If you owe back taxes in Louisiana — whether to the IRS, the Louisiana Department of Revenue, or both — you have more options than you probably think.
And fewer of them than you'll have if you wait another month.
Here's a plain-English breakdown of the back tax situation in Louisiana, what agencies are involved, and what you can actually do about it.
Most Louisiana taxpayers dealing with back taxes are actually dealing with two separate agencies:
1. The IRS (Federal) Handles federal income tax, payroll taxes, self-employment tax, and federal penalties. The IRS has enormous collection power — wage levies, bank levies, federal tax liens, asset seizure.
2. Louisiana Department of Revenue (LDR) Handles Louisiana state income tax. The LDR has its own collection process, its own penalties, and its own resolution programs — separate from the IRS. An IRS installment agreement does not cover your Louisiana state balance.
If you owe both, both must be addressed — and they're addressed separately.
We see these situations constantly across Baton Rouge, New Orleans, Shreveport, Lafayette, and the rest of the state:
Self-employment and gig work Louisiana has a strong independent contractor and gig economy. When quarterly estimated taxes aren't paid, the balance grows quietly — until it doesn't.
Small business payroll issues A business hits a rough quarter. Payroll tax deposits get skipped. The IRS moves fast on this one.
Life events Divorce, illness, job loss, death of a spouse. Tax returns stopped getting filed. Balances piled up. Time passed.
Energy and oil industry volatility Louisiana's economy has always tracked the energy sector. Boom years followed by down years can leave taxpayers with large prior-year income and no cash to pay the resulting taxes.
COVID-era disruptions Many Louisiana businesses and individuals got behind during 2020–2022 and never fully caught up.
None of these situations are unusual. None of them are permanent.
1. Installment Agreement The IRS allows taxpayers to pay their balance over time in monthly installments. If you owe less than $50,000, you may qualify for a streamlined agreement that can be set up without full financial disclosure.
2. Offer in Compromise If you genuinely cannot pay your full balance now or in the foreseeable future, the IRS may accept a lump sum for less than you owe. Eligibility depends on your income, expenses, and assets.
3. Currently Not Collectible If you have no ability to pay after covering basic living expenses, the IRS can place your account in Currently Not Collectible (CNC) status — pausing collection while your financial situation is reviewed.
4. Penalty Abatement Many taxpayers qualify for first-time penalty abatement or reasonable cause abatement — reducing or eliminating penalties that have accumulated on their balance.
5. Innocent Spouse Relief If your back tax situation resulted from a spouse's errors or omissions without your knowledge, you may qualify for relief from the resulting liability.
The Louisiana Department of Revenue offers similar programs:
The LDR is generally faster to move from notice to enforcement than the IRS — don't underestimate state collection timelines.
If you haven't filed Louisiana state returns in addition to federal returns, both agencies will eventually file substitute returns on your behalf using the least favorable numbers available.
A substitute return filed by the IRS or LDR assumes no deductions, no credits, and maximum income. The resulting balance is almost always higher than what you would owe on a properly prepared return.
Filing late, even years late, is always better than not filing.
The IRS and Louisiana LDR each have escalating collection sequences:
Notice → Final notice → Levy action → Lien filing → Asset seizure
In Louisiana, the LDR can issue a state tax lien that appears on your credit, levy your state tax refund, and pursue bank levies independently of the IRS.
Two agencies. Two escalation processes. Both will reach enforcement eventually.
We're headquartered in Louisiana. We know the Louisiana Department of Revenue's processes, timelines, and resolution programs alongside the federal IRS system.
We handle both — so you don't have to navigate two separate agencies while trying to run your life.
We serve individual taxpayers and small businesses across:
Your first consultation is free. We pull your IRS transcripts, review your Louisiana account history, and tell you exactly what you're dealing with — and what we can do about it.
Q: Does a federal installment agreement also cover my Louisiana state taxes? No. Federal and Louisiana state tax debts are handled by separate agencies. You must address each balance separately. Summit Tax Services handles both.
Q: Can Louisiana garnish my wages for state back taxes? Yes. The Louisiana Department of Revenue has the authority to levy wages and bank accounts for unpaid state taxes, independent of any IRS action.
Q: How far back can the IRS go for unfiled returns in Louisiana? The IRS generally focuses on the last six years of unfiled returns for compliance purposes, though they can technically go further. Louisiana's statute of limitations for assessment varies by circumstance.
Summit Tax Services is headquartered in Louisiana and serves clients statewide and nationwide. We work with a team of licensed tax attorneys and enrolled agents (EAs) for IRS representation. This article is for educational purposes only.