Louisiana State Tax Payment Plan Guide

Falling behind on your taxes can feel overwhelming, especially when interest and penalties continue to increase the amount you owe. Many taxpayers face this situation each tax year and struggle to pay their full tax liability by the due date. The delay can lead to mounting tax debt and the risk of collection activities such as wage garnishment, bank levies, and license suspensions. You are not alone if you owe the Louisiana Department of Revenue and cannot make a full payment immediately.

The state offers structured options through the Louisiana State Tax Payment Plan to help taxpayers resolve tax debt and regain control of their finances. These installment agreements allow you to pay your back taxes and unpaid balances over time in manageable monthly payments, reducing the pressure of paying the full amount at once. Establishing a payment plan can also help you avoid additional penalties and protect you from aggressive collection actions while you work to settle your tax debt.

This guide provides a detailed overview of Louisiana’s payment plans, including eligibility requirements, the application process, and what to expect after you apply. It also explains how the state’s programs differ from the IRS collection process and when alternatives, such as the offer of a compromise or other tax debt relief options, may be appropriate. Whether you are an individual taxpayer, an independent contractor, or a small business owner, understanding your choices can help you resolve tax debt, avoid further fees, and meet your tax obligations more effectively.

What Is a Louisiana State Tax Payment Plan?

A Louisiana state tax payment plan, also called an installment agreement, is a legal arrangement between the Louisiana Department of Revenue and a taxpayer that allows you to pay your tax debt in smaller monthly payments rather than a full payment. This is an essential option for taxpayers who cannot pay their full tax liability by the original due date but want to avoid interest and penalties from increasing the balance or triggering additional collection activities.

These plans divide the total tax liability into manageable monthly payments, including taxes, interest, and penalties. By entering a payment plan, you can reduce the likelihood of severe collection actions such as wage garnishment, license suspension, or bank levies. Establishing an agreement is often the first step in resolving tax debt and preventing further escalation of enforcement.

Louisiana offers different payment plans to meet varying needs depending on your financial situation. Some taxpayers may qualify for a short-term payment plan with five or fewer payments, while others with higher balances or significant financial hardship may require longer-term installment agreements. Although the IRS offers similar options for federal tax debt, Louisiana's system is state-specific and requires a separate application process to settle your tax debt with the state.

Types of Louisiana Tax Payment Plans

The Louisiana Department of Revenue provides several payment plan options to help taxpayers resolve their tax debt. These plans allow individuals and businesses to pay back taxes and unpaid balances over time while reducing the need for collection activities.

1. Short-Term Payment Plan
   
   
   
   • Designed for taxpayers who can pay their full tax liability in five or fewer payments.
     
     
   • This plan generally applies to smaller balances, including individual income tax debts.
     
     
   • No financial disclosures are required for this type of payment plan.
     
     
   • You may apply online through the Louisiana Taxpayer Access Point (LaTAP) or by submitting Form R-19026.
     
     
2. Long-Term Installment Agreement
   
   
   
   • Appropriate for taxpayers who need more time to pay their balance in full.
     
     
   • Monthly payments are calculated based on income, expenses, and other financial information.
     
     
   • Financial documentation such as bank statements, pay stubs, or other proof of income may be required.
     
     
   • You can apply for this installment agreement online through LaTAP or by mail.
     
     
3. Business Tax Payment Plans
   
   
   
   • Tailored for businesses with unpaid balances for sales tax, corporate income tax, or withholding tax.
     
     
   • May require a down payment, cash flow analysis, and detailed financial documentation.
     
     
   • To avoid default, businesses must remain current on all required tax returns during the plan period.
     
     
4. Offer in Compromise (Compromise Program)
   
   
   
   • Allows qualifying taxpayers to settle tax debt for less than the full amount owed.
     
     
   • Intended for those experiencing significant financial hardship or for whom the collectability of the debt is uncertain.
     
     
   • It requires submitting detailed financial information, a nonrefundable application fee, and supporting documentation.
     
     
   • Not all taxpayers will qualify; the Louisiana Department of Revenue evaluates each case based on the taxpayer’s ability to pay and other criteria.
     
     

Selecting the right plan depends on your tax liability, income level, and whether you are an individual, independent contractor, or business. Choosing the most suitable option can help you regain control of your finances and avoid further interest and penalties.

Eligibility Requirements

To qualify for a Louisiana state tax payment plan, taxpayers must meet specific criteria established by the Department of Revenue:

• All required tax returns must be filed: The Department will not approve a payment plan if you have unfiled or missing tax returns for any tax year.
  
