NYS Tax Payment Plan Options
New York State’s Department of Tax and Finance (DTF) offers tax payment plans for qualifying taxpayers who cannot afford to pay their NY state taxes in full. The NYS tax payment plan option can vary by the term and whether the taxpayer must disclose financial information. However, this option helps taxpayers who cannot afford to pay their taxes in full. Proactively setting up a payment plan can help you avoid income executions (wage garnishments), tax warrants (liens), driver's license suspensions, and other collection actions from the DTF.
Installment Payment Agreement (IPA) is the official name DTF uses to refer to a monthly tax payment plan. "Deferred payment agreement" was the previous name for the IPA.
DTF does not publicly discuss what the typical or maximum term is for a payment plan. Generally, the longer the term requested by the taxpayer, the more meticulous the IPA review process.
Some of these options may have changed. It is always best to consult with a licensed tax pro when in doubt. However, as of August 2017, here is a breakdown of the type of payment plans available to individuals.
3 Year Streamlined NYS Tax Payment Plan
Generally, NY State offers a 36-month payment plan for personal income taxes owed without requiring financial disclosure. In other words, the application process does not require financial disclosure. If you are granted the IPA, you pay off your tax liabilities over 3 years or before the Collection Statute Expiration Date (CSED), whichever comes first.
The CSED is the date that NY State cannot legally collect the tax from you. Therefore, an IPA will have to end before the CSED date(s) arrives. Remember, NY State has a 20-year statute of limitations on collections.
3 to 6 Year NYS Tax Payment Plan
If a taxpayer requires more than 3 years to pay off a tax balance, NYS may request financial information. Therefore, in cases requiring financial verification, a DT-5 form or financial information will need to be provided.
In certain cases, NYS may file a tax warrant with the County Clerk and the Secretary of State. As a result, the tax warrant creates a tax lien. Therefore, it is generally a good idea to ask if DTF can refrain from issuing a tax warrant as long as you stay compliant with your IPA.
Business Installment Payment Agreements
Businesses can obtain IPAs. However, the requirements can vary on a case-by-case basis. This is largely determined by the amount and type of taxes due. In many cases, the DTF requires a 20% down payment. However, there have been many cases where an IPA was still granted without the down payment. An IPA could be a for business with a “trust fund” liability. For example, sales taxes and withholding taxes are great examples of “trust fund” taxes. Consequently, Form DTF-5 may be required by all responsible officers of the business. They will need to fill it out personally.
Sole-proprietors, single-member LLCs, or members of multi-member LLCs, generally accumulate income at the personal level (pass-through income). Therefore, the individual options above would most likely apply.
How to Apply for an IPA
There are a few ways to apply for a payment plan with NYS’s DTF.
- You can hire a licensed tax professional (attorney, CPA, EA) with NYS tax resolution experience. You can request a . There is no obligation.
- If you have your bill, you can call the NYS Department at 518-457-5434. You will need to enter your taxpayer identification number and the four-digit pin on your bill.
- You can apply online once you set up an account. Once logged in, select “Payments”, then “bills and notices” and then “Request an Installment Payment Agreement.” Generally, this method is if you owe $20,000 or less.
As part of the IPA application process, taxpayers can request a term and/or specific monthly payment amount. During the time DTF is reviewing an IPA request, DTF may ask taxpayers to make good faith payments. Usually, these payments match closely the monthly payment amount the taxpayer asked for with the IPA.
DTF will look at the taxpayer’s compliance history and financial state when deciding to grant the IPA request. If DTF grants an IPA, the taxpayer (you) must stay compliant with all tax filings and pay all new tax balances in full. Any failure to stay in compliance will automatically default the IPA. If you default, the state may let you set up a new payment plan, but that's not guaranteed. If you default on two payment plans in a year, the state can take away your driver's license.
If a taxpayer cannot make the minimum monthly payments with an Installment Payment Agreement, they may want to consider other options, including an Offer in Compromise.
When Will NYS DTF Terminate an IPA?
DTF may terminate an IPA at any time if it believes the taxes owed pursuant to the IPA are in jeopardy of being collected. Generally, if DTF wants to cancel or modify an IPA, it must provide the taxpayer 30 days notice. It can terminate or modify the IPA if:
- The taxpayer provided inaccurate or incomplete information before entering into the IPA
- The taxpayer’s financial state has changed drastically
- You fail to make a payment or pay any other tax balance when due
- You fail to provide the updated financial info requested by the DTF
If you are looking to connect with a tax professional with experience resolving NY tax problems, visit the aforementioned link or start your search below. Not all professionals have experience with the New York Department of Taxation so be aware of that when selecting a company or professional to help. Using our site, you can have confidence that the professionals listed with New York Experience are top-rated professionals that can ensure you get the best outcome for your situation.
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.