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your full tax liability or negotiate an installment payment agreement, or if an offer in compromise is under review, withdrawn, or rejected, New York State may use any or all of the following activities to collect your tax liability.
A tax warrant may be filed against you. A warrant is the equivalent of a legal judgment against you and 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.
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.
A levy is a legal seizure of your property. The department will provide you with a notice of the types of property that are exempt from levy. 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. If you are a business taxpayer, a levy can be made on the cash in your register. Property will not be levied on if the department estimates that the expenses to levy and sell the property are greater than the expected sale proceeds.
An income execution is a type of levy that may be issued against your wages. Under an income execution procedure, subject to certain income thresholds, you will be asked to voluntarily submit a fixed amount of your wages, up to 10% of your gross earnings, to the department. If you do not voluntarily pay this amount within 20 days of receiving the department’s notice and continue to pay this amount until the debt is satisfied, your employer will then be ordered to take up to 10% of your gross wages, subject to certain income thresholds, directly out of your paycheck and pay it to the department on your behalf. The income execution remains in effect until the outstanding tax liability is satisfied.
Seizures and sales
Your real or personal property that is not exempt by law may be seized and sold at a tax auction. The department 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 department 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.
You have the right to request that any seized property be sold within 60 days of the request or within some longer specified period. Your request will be honored unless it is in the state’s best interest to retain the property for a longer period, in which case you will be notified.
Your property will be sold for at least the fair market value of such property sold in an auction sale in accordance with Civil Practice Laws and Rules, taking into account the condition of the property, the type of sale, and anticipated expenses. If the highest bid for the property is less than such fair market value, the offering may be canceled and rescheduled at another time.
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.
Any payment the state may owe you for goods or services you sold or provided to any state agency or instrumentality may be withheld and instead applied against any tax liability you owe to the state. Thus, rather than receiving payment from the state for the goods or services, your payment may be automatically diverted to the Tax Department and applied against your existing liability. If any payment due you is
the subject of this kind of offset, we will send you prior written notification about the money that will be sent to the Tax Department to cover your tax liability.
Also, under certain circumstances, any New York State tax refund due you may be offset to pay unpaid tax liabilities, or it may be sent to another state agency to which you owe money. That state agency will first notify you and then apply your refund to your debt.
If you have unpaid New York State taxes you need a CPA or tax attorney experienced in collection matters to help you resolve your NYS tax problems.