Tax Compliance Division is the collection department for New York state taxes. If you owe taxes to the state of New York, the Tax Compliance Division will attempt to obtain full payment from you. If this is not possible, you may be able to negotiate an installment payment agreement. Under extreme hardship cases, one may enter into an Offer in Compromise with the state of New York.
Your real or personal property that is not exempt by law or tax code may be seized and sold at a tax auction. However, the state will only seize an item if it believes that the proceeds from the sale will exceed the fair market value of that property and cover the estimated expenses for the seizure and sale.
During a seizure, tax compliance agents may have the locks changed at your place of business, denying you access to your place of business and your business assets. Alternatively, agents may remove all of the merchandise at your business and store it elsewhere until the sale. After a seizure, the state will advise you of the date of the intended sale. At any time before the sale begins, the property will be released and returned to you if you fully pay the tax, penalty, and interest owed, along with the expenses the department incurred in the seizure and the preparation for the sale.
Once your assets are sold at public auction, the department will send you an accounting of the disbursement of sale proceeds. If the proceeds exceed your debt and the department’s expenses, the surplus will be returned to you.Return to top
A bank levy is a legal seizure of your property. Most frequently, a levy is made on bank accounts, and requires a bank to remove money from your account and send it to the department. A levy can also be made on money that any third party owes you, such as a loan or rent owed to you, or accounts receivable. If you are a business taxpayer, a levy can be made on the cash in your cash register.Return to top
If you file a joint return, both you and your spouse are generally responsible for the tax and any interest or penalties due on the return. This means that if one spouse does not pay the tax due, the other may have to pay it. However, you may qualify for relief from liability for tax on a joint return if:
If you are financially unable to pay the full amount of your liability all at once, you may qualify for an installment payment agreement.
An installment agreement on taxes simply means that you are making payments, much like one would on a loan. An important distinction between a loan and an installment agreement on taxes is that a penalties and interest continue to accrue on the unpaid balance of your taxes due.
Before you can be considered as a candidate for an installment agreement, you must have all your tax filings up to date, and you must also fill out a detailed financial statement for the state.
The state may terminate an installment payment agreement at any time without notice if it believes collection of the tax pursuant to the agreement is in jeopardy or in the following situations:
If you do not satisfy your full tax liability or negotiate an installment payment agreement, or if an offer in compromise is under review, withdrawn, or rejected, any or all of the following enforced collection activities may be used to collect your tax liability.Return to top
You may represent yourself or designate another person to represent you before the state. If your representative contacts the state without you, he or she must file Form POA-1, Power of Attorney, beforehand. Click here for the proper New York power of attorney form.Return to top
If you are financially distressed, you may also decide to submit an Offer in Compromise to the department. An Offer in Compromise is an agreement to settle a tax debt for less than the full amount owed. The state is not obligated to accept an offer in compromise, is unlikely to accept one unless paying them would be impossible or would produce an undue hardship on you.Return to top
The three most common reasons for penalties are:
In the simplest terms, avoiding penalties and interest is a matter of filing your tax returns and paying the correct amount of taxes on time. If you are unclear about any of your tax responsibilities, use the resources described in this publication to learn more about your filing requirements.
The amount of penalties for late filing and delinquent taxes is generally based on the amount of tax that is overdue. There are also various penalties for late filing of some tax returns whether or not you owe any tax.
Interest and any penalties continue to be added to the amount due until payment is received by the department. All interest is compounded daily.Return to top
A levy may be released after the fact. This may mean that they will no longer take additional funds and/or will return to you funds already taken.Return to top
For certain taxes such as sales and compensating use taxes, withholding tax, and the motor fuel excise tax, so called responsible persons of a business may be held personally liable for the business debts. You may be deemed a responsible person if you are an officer, director, or employee of a corporation or dissolved corporation, or employee of a partnership or sole proprietorship who was under a duty to act for the business to comply with the relevant provisions of the tax code.
Factors that will be considered in determining whether you are under a duty to act on behalf of a business include whether you sign the tax returns or maintain the books or records for the business or are responsible for the business’ management. Under certain circumstances, you may be issued a responsible person assessment even if you are not under a duty to act for the business. For example, with respect to the sales and compensating use and motor fuel excise taxes, a responsible person assessment may be issued against you if you are a member of a partnership, whether or not you have a duty to act on behalf of the partnership.
If the department issues a responsible person assessment against you and you do not agree with it, you have 90 days from the issuance of the assessment to appeal by either requesting a conciliation conference or petitioning for a Division of Tax Appeals hearing. The appeal entitles you to a hearing to present any information you may have to refute the assessment. A full explanation of your rights to protest an assessment will be included with the original assessment document. With respect to the sales and compensating use taxes only, you will be deemed to have appealed if your business requests a conciliation conference or petitions for a tax appeals hearing with respect to the same tax liability. However, if you are not certain that the business has appealed in a timely manner, and you wish to appeal the assessment, you should request your own conciliation conference or petition for a tax appeals hearing.
Once a responsible person assessment is final, all collection methods available to the department can be used against the responsible person’s assets. You can be personally assessed for the full amount of the tax the business owes, even if there are other entities or persons involved who may be similarly assessed. In most cases, responsible person tax debts cannot be discharged by bankruptcy of the business.Return to top
The department may revoke or suspend your Certificate of Authority to collect sales taxes for willful failure to comply with certain requirements of the tax code, such as willfully failing to file a return or to pay tax. If your Certificate of Authority is revoked or suspended, you will be prohibited from engaging in any business in New York State for which a Certificate of Authority is required. If you try to remain in business with a revoked or a suspended certificate, or start a new business without a required certificate, civil and criminal penalties may be imposed.
If the department institutes a Certificate of Authority revocation or suspension proceeding, you will be notified of the proceeding and of your rights during each step of the process. The process may be stopped at any time if circumstances warrant it, such as if you satisfy your liability.Return to top
A warrant, also known as a tax lien by the IRS and some states governments, is the equivalent of a legal judgment against you. It creates a lien against your real and personal property when filed. The warrant is a public record, on file at your County Clerk’s office and with the Secretary of State. It publicly acknowledges that you owe New York state taxes and may adversely affect your credit rating. It may make it difficult for you to get a loan or buy or sell real property. A warrant remains on file with the County Clerk and the Secretary of State until the tax liability is satisfied or the warrant expires.
The state may file a tax warrant on any business or individual that has unpaid taxes due. The warrant ensures the department’s priority over the taxpayer’s subsequent creditors.
A filed tax warrant secures the state as a lien holder of your personal and real property and empowers the department to use certain collection procedures, such as asset seizure, wage garnishment or bank levy.Return to top
If you are a business taxpayer owing sales and compensating use taxes or withholding taxes, the department may require you to establish a trust account with a bank for depositing taxes as they are collected from customers or withheld from employee wages. The trust account will help ensure that the taxes due are available when the tax returns are due.
The department will require you to set up a trust account when your past performance indicates chronic tax delinquencies.Return to top
We strive to save our clients money, time and stress. Just as there are many different tax related problems, there are many options for tax resolution. Call us at 888-902-0778 for a free consultation. In a few minutes we will help you to better assess what options are best for your unique situation.