Am I Eligible for a NYS Tax Payment Plan?

Andrea Miller
Expert Contributor
Last Updated:
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  • Taxpayers who cannot afford to pay the state taxes they owe to New York can apply for a payment plan.
  • The state has several types of installment programs depending on your circumstances.
  • Taxpayers who enter this type of agreement must abide by its terms or risk defaulting.

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.

Types of New York Installment Agreements

Installment agreement options currently available to New York taxpayers include:

  • The three-year streamlined payment plan, which does not require the individual to provide financial disclosure if he or she can repay the full balance, including penalties and interest, within 36 months. This plan is similar to the federal streamlined installment plan offered by the IRS. This agreement cannot extend beyond the Collection Statute Expiration Date (CSED). This is the statute of limitation for New York income tax debt and is usually 20 years from the date on which the taxes were assessed.
  • The three-to-six-year payment plan, which requires you to complete financial information using Form DT-5. For example, you’ll need to provide documentation of your income, expenses, and assets. With this plan, you may be subject to a tax lien, which means that state has a legal claim over your property until the taxes are paid. However, you can sometimes ask that the lien is removed provided that you uphold the terms of the installment agreement.
  • Business tax payment arrangements may be available depending on the circumstances, including the type of taxes owed and the total balance amount. You may be required to pay 20 percent of the balance before entering an installment agreement.

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.

How to Apply

If you cannot pay your state taxes and want to request a payment plan, take one of these options:

  • Call 518-457-5434 to speak to a DTF representative. You must provide your taxpayer ID number (usually your Social Security number) and the four-digit PIN from your tax bill.
  • Establish an account on the DTF website. Log in, then select Payments and Bills and Notices to access the online application for an installment agreement.

Before applying, make sure you have filed all state tax returns. While your request is under review, make your requested monthly payment.

Am I Eligible for a NYS Tax Payment Plan?

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.

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Managing Your Payment Plan

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.

Seeking Hardship Status

If your financial situation makes it impossible for you to make monthly payments toward your tax debt, 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 tax debt 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.

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Applying for Penalty Abatement

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 debt. 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:

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  • Late filing penalty of 5 percent of the balance each month or partial month to a cap of 25 percent.
  • Returns later than 60 days are subject to a fee of the full balance amount or $100 (whichever is less).
  • Late payment penalty of 0.5 percent of the balance each month or partial month to a cap of 25 percent.
  • Incorrect tax calculation penalty of at least $2,000 or 10 percent of the total balance (whichever is more) carries a penalty of 10 percent of the discrepancy amount.

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 relief for those with tax debt, student loans, and credit card debt. Get on the path to a brighter financial future.

 

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Andrea Miller
Expert Contributor
Last Updated: