For some, tax liability takes a backseat to the onrush of life. If you are a taxpayer in New York, it is important to be aware of enforcement tools in the hands of the tax authorities.
On the federal level, the Internal Revenue Service (IRS) has a straightforward collection process for unpaid taxes. The agency sends you a bill that kicks off the effort to collect what you owe. The letter includes information on the amount due, penalties accruing, and the interest you will pay on all of it. The IRS is persistent and the effort will continue until the tax liability is paid, an installment plan is completed, an Offer in Compromise is in place, a Federal Tax Lien is entered, or the debt is discharged in some other way.
The New York State Department of Taxation and Finance is equally serious on the state level. On the face of it, the department names and shames the top 250 taxpayers and businesses who are the subject of state tax warrants.
Upon notice to you, and if you fail to respond with money owed on either a personal or corporate level, the state takes action to protect its tax interests through a tax warrant. A tax warrant in New York is the equivalent of a judgment in a civil action for outstanding tax debt. By itself, a tax warrant confers considerable authority to the state to collect on tax due, including seizure of personal and real property and garnishment of any income streams you may have. A warrant also impacts your ability to purchase or sell property and can affect your credit.
Beyond these somewhat standard collection morays, New York can also suspend your license to drive if you owe more than $10,000 in back taxes. At the federal level, a taxpayer with “seriously delinquent tax debt” is also in for an unpleasant travel surprise. Seriously delinquent tax debt is defined as at least $55,000 (including penalties, interest, etc.) and for which the U.S. government and the IRS can revoke your passport (but not your return to the U.S. if you are out of the country).
For high-asset individuals who may have offshore tax holdings, a foreign bank account, or wealth, significant tax liability is not uncommon. At all times, staying off the radar of the IRS or New York State is a better idea than engaging in the collection processes of any agency. If you are carrying significant back taxes, speak as soon as possible to an experienced tax lawyer to learn options and pathways to mitigate or resolve your tax liability.
Speak with a knowledgeable tax attorney when you have a question about New York back taxes or a residency audit
The legal team at Robert J. Fedor, Esq. works with taxpayers to respond to tax and residency audits, tax litigation, allegations of tax fraud, or compliance issues. When you have tax questions, call us at 800-579-0997 or contact us. We serve clients across the U.S. and abroad from offices in Cleveland and Chicago.