Everything You Need to Know If You Owe Taxes to New York State

Annie Beverly

Expert Contributor
Last Updated: December 9, 2021

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Often those in with debts money at both the state and federal levels.
New York State uses conventional methods to recoup back taxes, like seizure and sale and income execution, but also more controversial ones — such as publishing the names of tax delinquents online.
However, if you owe taxes to New York State’s Department of Taxation and reach a payment agreement with them, there’s no cause to fear their more punitive measures.

If you live in New York State and you owe taxes to the Department of Taxation and Finance, it can be confusing to know how to resolve the problem of back taxes. Which is why we at Solvable are here to help: we’re going to break down everything you need to know about back taxes in New York State. Conveniently for you, New York State’s taxation department is known as being one of the most efficient at finding resolutions in the whole of the U.S.

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1 First, Work Out How Much You Owe

2 How Does New York State Tackle Tax Delinquents?

3 Your Name Might Be Put On their List of Delinquent Tax Payers

4 New York State Will Issue a Tax Warrant

5 Tax Collections Levy

6 Income Execution

7 Seizure and Sale

First, Work Out How Much You Owe

Often those in back taxes owe taxes at the state and federal levels. Every state taxation department is separate from the IRS, and each has their own rules governing how they collect taxes. The first thing you must do is work out where your back tax lies.

Look carefully at any preexisting taxes you’ve already filed, and find out if your existing tax returns are at the state or federal level. Use a spreadsheet to place the two types of taxes in separate columns, and work out the total owed for each. When you have those figures, calculate an increase of 0.5% for each month your taxes went unpaid at the federal level, and 5% for every month your taxes for New York State were unpaid. Once you’ve done this, you should have the total amount you owe to the federal government and the taxation department of New York State.

How Does New York State Tackle Tax Delinquents?

If you’ve not paid your taxes in New York State, and have failed to negotiate a payment installment plan or the filing of your account as Uncollectible, the state will begin implementing methods to collect the taxes. Some of these are quite conventional; like the IRS, New York state implements tax levies on those who haven’t paid their back taxes. Others, like their Tax Delinquents List, are quite remarkable.

Your Name Might Be Put On their List of Delinquent Tax Payers

One way New York State deals with tax delinquents is quite unconventional; each month, they publish a list on their website of the 250 individuals with the highest back taxes. Individuals on the list are ranked by the amount of taxes owed. The only people included are those who have not settled a payment agreement with New York State, filed for bankruptcy or are in the process of protesting the tax bill. If you resolve your tax delinquency with New York State while you’re on the list, it won’t be taken down until the following month.

Everything You Need to Know If You Owe Taxes to New York State

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New York State Will Issue a Tax Warrant

A tax warrant, also known as a tax lien, is the equivalent to a money judgment for New York State’s tax department. Once this is released, New York State will be able to pursue the money you owe them through various means, completely legally. The first effect of a Tax Warrant is to prohibit due back taxes from liquidating their assets. In practice, this means that, while under a Tax Warrant, you will be unable to sell any property you own. Secondly, once a Tax Warrant is issued, New York State can begin the process of seizing assets through levies, deductions from wages, and seizing properties.

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However, tax warrants are not issued if an individual sticks with their negotiated installment payment plan or their Offer in Compromise with New York State’s taxation department. The four main ways to avoid having a Tax Warrant issued in your name are:

Negotiate a New York Installment Payment Agreement. This is where you reach an agreement with the taxation department to pay off your back taxes bit by bit, at a pace you can afford.
Be filed as Currently Not Collectible, because of Financial Hardship. If paying off your back taxes now would leave you unable to pay rent, afford transport, or feed and clothe your family, you may be eligible to file for Financial Hardship. If you get it, you won’t have to worry about your back taxes for a minimum of 12 months.
Reach an Offer in Compromise. This is when you pay back less than what you originally owe, by reaching an agreement with NY State on a payment plan. An Offer in Compromise is available to individuals who have filed for bankruptcy or for those whom a conventional payment plan would create “undue economic hardship”.
Demonstrate you are an Innocent Spouse. If you are in back txes because your partner did not correctly file his/her portion of your joint tax return, you can register as an Innocent Spouse to absolve the debt from your records.

Tax Collections Levy

After a Tax Warrant has been issued, New York State will proceed to issue levies. Tax levies allow the state to collect money, not from you, but from a third-party who administers you money. Third-parties the state may issues levies to could be the bank, or your tenants, if you’re a landlord. Even credit card processors are susceptible to levies.

However, there are many funds which are exempt from levies, and these include:

Any form of benefits administered by Social Security.
Child support.
Money from divorce proceedings.
Compensation.
Pensions.

Income Execution

Income Execution is where New York State requires that a portion of your wage is deducted and paid to the state. Often, New York State allow you to do this yourself, and will not contact your employer. However, if you do not initially respond, they may do, so make sure to affirm that you will pay it yourself before the State take that action.

Seizure and Sale

Seizure and sale is usually the final effort New York State take to claim your back taxes. Usually, this involves seizing and selling your property or properties to pay off your back taxes. However, if your back taxes amount is very high, they may also seize other high net-worth items, like jewelry, artworks and cars.

However, if you tackle your back taxes responsibly, it will never come to seizure and sale. At Solvable, we want you to connect with the right companies to relieve your back taxes. If your back taxes are handled in a timely manner, and you reach a resolution quickly with New York State, you will not no need to worry about any of their more punitive tax collection methods.

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Annie Beverly

Expert Contributor
Last Updated: December 9, 2021

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