North Dakota Payroll Tax Enforcement and Liens
Checklist
Introduction
North Dakota payroll tax refers to the state income tax that employers withhold from employee wages and remit to the North Dakota Office of State Tax Commissioner. These taxes must be withheld, reported, and paid on specific schedules set by the state. If payroll taxes are not withheld correctly, reported on time, or paid in full, the state may take collection action against the business or individual responsible.
What This Issue Means
Payroll tax delinquency occurs when the North Dakota Office of State Tax Commissioner identifies that payroll taxes were not properly withheld, reported, or paid by the due date. This could include missing deposits, late filings, incomplete tax returns, or unpaid balances. An enforcement action signals that the state identified a payroll issue and is moving forward with collection or compliance procedures.
Why the State Requires This
The state requires payroll tax withholding and remittance because this revenue funds state operations and services. When employers do not comply with withholding and payment requirements, the state initiates collection action to recover the unpaid balance. Common triggers include missed quarterly payments, unfiled payroll tax returns, wage-and-hour record discrepancies, or routine audits that identify unpaid balances.
What Happens If This Is Ignored
If payroll tax issues are not addressed, the state adds tax penalties and interest to the original amount owed. The North Dakota Office of State Tax Commissioner may issue additional notices, place a tax lien against business or personal property, pursue a bank levy, or file a lawsuit. The longer an issue remains unresolved, the larger the debt becomes, and the more aggressive collection efforts become.
What This Does Not Mean
Receiving an enforcement notice does not automatically mean criminal prosecution for tax evasion is pending. It does not mean the business or individual has lost all options or cannot
resolve the issue. Collection action is a procedure to recover unpaid taxes, not a final judgment, and there are typically steps available to address or resolve the liability.
Checklist: What to Do After Receiving Payroll Tax
Enforcement
Step 1: Locate and Organize All Payroll Tax Documents
Gather all notices, letters, or documents received from the North Dakota Office of State Tax
Commissioner, including any tax audit notice. Collect payroll information, including employee names, wages paid, and tax withheld. Organize bank statements showing payroll tax deposits, payroll tax return forms filed, and any correspondence with the tax agency to ensure accurate responses.
Step 2: Review the Enforcement Notice Carefully
Read the entire notice or letter from the North Dakota Office of State Tax Commissioner and identify the specific tax period in question. Determine the amount claimed as unpaid or underwithheld, any deadline for response or payment, and the type of collection action being taken. Note the contact information or case number listed and any instructions for requesting a hearing or installment plan.
Step 3: Calculate the Discrepancy
Compare the state's claimed amount with your records by reviewing payroll information for the listed periods. Calculate total wages paid to all employees during those periods and determine what tax should have been withheld based on North Dakota rates. Compare the state’s claim to your actual withholding and deposits and note any discrepancies or missing information to support payroll tax disputes.
Step 4: Contact the North Dakota Office of the State Tax Commissioner
Reach out to the North Dakota Office of State Tax Commissioner at 701-328-1244 or collectionstax@nd.gov with your documents and case number ready. Ask specific questions about the exact amount owed, what tax periods are included, and whether deadlines can be extended. Request a written explanation of how the amount was calculated, ask about installment plan options or tax relief programs, and keep notes of all communications.
Step 5: Request a Hearing if You Dispute the Assessment
If you believe the state’s assessment is incorrect, submit a written request for a hearing within the timeframe specified in the notice. North Dakota Century Code tax protest procedures generally require submission within 30 days of notice, though you should confirm the specific deadline with the North Dakota Office of State Tax Commissioner. Explain briefly why you dispute the assessment and include copies of supporting documents for tax resolution.
Step 6: Explore Payment Plan Options
If the amount owed is confirmed and you cannot pay it in full immediately, contact the North
Dakota Office of State Tax Commissioner to request an IRS Payment Installment Plan or state installment plan. Provide information about your current financial situation if requested, and ask about the terms, monthly payment amount, and total timeframe. Confirm whether interest continues to accrue during the payment plan and request the agreement in writing for your tax resolution plan.
Step 7: Address Any Tax Lien Against Your Property
If the state has filed a tax lien, request written confirmation from the North Dakota Office of State
Tax Commissioner. A tax lien is a legal claim against your property that prevents you from selling or refinancing without paying the debt. Ask about the process for removing the tax lien once the debt is paid and determine whether the lien affects your ability to conduct business operations.
