New York State Tax Relief Program
The New York State tax relief program offers options for people who owe back taxes. The Department of Taxation and Finance (DTF) is known for being fair and consistent. Some programs let you pay over time.
Others help you settle for less if you’re facing financial hardship. This guide outlines your options and explains what happens if you don’t pay. Since rules can change, it’s best to speak with a licensed tax professional.
Contact the New York State Department of Taxation and Finance:
- Individual Taxpayer Assistance: 518-457-5181
- Business Taxpayer Assistance: 518-457-5434
- General Inquiries: 518-485-6027
- Collections Number: 518-457-5434
- Offer in Compromise: 518-591-5000
- Website: https://www.tax.ny.gov/
NY State Individual Tax Resolution Options
How to Pay Taxes in New York
You can pay your taxes online, through the mail, over the phone, or even in person. Our guide to how to pay NY state taxes covers the options and looks at deadlines for state tax payments.
NY Installment Payment Agreement (IPA)
DTF offers payment plans for taxpayers who can’t pay in full. They review your history, finances, and whether you meet their rules before approving an IPA. You’ll make monthly payments, but interest and penalties keep adding up. Most plans give you up to 72 months to pay, usually through direct debit.
Read more here about the different IPAs available and how to apply.
12-Month Currently Not Collectible Status (Hardship)
If you don’t qualify for an IPA, you can apply for hardship status under the New York State tax relief program. It usually lasts one year.
You’ll need to file a form and update your financial info each year. This option works well for retirees or those with disabilities because their income likely won’t change. The state often files a tax lien or warrants during this time.
It is comparable to obtaining a CNC status from the IRS. Unlike the IRS, the DTF does not publicly discuss this option, and there are no formal procedures. However, it is available for taxpayers facing difficult situations. For example, unemployment, illness, family issues, fire or floods, and severe decreases in income.
Innocent Spouse Relief (ISR)
NYS does offer Innocent Spouse Relief as an option for spouses or former spouses who filed a joint tax return. There are three types of innocent spouse relief options available:
- Innocent Spouse Relief
- Separation of Liability
- Equitable Relief
Generally, ISR is best for spouses or former spouses who did not know and had no reason to know a joint tax return they signed had an omission or error. Furthermore, the spouse believes that DTF should not hold him or she responsible for the understatement of tax.
NY Business Tax Options
In NY state, withholding tax and sales taxes are “trust” fund taxes. Businesses collect them from customers or employees and must send them to the state. Unpaid trust taxes are serious, and New York handles these cases individually. Below are common options for businesses with NYS tax debt.
Installment Payment Agreement – IPA
In most cases, NY State requires a down payment of around 20% before they agree to an IPA. However, DTF may still grant an IPAs without a down payment.
Offer In Compromise
The New York State tax relief program offers an OIC, like the IRS version. NY is more selective about who qualifies. It’s open to individuals or businesses that are insolvent or discharged through bankruptcy.
Some solvent taxpayers may also qualify if paying would cause undue economic hardship. The offer must reflect your asset equity and future disposable income.
For businesses, NY usually won’t accept an offer for less than the amount of trust fund taxes owed. You may be able to settle the principal and exclude penalties and interest. However, income taxes follow different rules. A “responsible person” personally assessed for business tax debt may still apply for an OIC if they meet the financial requirements.
Read more here about the NYS offer in compromise program, who qualifies, and how to apply.
Voluntary Disclosure Program
The NY Department of Taxation and Finance runs a Voluntary Disclosure and Compliance Program, like a permanent NYS tax forgiveness program. If you owe NYS back taxes or have unfiled returns, you can catch up without penalties or criminal charges.
To apply, you must contact the department and outline which taxes you owe. Then, pay what you owe and agree to stay current.
You can apply for voluntary disclosure online or contact a tax professional to help you. If you have undisclosed investments in a Passive Foreign Investment Company, don’t file returns yet. Wait for DTF instructions after applying.
NY State Tax Audits
A New York State audit can be stressful. The DTF may audit you for unfiled returns, unreported income, or mismatched IRS data. Residency audits are also common. You’ll need to prove your return is accurate and may have to challenge the auditor’s claims. Mistakes can lead to surprise tax bills. Getting NY tax help from a professional can make the process easier and protect you from extra liability.
NY State Statute of Limitations for Tax Collection
New York or the DTF has 20 years to collect tax liabilities. It is 20 years from the date the DTF could file a warrant. While the IRS has ten years to legally collect the taxes, NY State has 20 years.