  
• You must owe a valid tax debt, such as Individual income tax, business tax, sales tax, or related penalties and interest.
  
  
• No recent defaults: If you previously defaulted on an installment agreement within the last year, your application may face stricter review.
  
  
• Demonstrate ability to pay: For long-term payment plans or larger balances, you may be asked to provide financial records such as income statements, bank records, or expense documentation.
  
  

In addition, taxpayers who owe $1,000 or more in individual income tax may face license suspension under Louisiana law if they do not take action to pay their taxes or set up a payment plan.

Those dealing with a specific financial situation, such as temporary unemployment or health-related expenses, may qualify for modified terms. However, you must submit detailed documentation to prove economic hardship. Working with tax professionals or a tax relief company can help you meet eligibility requirements and avoid collection actions.

How to Apply for a Louisiana Tax Payment Plan

Taxpayers can request a Louisiana state tax payment plan using one of two primary methods: the online Louisiana Taxpayer Access Point (LaTAP) system or by mailing in the required forms. Both options help taxpayers resolve their tax debt and avoid further collection activities.

Option 1: Apply Online via LaTAP

Applying online through LaTAP is the fastest and most convenient method.

• Create or log in to your LaTAP account on the Louisiana Department of Revenue website.
  
  
• Select “Request a Payment Plan” and choose the applicable tax year(s) and type of tax liability.
  
  
• Enter your proposed monthly payment amount and banking information if you choose automatic debit as your payment method.
  
  
• If required, upload supporting documents such as proof of income, bank statements, or a financial hardship statement.
  
  
• Submit your application and make monthly payments immediately while awaiting approval to show good faith and reduce interest and penalties.
  
  

Option 2: Apply by Mail

Some taxpayers prefer to apply for a payment plan by mail, especially if they have limited internet access.

• Individual taxpayers should complete and submit Form R-19026 (Installment Request for Individual Income).
  
  
• Business taxpayers may need to submit other forms depending on the type of tax debt.
  
  
• Mail your completed form and any supporting documentation to:
  Louisiana Department of Revenue
  Collection Division
  P.O. Box 201
  Baton Rouge, LA 70821-0201
  
  

After submitting your application, the Department of Revenue typically reviews requests within 30 days. You will receive notification by mail about the status of your application—whether it has been approved, denied, or requires additional information.

Tip: Paying before receiving formal approval can demonstrate commitment and help reduce unpaid balances. If you need help with the process, tax professionals or an independent organization such as the Taxpayer Advocate Service can guide you.

Interest, Penalties, and Fees

Understanding how interest and penalties accrue on your tax debt is critical before entering a payment plan. These additional charges can significantly increase your balance if you fail to pay your taxes by the original due date.

Interest Charges

• Interest is applied to all unpaid balances and is calculated at a rate three percent higher than the state’s legal interest rate.
  
  
• Interest begins accruing on the original due date of your tax bill and continues until your entire tax liability is paid in full.
  
  

Penalties

• Late Payment Penalty: 0.5% of the unpaid balance for each month (or portion thereof) your taxes remain unpaid, up to 25% of the total amount owed.
  
  
• Late Filing Penalty: 5% of the unpaid tax for each month your tax return is filed late, up to a maximum of 25%.
  
  

Fees and Payment Methods

• Louisiana does not generally charge a setup fee for most standard payment plans or installment agreements.
  
  
• Payments can be made electronically through LaTAP, check, or money order.
  
  
• Paying more than the minimum required amount each month can reduce interest and penalties over time and help you settle your tax debt faster.
  
  

What Happens If You Default?

Defaulting on a Louisiana state tax payment plan can have serious consequences. A payment plan is considered in default when a taxpayer fails to make a required payment, pays less than the agreed-upon monthly payments, or does not file required tax returns during the agreement period.

Consequences of Default

• The Department of Revenue may quickly resume aggressive collection activities.
  
  
• You may face wage garnishment, where a portion of your income is withheld to cover unpaid balances.
  
  
• Bank levies may be issued, freezing and seizing funds from your account.
  
  
• If you owe more than $1,000 in individual income tax, your driver’s license may be suspended under state law.
  
  
• Additional interest and penalties will continue to increase your tax debt.
  
  

Recovering from Default

Should you default, please contact the Louisiana Department of Revenue’s Collection Division at your earliest convenience. In some cases, you may be able to reinstate your installment agreement with revised payment terms. The department may request updated financial documentation, especially if your financial situation changes.