Step 8: Consider Tax Relief Options
Depending on your financial situation and the circumstances of the payroll tax delinquency, you may qualify for tax relief programs. Options may include penalty abatement for reasonable cause, Offer in Compromise if you cannot pay the full amount, or other arrangements. Consult with a tax resolution professional or contact the North Dakota Office of State Tax Commissioner to discuss available tax relief options for your specific situation.
Step 9: Make or Arrange Payment
Once the amount owed is confirmed, ask the North Dakota Office of State Tax Commissioner for the correct mailing address and payee name. Send payment by check with a note including your case number or business identification number, and keep a copy for your records. If using an installment plan, set reminders for each scheduled payment date to avoid defaulting on the agreement and triggering additional collection action.
- Ignoring the notice: The state will continue collection action, add interest and tax
- Missing response deadlines: Notices often include deadlines for requesting a hearing
- Paying the wrong amount: Sending payment to an incorrect address or in the wrong
- Not keeping copies: Maintaining copies of notices, correspondence, payment receipts,
- Assuming bankruptcy will eliminate the debt: Trust fund payroll taxes, including the
- State tax notice review and response
- Penalty and interest reduction options
- Payroll and trust fund tax assistance
- Payment plan and relief eligibility review
- Representation with state tax agencies
Step 10: Follow Up and Request Confirmation
After paying or arranging an installment plan, wait for written confirmation from the North Dakota
Office of State Tax Commissioner. Verify that your payment was received and credited correctly, and confirm that the tax lien will be released upon payment of the debt. Keep all confirmation letters and payment receipts, and ask about any remaining tax penalties or interest that may apply to your account.
Understanding the Trust Fund Recovery Penalty
The Trust Fund Recovery Penalty applies when employers fail to remit payroll taxes withheld from employee wages to the appropriate tax authority. This penalty holds the responsible parties personally liable for unpaid trust fund taxes, including employee withholding amounts. The North
Dakota Office of State Tax Commissioner and the Internal Revenue Service can assess this penalty against officers, directors, or other individuals with authority over payroll tax compliance.
Common Mistakes to Avoid penalties, and potentially file a tax lien or pursue a bank levy. Responding quickly prevents escalation and demonstrates your willingness to resolve the issue with the
North Dakota Office of State Tax Commissioner. or disputing the assessment, typically 30 days under the North Dakota Century Code.
Missing these deadlines may eliminate your right to challenge the amount or negotiate alternative tax resolution options with the state. amount may not be credited to your account. Always confirm payment instructions with the North Dakota Office of State Tax Commissioner before submitting any funds to avoid complications with your tax resolution plan. and payroll information protects you in the event of a dispute later. Documentation is essential for proving what was paid, when it was paid, and to whom it was sent for tax collection defense purposes. employee withholding portion, are not dischargeable in bankruptcy under federal tax laws. This is a priority tax debt that survives bankruptcy and must be paid regardless of bankruptcy status.
Frequently Asked Questions
What Is the Difference Between a Notice and a Tax Lien?
A notice is a letter informing you of an unpaid balance or requesting payment from the North
Dakota Office of State Tax Commissioner. A tax lien is a legal claim filed against your property if the debt remains unpaid after the notice period expires. A notice typically comes first, and a
Federal Tax Lien or state tax lien follows if the debt is not resolved through payment or tax resolution.
Does Interest Stop Accruing During an Installment Plan?
Interest continues to accrue on unpaid payroll taxes, even when an installment plan is in place, at a rate of 12 percent per year. The North Dakota Century Code requires this Code and applies from the original due date until the tax is paid in full. Confirm the specific terms when arranging
your IRS Payment Installment Plan or state payment plan with the North Dakota Office of State
Tax Commissioner.
How Long Does Tax Lien Removal Take After Payment?
Upon payment of the tax, the North Dakota Office of State Tax Commissioner files a satisfaction of the tax lien, releasing the claim. While the North Dakota Century Code does not specify an exact timeframe, similar federal government procedures typically require lien release within 30 days of full payment. Contact the North Dakota Office of State Tax Commissioner to confirm the expected timeline for your specific case.
What Tax Relief Options Are Available for Payroll Tax Issues?
Tax relief options for payroll tax delinquency may include penalty abatement for reasonable cause, installment plan arrangements, or an Offer in Compromise if you cannot pay the full amount. The North Dakota Office of State Tax Commissioner evaluates each case individually based on financial circumstances and compliance history. Consulting with a tax resolution professional can help you identify the most appropriate tax relief strategy for your situation.
Received a State Tax Notice?
If you’ve received a state tax notice and aren’t sure how to respond, we can help you review your options and next steps.
20+ years experience • Same-day reviews available