The first date a warrant can be filed is different depending on the situation:
- If there is no right to a hearing, the deadline starts the day after the payment demand letter states.
- If there is a right to a hearing, it would be the first day after the deadline to request a hearing.
Remember, NY State and the taxpayer can agree to extend the time to collect on a tax warrant.
New York State Debt Collection Actions
New York State has up to 20 years to collect NYS back taxes. The best move is to work with a tax pro and choose a New York State tax relief program that fits your situation. But what if you don’t pay? Here's how the Department of Taxation and Finance can collect your debt through enforcement.
New York State Tax Warrant
A New York State tax warrant is a lien against your real or personal property. It gives the state the right to seize your property and garnish your wages.
Even without a seizure, a tax warrant can hurt your ability to get loans or buy and sell property. If you sell while a warrant is active, the state can take the proceeds—up to the full tax bill plus interest, penalties, and fees. Once filed, a warrant is hard to remove unless you pay in full. The best option is to settle your NYS taxes owed before the Department of Taxation and Finance issues a warrant.
Tax Levies in New York
A levy is typically the next step after a tax warrant. A levy is when the New York DTF seizes your bank accounts. The state will contact your bank and give them a 90-day warning. If you don't pay your tax liability, the bank will send the funds in your account to the state at the end of the 90 days.
In New York, the state generally uses the term "tax levy" to refer to bank account levies. When the state levies physical assets, it refers to the process as a seizure. When it levies wages, it uses the phrase income execution.
Income Executions
An income execution lets the state take part of your wages to pay your tax bill. First, they’ll ask you to pay 10% of your gross wages or 25% of your disposable income each payday. If you don’t, they’ll send the order to your employer, who will then withhold the money and send it to the state. Other states call this wage garnishment.
Seizures
After New York State files a tax warrant, it may seize your assets and sell them at auction. The state can take personal and business assets. If the state seizes business assets, it can change the locks, block access, and take all equipment, inventory, and merchandise.
NY Driver License Suspension
If you owe over $10,000 in NY state back taxes, the state can suspend your driver's license. You'll get a Notice of Proposed Driver’s License Suspension. You can stop the suspension by paying in full or setting up a payment plan. If you have a commercial license, you may be exempt.
You may also qualify for an exemption if:
- your wages are garnished
- you pay child support
- you receive public assistance
- you get SSI
Private Debt Collection for New York State Back Taxes
If you don’t pay, the state may send your case to a private debt collector. You’ll receive letter DTF-975.1 to notify you. To confirm the agency is legitimate, ask for your case ID or contact the Department of Taxation and Finance. As of 2022, New York uses Coast Professional, Inc., based in West Monroe, Louisiana.
Tax Refund Offsets
Why didn't I receive my NY tax refund? If you owe NYS back taxes, the state can take your refund. It can also keep refunds to cover IRS or other agency debts through the tax refund offset program. You usually can’t recover offsets.
If you filed jointly and the debt was only your spouse’s, you can file Form IT-280 (Nonobligated Spouse Allocation) to apply.
Contacting the New York State Department of Taxation
You can reach the NY Department of Taxation and Finance in several ways. Since they may not always take calls, Online Services is often the fastest and most effective option. It works well for responding to notices, bills, or other tax-related needs.
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Online Services
The fastest way to manage your NY taxes. After creating an account, you can pay bills, respond to notices, change addresses, file or apply for relief programs, and set up payment plans. Suitable for individuals, businesses, tax pros, and fiduciaries. -
Contact by Phone
You can call the department, but they may not take calls during busy times or when short-staffed. Notices usually include a phone number and PIN, though reaching a live agent isn't guaranteed. You can find a list of telephone numbers and hours of operation for individuals here and for businesses here. -
By Fax
Letters or notices often include a specific fax number for sending documents. Don’t use just any number online; the fax number must match the one on your notice.
Get Help With Back Taxes and Other Tax Problems in New York
If you are struggling with New York State back taxes, it is generally a good idea to connect with a licensed tax professional or a tax firm with experience resolving NY tax problems found in the link or start your search below. You can also find the top-rated tax professionals by license type below.
- New York Tax Attorneys
- New York CPAs
- New York Enrolled Agents
- Tax Professionals in NY that help with tax problems
Disclaimer: This article is not legal or tax advice. This article should not be used as a substitute for the advice of a competent attorney or tax professional admitted or authorized to practice in your jurisdiction.