When you owe back taxes to the New York State Department of Taxation and Finance, the department will attempt to recover payment in full from you. Its collection department, the Tax Compliance Division, can impose a tax levy, a legal order enabling the state to collect the debt against your income, property, and assets.
The State of New York also takes punitive action against late taxpayers, such as suspending a driver’s license.
Before it issues a levy, the State of New York must file a tax warrant against you. The warrant is filed with the Department of State and a local county clerk’s office. This warrant becomes a public record of tax debt. Anyone can find the warrant by searching the Department of State’s database on its website.
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Once the Department of State has filed the warrant, the department has the legal authority to recover tax debt through a third-party levy, garnishment of income, and the seizure and sale of property. You should be aware that the State of New York does not notify you about the levy until after the tax warrant is filed. It is important that you respond to any communication about taxes that are due.
The tax warrant stays in force until the tax debt is satisfied in full or until the warrant expires. For real estate, the expiration date is 10 years. For personal property, the tax warrant is valid for 20 years.
When two people share the same tax debt, both individuals can be ordered to make payments under a tax levy.
Certain funds are exempt from being taken in payment of a tax levy. These funds may include:
Since 2013, the New York State Department of Taxation and Finance has been allowed by law to recommend the suspension of a driver’s license if you owe at least $10,000 in past due taxes. The department could send you notice of further action if you do not settle your debt or set up a payment agreement within 60 days.
If you do not respond to the notice, the State of New York will request the Department of Motor Vehicles to suspend your New York driver’s license. You will receive a 15-day pre-suspension notice from the department, and if you do not pay your tax debt, your driver’s license will be suspended from the effective date.
You could be exempt from this action under the following circumstances:
If your license is suspended, you may be able to obtain a conditional and restricted license that allows you to drive a vehicle for specified reasons.
To avoid a tax levy in New York, you want to pay your tax liability in full and on time if you are able. If not, you should consider the options that are open to you to settle the debt, which may include the following:
You may be able to apply for an installment payment agreement if you can’t pay the full amount of your tax debt or if paying the full amount would leave you in financial hardship. To qualify for this type of agreement, your tax filings must be up-to-date, and you will be required to provide the State of New York with a detailed financial statement.
You need to be aware that interest and penalties are compounded daily on the outstanding amount of your debt. The state could terminate the agreement without notice if your financial circumstances change significantly, you fail to pay a due installment on time, or if any information you supply to the Department of Taxation and Finance is incorrect.
If you are in financial distress and unable to pay your tax debt in full, you could make an offer in compromise, an agreement to settle your tax liability for an amount less than the full amount due. An offer in compromise may be considered if you can’t pay your tax debt or doing so would create a financial hardship.
If you are concerned about your tax debt with the State of New York, or if the state is attempting to collect back taxes from you, consider requesting professional tax debt advice from Solvable. We can help you with your debt concerns by matching your needs with trusted debt relief providers who could help you to get out of debt faster.