rights Advocate
The department cannot enter into a payment agreement if a debtor is in bankruptcy or has an active Liquor License.
Payment Agreement Default
If the terms of the payment agreement are not met, it may “default.” The default terms are defined when setting up the payment agreement.
Cancellation of Payment Agreement
The department may cancel a payment agreement in the following circumstances:
- The department becomes aware that the debtor provided inaccurate information prior to the agreement.
- Collection of the debt included in the payment agreement is in jeopardy.
- Change in the debtor’s financial situation.
- Debtor fails to make a payment under the terms of the payment agreement.
- Debtor fails to pay any other tax due or files a tax return that becomes due after the agreement.
Once entered into a payment agreement, the terms of the agreement cannot be changed. If an agreement is changed, the current payment agreement may be cancelled, and a new one reflecting the changes is created. The department may charge an additional $50 fee for the new payment agreement.
The cancellation notice gives the debtor 14 days to request a reconsideration of the decision. The request does not stop enforced collection action
beyond the 14 days.