If you owe income tax to the state of New York, you could be eligible for an NYS tax payment plan. This arrangement is provided by the state’s Department of Tax and Finance (DTF) and allows you to repay your tax liability over time. DTF has a range of programs with various options for taxpayers who cannot afford to pay the taxes they owe.
Installment agreement options currently available to New York taxpayers include:
In most cases, taxpayers can request a monthly payment amount and/or agreement term. Keep in mind, however, that the longer the agreement, the more stringent DTF will be in reviewing your finances.
If you cannot pay your state taxes and want to request a payment plan, take one of these options:
Before applying, make sure you have filed all state tax returns. While your request is under review, make your requested monthly payment.
According to the DTF, using their website is the fastest and easiest way to apply for an installment agreement. This option is available to taxpayers who owe less than $20,000 and plan to pay the balance in full in no more than 36 months.
It’s important to follow the terms of the payment plan and file and pay subsequent tax returns on time. If you fail to do so, your agreement may be canceled and you will be subject to collection actions on any remaining balance. However, DTF must provide 30 days’ written notice before taking this step. The agreement will also be void if you do not provide updated financial information as requested by the terms of your agreement, if your financial situation changes and you are able to repay the balance in full, or if the DTF finds you were not accurate or thorough in your application.
Once you are enrolled in a payment agreement, you can use the online system provided by DTF to check your balance, make payments, and review the terms of the agreement.
If your financial situation makes it impossible for you to make monthly payments toward your back taxes, you can request hardship status from the state for one year. You will need to complete initial documentation about your income, expenses, and assets to determine whether your back taxes causes a true hardship. Each year, you will need to resubmit your financial information to maintain this uncollectible status.
Although you will not be subject to collection actions during this time, the interest and penalties on your outstanding balance will continue to accrue. In addition, a tax lien may be filed. Although your property will not be seized as long as you submit updated information as required, the lien can make it difficult for you to qualify for other loans. For this reason, hardship status should generally be avoided except for those who are retired or disabled and do not have a projected income increase.
Some New York taxpayers may qualify for penalty abatement. This program could reduce your past-due tax balance, allowing you to access an affordable payment plan for the remaining back taxes. In order to have the penalty waived, you need to show that the offense was not related to willful neglect but resulted from a reasonable cause.
Some of the most common penalties include:
Keep in mind that even when penalties are waived, interest continues to accrue. It is compounded every day at a rate that adjusts each quarter.
Solvable can help resolve your New York state tax liability once and for all. We connect our clients to vetted, well-reviewed firms that specialize in back tax assistance for those with back taxes, student loans, and credit card debt. Get on the path to a brighter financial future.