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Payment arrangement with the tax authorities

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What are the conditions?

An independent entrepreneur in the interior design sector approached us. He asked whether we could prepare a payment arrangement with the tax authorities for him. Because of the crisis, we unfortunately have a lot of experience with this and this client was therefore also referred by another client. This client already had a current payment arrangement with the tax authorities.

An independent entrepreneur in the interior design sector approached us. He asked whether we could prepare a payment arrangement with the tax authorities for him. Because of the crisis, we unfortunately have a lot of experience with this and this client was therefore also referred by another client. This client already had a current payment arrangement with the tax authorities.

What was going on? After switching to a different accountant, he discovered that an amount of sales tax (VAT) of € 30,000 was due over several years. An error made by the previous accountant. There were also income tax assessments to be expected. A total amount of over € 20.000. Money that was not immediately available. The accountant wanted to give full disclosure and write a letter requesting a payment plan with the tax authorities, but the client still wanted us to do a check. What are the rules?

Short telephone extension for entrepreneurs

You can telephone extension of payment for up to € 20,000 if you meet the conditions. You will be granted a maximum deferral of 4 months from the day after the final payment date of the (oldest) assessment. You will, however, have to pay collection interest.

Conditions for postponement by telephone

  • Your total outstanding tax debt is less than € 20,000.
  • A surcharge debt or a tax debt for which you have a postponement of payment because of an objection does not count towards this amount.
  • You can only apply for a postponement of payment by telephone for an assessment that you have received.
  • You have not received a writ of execution for your outstanding tax debt.
  • You don't have an unpaid misdemeanor fine.
  • You have not yet received a deferral of payment for your outstanding tax debt.
  • This condition does not apply if you have been delayed by an objection procedure.
  • You can only get a postponement for a provisional assessment if the assessment has a date after 1 November of the tax year.
  • You always filed your tax return on time.

We advised the client to pay an amount of € 10,000 immediately. This made the amount of VAT due €20,000 and a short extension of payment was possible. In this time the entrepreneur could get his cash flow in order and thus pay the outstanding debt.

Payment arrangement with the tax authorities

A separate deferral of payment must then be requested for the income tax assessments that have yet to be imposed. What are the conditions?

  • In any case, you must pay any tax assessments imposed after a payment arrangement with the tax authorities on time.
  • Also, the tax authorities can and will ask for security (a pledge) before granting a deferral.
  • If you have assets, you will not normally be able to make payment arrangements with the tax authorities for a tax assessment. If the costs of releasing your assets turn out to be disproportionately high, you may be able to.
  • You must be able to pay the tax debt within 12 months. A longer period is only possible in exceptional cases.

Waiver

Do you have insufficient payment capacity to pay your tax debt within 12 months? Then you may be eligible for waiver eligible. But do not count on much cooperation from the tax authorities in this. A good advisor can optimally plan the timeline and negotiate for you with the tax official.

Sanitation agreement

For most taxes, it is possible to reach an arrangement with the tax authorities and the other creditors. This is subject to strict conditions. The tax authorities only agree to this arrangement if all other creditors agree and they receive a percentage that is twice as high as the other creditors. Please contact us for a detailed explanation.

More information

Niek Pilgram
Niek Pilgram

tax advisor
+31 (0)35 628 57 53
niek@habermehl.tax

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