What You Need to Know About New York State Tax Levies

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Graham Snelgrove
Graham Snelgrove
March 06, 2019

  • The New York State Department of Taxation and Finance can impose tax levies on late taxpayers.
  • Failure to pay your taxes could result in the suspension of your New York driver’s license.
  • Seek tax debt advice to help you avoid possible tax levies.

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.

How Does the State of New York Impose a Tax Levy?

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.

What You Need to Know About New York State Tax Levies

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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.

What Types of Tax Levies Can Be Imposed?

  • A bank levy requires your bank to take money from your account and direct it to the state.
  • An income execution is a legal requirement for you or your employer to pay the state part of your wages. The garnishment cannot be more than 10 percent of your gross wages or 25 percent of your disposable income.
  • A third-party levy can be imposed on individuals who pay you money, such as tenants or customers. These individuals would be required to pay any money owed to you to the state instead.
  • Seizure and sale of your property can occur if other methods of recovering your tax debt have failed. Your property will be seized and sold at public auction. You will be sent the details of the sale, and if the proceeds are more than you owe, the state will return the surplus to you. If you can reach a mutual agreement for settlement with the state before the sale, your property will be returned to you.

When two people share the same tax debt, both individuals can be ordered to make payments under a tax levy.

Is Any Money Exempt From a Tax Levy?

Certain funds are exempt from being taken in payment of a tax levy. These funds may include:

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  • Private or public pensions
  • Welfare payments
  • Unemployment and disability benefits
  • Workers’ compensation
  • Child support or alimony
  • Social Security income

Can the State of New York Suspend Your Driver’s License for Tax Debt?

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:

  • You have paid your tax debt.
  • You received the notice in error.
  • You have a commercial driver’s license.
  • The State of New York is currently garnishing your wages.
  • You pay court-ordered alimony or child support.
  • You’re eligible for innocent spouse relief.
  • You have filed for bankruptcy for your tax debt.

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.

How Can You Avoid a Tax Levy?

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:

  • Agreeing to pay in installments
  • Making an offer in compromise

Payment in Installments

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.

Offer in Compromise

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.

Get in Touch With Solvable

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.

 

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