Is the letter from your state, not the IRS? Learn who collects it and how state plans differ.
State Tax Debt: Who Collects It, and How State Payment Plans and Offers Differ From the IRS
Start with the agency named on your notice. Learn how state plans and offers differ from the IRS, with California and New York read directly, and when a state can take your federal refund. There is no 51-state table here.
By the end you will know: which agencies collect and why a state can have several; two state agencies' plan and offer rules against the IRS's; where federal and state collection overlap.
Quick answer
State tax debt is owed to your state’s tax agency, not the IRS, and each state sets its own payment plan, settlement and collection rules; the Federation of Tax Administrators lists state tax agencies, and the IRS links the websites of all 50 states and D.C. Two examples of the difference: California’s Franchise Tax Board charges individuals $34 for a payment plan of up to $25,000 over 60 months and takes offers only as a lump sum, while New York’s online plans cover balances of $20,000 or less over 36 or fewer payments. The IRS, by comparison, sets up individual plans online up to $50,000 and takes offers paid over as long as 24 months (agency pages read October 14, 2026).
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If you owe the IRS as well, the federal plan is separate. Use this free tool to see its setup fee, which can run from $0 to $178, with this quarter's interest rate and the penalty.
By the Legal Cost by State Editorial Team·Last updated and source-checked October 14, 2026
What to do next
1
Read the agency name and the account number on the notice
A state can have separate agencies for income tax, sales tax and payroll taxes, and the one on your letter is the one that holds your account.
2
Open that agency's own payment and hardship pages
The FTA agency list and the IRS list of state websites under Sources link each one, and each agency publishes its own rules on plans, offers and penalty relief.
3
If you also owe the IRS, treat it as a second, separate arrangement
An IRS plan or offer does not cover a state balance and a state plan does not stop IRS collection; each has its own fee and terms, and refunds can be offset until both are paid.
For your state, the agency on your notice is the source; this page has checked two of them.
Who sent this letter? Your state's own agency, sometimes several
Each state collects its own taxes through its own revenue agency. The Federation of Tax Administrators list of state agencies includes some city agencies too, such as the New York City Department of Finance and the Philadelphia Department of Revenue, so use the agency named on your notice.
Some states split taxes among several agencies. The FTA list shows four California agencies, among them the Franchise Tax Board, the California Department of Tax and Fee Administration and the Employment Development Department. The Franchise Tax Board says it evaluates an offer separately from any offer made to the IRS, to another California agency or to another state.
New York’s Tax Department puts it plainly on its payment plan page: it and the IRS are two separate taxing authorities, and federal income tax questions go to the IRS.
Learn more. Tap a topic to open it.
Learn how California and New York plans and offers compare with the IRS, from each agency's page.
The only state figures on this page, each from the agency’s own page; other states set their own rules.
California FTB payment plan
Individuals: $34 setup fee added to the balance, eligible if the balance is $25,000 or less, can be paid within 60 months, and returns for the past 5 years are filed; up to 90 days to process. Businesses: $50, $25,000 or less, 12 months. A tax lien may be a condition (page updated April 7, 2026).
California FTB offer in compromise
The offer must be a lump sum, cannot include prior payments and cannot be $0. The FTB expects an acknowledgment within 2 to 4 weeks and generally a decision within 4 to 6 months after the account is assigned for review; an approved offer stops collection and releases state tax liens (page updated October 15, 2025).
New York installment payment agreement
Requested online for a balance of $20,000 or less with 36 or fewer monthly payments. Penalty and interest keep accruing, and not meeting the terms can lead to collection action (page updated July 25, 2025).
The IRS, for comparison
Individual plans online up to $50,000, for $29 to $178, most allowed up to 10 years; offers carry a $205 fee and can be paid over 6 to 24 months.
Learn how refund offsets work both ways and which federal rules do not reach a state debt.
Your federal refund can pay a state debt
When a state reports a past-due, legally enforceable state income tax obligation, Treasury reduces your federal refund by that amount and notifies you. The Treasury Offset Program recovered more than $3.8 billion for state and federal agencies in fiscal year 2024.
The IRS can levy a state refund
The Tax Court’s guide for petitioners lists a proposed IRS levy on state tax refunds among the collection actions that can be challenged there.
An IRS offer can count state tax payments
Payments on delinquent state and local taxes may be allowed, in proportion to what is owed each, among the expenses used to judge an offer (IR-2012-53, 2012).
Federal rules stay federal
The IRS Collection Financial Standards apply "for purposes of federal tax administration only", and the 10-year period in 26 U.S.C. 6502 is federal; a state sets its own.
Learn why there is no 51-state table of state plans and offers yet.
There is no 51-state table here: offer programs, plan costs, collection periods and penalty relief each take a lookup per state, not done for every state. Online lists of states without an offer program have not been checked against the agencies.
The FTC’s advice is to read the notices from the IRS or your state and ask those agencies about collection alternatives.
No. Each state’s own agency collects its taxes under its own law.
Not in what we read: the IRS and each state agency run their own plans with their own fees and limits.
Yes, for a past-due, legally enforceable state income tax obligation the state has reported to Treasury. Under 26 U.S.C. 6402(e) the refund is reduced by that amount and you are notified.
It can propose a levy on state tax refunds. The Tax Court lists that among the collection actions a taxpayer can challenge after a notice of determination.
We have not checked all 51 jurisdictions, so we do not publish a list. California has one, lump sum only. Ask the agency named on your notice.
Each state sets its own period in its own law; the 10-year period in 26 U.S.C. 6502 is federal only. State periods are not checked here.
Some do: California adds $34 for an individual plan and $50 for a business plan. The New York page lists no setup fee.
The FTC says only the IRS or your state can decide what you qualify for and that no company can promise a particular result. This site does not evaluate or recommend any company.
Information on this page reflects laws and published figures as of October 14, 2026. This is general information, not legal advice, and not a prediction for any matter. Rules and fees change; check the court or agency page linked for each figure.
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