Ignoring a default can result in severe collection actions, so it is essential to act quickly. Taxpayers struggling to maintain compliance can also consult tax professionals or a tax relief company to explore options for resolving tax debt.

Alternatives and Additional Relief Options

Not all taxpayers can maintain a payment plan, particularly when facing significant financial hardship. If you cannot pay your full tax liability even through monthly payments, Louisiana offers additional options for tax debt relief.

Offer in Compromise (Compromise Program)

• This program allows eligible taxpayers to settle tax debt for less than the full amount owed.
  
  
• Applicants must demonstrate that paying their full tax liability would create significant financial hardship or that there is doubt whether the state can collect the entire debt.
  
  
• To document income, assets, expenses, and liabilities, individuals must submit Form R-20212I (for individuals) or Form R-20212B (for businesses) along with Form R-20211.
  
  
• A nonrefundable application fee and a 20% down payment of the offer amount are required.
  
  

Note: Approval is not guaranteed. The Department of Revenue evaluates each case individually to determine whether it is in the state’s best interest to accept the offer.

Currently Not Collectible (CNC) Status

• Taxpayers experiencing extreme financial hardship may qualify for CNC status, which temporarily pauses collection actions.
  
  
• This status does not eliminate your tax debt but prevents active enforcement while your financial situation is reassessed.
  
  

Federal Tax Coordination

If you owe both Louisiana and IRS tax debt, you must manage them separately. The Internal Revenue Service offers similar options to resolve IRS debt, including payment plans, short-term payment plans, and an offer in compromise program.

To coordinate your state and federal tax obligations, you can work with tax professionals, a tax relief company, or the Taxpayer Advocate Service. IRS offers can differ in eligibility and documentation, and having independent organization support can make the process easier.

Frequently Asked Questions

How do I qualify for a tax payment plan in Louisiana?

To qualify for a Louisiana state tax payment plan, taxpayers must have filed all required tax returns and owe a valid tax debt to the Louisiana Department of Revenue. You must also be able to make monthly payments based on your tax liability and income level. If you have defaulted on a previous installment agreement or have unpaid balances from prior tax years, you may need to provide additional financial documentation before approval.

Does the state charge a setup fee for payment plans?

No, the Louisiana Department of Revenue generally does not charge a setup fee for most payment plans. However, interest and penalties will continue to accrue on your unpaid balances until your full tax liability is resolved. Taxpayers can apply online through LaTAP or by mail and select their preferred payment method. Paying more than the minimum required amount each month can help reduce interest and settle your tax debt faster.

Can I settle my Louisiana tax debt for less than the full amount?

Yes, Louisiana offers a compromise program that allows eligible taxpayers to settle tax debt for less than the full amount owed, provided they meet strict criteria. You must demonstrate significant financial hardship or that the state cannot reasonably collect your full tax liability. The application requires detailed financial information, an application fee, and a down payment. Approval is not guaranteed, but it can be a path to resolving tax debt for less.

Will entering a payment plan stop collection actions like wage garnishment?

Yes, entering into an approved tax payment plan in Louisiana can stop collection actions like wage garnishment and bank levies, as long as you stay current on all monthly payments and file all required tax returns. Missing a payment or failing to meet other installment agreement terms could cause the Department of Revenue to resume collection activities. Being proactive and consistent is the best way to resolve tax debt and regain control of your finances.

Can independent contractors and small business owners get tax debt relief?

Independent contractors and small business owners can qualify for tax payment plans in Louisiana or an offer in compromise if they cannot immediately pay the full tax liability. To qualify, you must be current on all required tax returns and provide proof of income, expenses, and business activity. These taxpayers may also seek help from tax professionals or a tax relief company to navigate the process and avoid further interest and penalties.

What happens if I miss a payment on my installment agreement?

If you miss a monthly payment, your Louisiana state tax payment plan could be placed in default, which may result in additional interest, penalties, and collection activities. This can include wage garnishment, bank levies, or license suspension if you owe more than $1,000. You should immediately contact the Department of Revenue to discuss reinstating your installment agreement. Tax professionals or the Taxpayer Advocate Service can also assist you with options for resolving tax debt quickly.

How is a Louisiana payment plan different from the IRS collection process?

The Louisiana state tax payment plan is managed separately from the IRS collection process and applies only to state tax debt. While the Internal Revenue Service offers installment agreements and compromise programs, these do not cover your Louisiana tax obligations. Taxpayers who owe state and IRS debt must coordinate with each agency individually. Consulting tax professionals or an independent organization can help you manage obligations effectively and avoid further penalties.