Heads up to those who have outstanding New York tax liabilities; the state is getting tougher than ever in pursuing collection of these funds. Over the past few years, New York has implemented some of the nation’s most comprehensive initiatives regarding tax collections. New York taxpayers now need to realize that ignoring a tax liability could mean public exposure and loss of a privilege.
Beginning in 2009, New York started publishing a list of the state’s top 250 delinquent individual and business taxpayers. Individuals and businesses that have a tax delinquency judgment ruled against them are notified by certified mail that their names qualify to be placed on this list. Tax delinquents have 60 days to respond to the Department of Taxation and Finance before their names are published. Individuals and businesses that provide evidence of paying their debt in full, opting into a payment plan or declaring bankruptcy are exempt. The “top 250” is published on the website www.tax.ny.gov/enforcement and is updated every month. At least 18 other states, including California, Colorado, Connecticut, Florida, Georgia, Kansas, Kentucky, Maryland, Massachusetts, Montana, Nebraska, New Jersey, North Carolina, Pennsylvania, Rhode Island, South Carolina, Washington, and Wisconsin follow New York’s approach by publishing the names of their tax delinquents online.
Now, Governor Cuomo has taken additional steps to chase down tax scofflaws. Under Cuomo’s 2013-2014 budget, a new program was created to suspend the driver’s licenses of taxpayers who have past-due tax liabilities of more than $10,000. A past-due tax delinquency is one that is final, meaning the taxpayer has no further avenue of administrative or judicial review available. This program is modeled after one created almost 20 years ago in which the state suspends driver’s licenses to force individuals to pay outstanding child support. The Department of Taxation and Finance is required to notify the taxpayer of the pending license suspension at least 60 days prior to commencement of the suspension. Suspensions under the program will be lifted once the taxpayer either pays the delinquency or enters into an installment payment or similar agreement. It is estimated that enforcement of the program will bring in an additional $26 million in tax revenue in the present fiscal year and $6 million annually thereafter. In early August, the first round of suspension notices were mailed to 16,000 delinquent taxpayers statewide.
In addition to the above, the Department of Taxation and Finance was recently given the authority to impose income executions without the mandate to issue a tax warrant. An income execution is a legal order that requires an employer to withhold a certain amount of money from a taxpayer’s paycheck and send these funds directly to New York State. If an individual fails to pay any tax 21 calendar days after the issuance of a notice and demand decree, or 10 days after such issuance if the amount exceeds $100,000, the Department can serve an income execution on the individual without filing a tax warrant. The wage garnishment would continue until the tax liability is satisfied in full, or until 20 years from the first date a warrant could have been filed by the commissioner, whether or not a warrant is filed, regardless of whether the liability is fully satisfied.
If you have any questions regarding New York’s tax enforcement, please contact Manager of Tax Controversy and State and Local Tax Alan Goldenberg, at firstname.lastname@example.org or 212-897-6421, or contact your Friedman LLP tax professional.