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Department of Revenue Inefficiency
September 30, 2011
The Missouri Department of Revenue (“MDOR”) is not what I would call a well-oiled machine. As the collection arm for Missouri’s tax revenue I would expect more of a focus on efficient collection processes than what I have seen. I will give you an example. The MDOR offers a simple payment plan to individual taxpayers with delinquent accounts – the amount owed paid in equal installments within two years (i.e., 24 payments). This offer does not take into account the taxpayer’s ability or lack thereof to pay and cannot be extended beyond 24 months. If the delinquency cannot be paid within 24 months, the taxpayer’s next option is to file an offer in compromise with the state and pay a lesser amount within 12 months. I will clarify the point I am trying to make – the MDOR is willing to significantly compromise on back tax liability rather than extend payment plans beyond 24 months. Most of my clients owe money to the IRS and the state, they go hand-in-hand. The first priority is managing the debt with the IRS. The IRS determines ability to pay on disposable income (income after certain expenses and allowances). This usually means that once the payment plan with the IRS is in place, there is little money left for the state, leaving most of my clients with the inability to the MDOR in full within 24 months. I could understand the MDOR’s inflexibility if they were the alpha male of the tax delinquency pecking order, but they are not. And this inflexibility leads to compromising on debts that do not necessarily need to be compromised because my clients are willing to pay – they just need longer payment schedules.