Louisiana Tax Collection Process Checklist
Understanding Collection Referral
The Louisiana Department of Revenue refers unpaid tax accounts to collection contractors after standard billing periods have passed without payment. Collection referral occurs when taxes remain outstanding, and the department activates more intensive collection efforts to recover revenue owed to the state.
Before referring your account to a collection contractor, the Louisiana Department of Revenue must send you notice by regular mail. Your notice informs you that the obligation has become a final judgment, explains all collection actions the secretary is authorized to take, and warns that if you do not pay the debt within 60 days from the notice date, a collection fee up to 25 percent of the total liability will be charged to your account.
What Collection Referral Means for You
When the Louisiana Department of Revenue refers your account for collection, the state treats your case as a priority requiring active enforcement. Collection contractors work on behalf of the department to recover unpaid tax debt through phone calls and written correspondence.
The referral does not mean the state has filed a lawsuit against you, but it does signal that standard billing has ended and formal collection procedures have begun. Your account status changes from routine billing to active collection, which opens the door to enforcement actions, including bank levies, wage garnishment, and refund offsets.
Potential Collection Actions
Once your account enters collection status, the Louisiana Department of Revenue has legal authority to pursue several enforcement methods:
● Bank levies: The department can place a levy on your bank account, credit union, or brokerage account, requiring your financial institution to remit available funds to apply toward your outstanding balance.
● Wage garnishment: Louisiana law allows the department to garnish up to 25 percent of your pay, requiring your employer to deduct specified amounts until you pay the debt in full or the department releases the garnishment.
● Refund offsets: The state can offset future state and federal tax refunds against your outstanding liability through the Louisiana tax refund offset program.
● Tax liens: The department may file a state tax lien against your property if your debt exceeds $2,500 or if your payment plan extends beyond 12 months, creating public records that can affect your ability to sell or refinance property.
Payment Plan Options
If you cannot pay your tax debt in full, you may request an installment agreement through the Louisiana Taxpayer Access Point system. Individual income taxpayers must submit Form R-19026, while business taxpayers use Form R-19027 to request payment arrangements.
Installment agreements for individual income tax must run for a minimum of six months, and you must make equal monthly payments over the agreed period. The department requires a down payment of 20 percent of the total amount due for individual income tax installment agreements. Additionally, the department charges a non-refundable installment agreement fee of $105. However, this fee is waived if your Louisiana adjusted gross income on your most recently filed return is $25,000 or less.
Formal installment agreements become required if the amount you owe reaches $50,000 or more, or if your payment period exceeds 60 months. You must use automatic bank debit for all installment payments, and the department will continue normal billing processes even after you enter a payment plan.
Your Rights During Collection
Louisiana law provides specific taxpayer rights during the collection process. Taxpayers have 60 calendar days from the date of an assessment notice to either pay the assessment amount or appeal to the Louisiana Board of Tax Appeals for redetermination.
Petitioning the Board of Tax Appeals remains available within 30 days of receiving notice about a seizure, levy, garnishment, offset, or other collection action. Additionally, you retain the right to request penalty relief or reduction depending on your specific circumstances and state policy at the time of your request.
Steps to Take Immediately
- Contact the collection contractor or department office listed in any notice you receive as soon as possible. Ask them to explain your account status, verify the tax period in question, confirm the total amount owed, and describe available payment options.
- Document every conversation by recording the date, the name of the person you spoke with, what they told you, and any reference number provided. Gather your records, including copies of filed tax returns for the years in question, proof of any payments you made toward the tax debt, and documentation of your current income and expenses.
- Review the amounts claimed in collection notices against your own records to identify any discrepancies, noting errors in the tax year, tax type, or amounts specifically, and raising them with the collection contractor immediately.
- Request information about payment plan eligibility before any deadline passes if you cannot pay the full amount immediately, providing required financial information promptly if you seek an installment agreement, and keeping copies of all notices, letters, emails, and documents you send or receive from the Louisiana Department of Revenue or collection contractors throughout the process.
Conclusion
Collection referral by the Louisiana Department of Revenue represents a serious stage in the tax collection process that requires immediate attention and action. Taking prompt action, understanding available payment arrangements, and maintaining thorough documentation can help you resolve your tax debt while minimizing additional penalties and enforcement actions.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance
