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New York State Tax Debt Resolution Options

ny state tax debt resolution optionsNew York State is considered one of the more professional State Tax Agencies and one that has traditionally been reliable and consistent in their tax relief programs. Just like the IRS, NY State offers various options for those having trouble in paying back taxes or tax debt.  The options range from installment agreements (aka payment plans), hardship status, to an Offer in Compromise, which is a one and done tax settlement option.

New York Tax Payment Plan Options

36 Month Tax Payment Plan

For individuals, the New York State offers a 36-month payment plan without the need to disclose financial information in most cases. This is similar to the IRS’s streamlined installment agreement. This means that the balance has to be paid off in 36 months or in the number of months left on the statute of limitations. Remember, New York State has a 20 year time frame to collect on taxes owed (from the date of assessment).

36-72 Month Payment Plan

If a taxpayer needs more than a 36 month payment plan, but less than 72 months, this payment plan will require the taxpayer’s financial information to be verified.  This may include an analysis of the taxpayer’s income, expenses, assets and liabilities. Although NY State generally doesn’t require documentation in all cases, they can and have required supporting documentation.

72+ Month Payment Plan

In the rare case that a taxpayer needs more than 72 months to pay off an outstanding tax debt with NY State, certain financial forms and documentation will be required to support the financial need for a payment plan longer than 6 years.

Hardship Tax Option

If a taxpayer doesn’t qualify for a payment plan because of financial reasons, NY State offers taxpayers a hardship status option for a period of 1 year.  This generally requires certain forms be completed and financial disclosure. This means that every year you will need to fill out forms and complete documentation to stay in the hardship status. Unfortunately, penalties and interest continue to accumulate. However, if you qualify for this status until the statute of collections is reached for a particular year, then that year’s corresponding debt would fall off.

This status also has drawbacks because it often leads to tax liens being filed (if they haven’t already been filed). Moreover, for most individuals who are not disabled, retired, or soon to be retired, this option is generally not ideal, especially for those dealing with short-term unemployment.

Offer in Compromise Tax Option

In similarity to the IRS, NY State offers an Offer in Compromise program to those who are in a financially stressful situation. This generally means that a taxpayer offers NY state an amount of money, called an “Offer,” that is generally equivalent to the equity in assets (if any) and disposable income of the taxpayer (if any).  As a general rule, NY state often requires the taxpayer be insolvent (liabilities exceed assets).

Business Taxes/Trust Fund Taxes

Business and Trust Fund taxes are treated very seriously by New York State. These taxes consist of payroll withholdings, sales and use, and other taxes that are held by the business to be remitted to the State but for one reason or another were not. As such, New York State has tight restrictions on how to address these tax balances and have to be evaluated on a case by case basis. Generally, the expectation to resolve these type of tax issues is with a down payment and a monthly payment plan. The specific amounts will have to be negotiated case by case with New York State.

New York State, as one can see, has a framework of tax resolutions available to individuals.  As one of our offices is located in New York, our team is highly experienced working with the New York State Department of Tax and Finance for both business and individual tax matters.