Many states are willing to let you make installment payments if you get behind on sales taxes. However, a common requirement is to keep current on new monthly or quarterly tax filings and payments.

State revenue agents will use two forms of punishment with delinquent taxpayers. They can pull your license to conduct business (if a state license is required in your profession and your state). That makes you subject to fines and having your place of business sealed by the county sheriff or court order. The more effective method is to issue a tax warrant. The tax warrant is a warrant for your arrest for failure to pay state taxes. Unlike a criminal warrant, in many states you do not have the usual civil rights that criminals have. But the deputy or policeman is required to treat you the same as a criminal, which can be very embarrassing, and almost impossible to explain to customers, vendors and employees.

Your best course of action is to respond to any state notices of delinquency promptly. If you cannot pay in full, you should usually file the return anyway, and send some money along with a request to work out a payment plan. Remember, the revenue agent is not interested in putting you in jail (where you cannot earn money for the state), so they will usually work with you as long as they are getting regular cash payments.

If you also owe money to the IRS, you can usually put off the state taxing authorities rather easily by telling them that the IRS already has a lien, and that you are in the process of working out a deal to pay the IRS. The state knows that in most cases, if they push the issue, the IRS will end up with most of the money. Since the state is competing with the IRS for your limited dollars, they will usually wait until the IRS is out of the way. However, once the IRS issues are resolved, most states will move swiftly, so you must be prepared to pay them off shortly after the IRS lifts its lien.