Minnesota government going after unpaid taxes in 2013

With the economy still slowly recovering from the Great Recession that began around 2008, governments are looking everywhere for revenue sources. In an effort to offset tight budgets, in 2013 the Minnesota Department of Revenue has focused its attention on collecting unpaid taxes owed to the state. The state's crack down on tax collection could be disastrous for those who have tax debts that they cannot pay. Minnesotans should be aware of the state's tax collection efforts and how bankruptcy may help those who cannot afford to pay their tax debts.

Debt collection process sped up

The Minnesota Department of Revenue has made significant changes to it collections process in 2013, which has resulted in the state collecting $266.4 million in unpaid taxes this year. While the state still has $381 million to collect, the amount of unpaid taxes is about $80 million lower than at the same time in 2012.

The Department reports that it has streamlined its collection process so that it can collect more debts in less time. The Department modified the delinquency notices that it sends taxpayers and trained employees differently on how to handle calls from taxpayers after the Department mails the notices. As a result, the Department can now send notices in batches of 6,000, up from 100 previously. Additionally, the state no longer lets delinquent accounts sit before escalating them. A taxpayer has 60 days to pay their debts or appeal the tax assessed. Once that time period has passed, the state now immediately sends the debt to a debt collection agency, rather than letting it linger.

Bankruptcy may help

The state's new urgency in collecting taxes may result in serious financial hardship for those with unpaid taxes as a result of not being able to pay those taxes while still meeting their basic needs. Those with tax debts who struggle financially may want to consider bankruptcy as a solution to their difficulties. People may discharge some or all of their income tax debts under Chapter 7 and Chapter 13 bankruptcy as long as:

  • The tax debt was due at least three years ago.
  • The taxpayer filed a tax return at least two years ago.
  • The taxpayer received a tax assessment at least 240 days ago.
  • The tax return was not fraudulently filed.
  • The taxpayer was not intentionally trying to evade tax laws.

Talk to a lawyer

Bankruptcy is a powerful debt relief solution, but bankruptcy laws are complicated. Those with tax debts that they cannot pay who are considering bankruptcy as a way to resolve their situations should speak with an experienced attorney to help ensure that they can discharge their tax debts in bankruptcy. If you have questions about tax debt and bankruptcy, speak with a skilled bankruptcy attorney who can advise you about your specific circumstances.