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State tax debt help

Your state has its own rules. Here's where to start.

Small business owner flipping the open sign on a shop door in the morning
Updated October 8, 20262 sourcesFact checked
The short answer

States collect their own taxes and set their own rules. Many have payment plans and some have offer programs. A deal with the IRS does not cover your state debt, and a state deal does not cover the IRS.

Who it fits

People who owe state income, sales, payroll or business taxes.

Who it fits
Owe your state
Cost
Rules, fees and time limits differ by state.
IRS form
Set by each state

What to know first

State and IRS are separate

California's Franchise Tax Board, for one, reviews its offer apart from any offer you make to the IRS or other state agencies.

Your refund can be taken

The federal Treasury Offset Program can take your federal refund for state income tax debt.

Some states take offers

California, for example, has an offer in compromise program. Its offers must be a lump sum, not a payment plan.

File first

States like California want all required returns filed before they review an offer.

Some states have no income tax

In those states, back taxes are often sales or business taxes, or the debt is with the IRS.

Check your state hub

Our state pages link each fact to the state agency, so you can check it yourself.

Common questions

Will my federal refund pay my state tax debt?

It can. Debt offsets can take a federal refund for state income tax debts.

Source: IRS: Topic 203, Reduced refund

Does an IRS offer settle my state debt too?

No. California's FTB, for example, looks at its offer separately from any IRS offer.

Source: California Franchise Tax Board: Offer in compromise

Results depend on your situation. Not every case qualifies.

More guides

Run the numbers with our free tax tools, like the penalty and payment plan math.

See your options

A few questions. A tax pro calls you back.

Free tools: penalty calculator, 10 year clock, IRS offer data

Free to use. Not the IRS or any government agency. Results depend on your situation. Not every case qualifies.