How New York collects
Once your appeal rights on a bill have expired, the Department of Taxation and Finance's Civil Enforcement Division takes over. Its main tools are:
- Tax warrants. A warrant is filed electronically with the New York Department of State and the county clerk. It works like a civil judgment and creates a lien on your real and personal property, without the state needing to sue you. It's a public record, and it can affect your credit and your ability to buy, sell, or refinance property.
- Income executions. A wage garnishment that takes up to 10% of your gross wages. You're generally notified first and asked to start paying directly. If you don't, the execution goes to your employer.
- Levies. The state can levy bank accounts and other property to satisfy a warranted debt.
- Driver's license suspension. If you owe $10,000 or more in past-due tax assessed against you personally, the department can ask the DMV to suspend your license.
- Refund offsets. State and federal refunds can be applied to the debt.
Driver's license suspension: the 60-day window
If you receive a Notice of Proposed Driver's License Suspension, you have 60 days to resolve the debt. If you don't, the department refers you to the DMV, which sends an Order of Suspension 15 days before the license is suspended.
You can avoid suspension by:
- Paying the debt in full
- Setting up an installment payment agreement. As long as you keep to it, the department won't request suspension.
- Showing you qualify for an exemption. These include holding a commercial driver's license, having wages already being garnished, receiving court-ordered child support, receiving public assistance, or receiving SSI.
- Claiming undue economic hardship on Forms DTF-5.1 and DTF-5
Don't let the 60 days pass. Once the DMV issues an order, the timeline is short. Setting up a payment agreement before the deadline is usually the simplest way to keep your license.
Installment payment agreements (IPAs)
New York's payment plans are called installment payment agreements:
- You can request an IPA online if your balance is $20,000 or less and you can pay it in 36 or fewer monthly payments. You need an existing bill to request one.
- If you owe more, or need more time, you must request the IPA by phone, and the department will typically review your finances, often using Form DTF-5.
- An IPA stops further collection, but a tax warrant already filed stays on record as a lien until the balance is paid in full.
- Interest and penalties continue while you pay, and a new unpaid tax can put the agreement in default.
For balances over $20,000, preparation matters. We prepare the financial information, propose a payment the department can approve, and keep the agreement aligned with any IRS plan.
Owe New York more than $20,000, or facing a license suspension? Let's get an agreement in place.
Get a Free ReviewNew York offer in compromise
New York's offer in compromise program is narrower than the IRS's. It's generally available to:
- Insolvent individuals and businesses, or those discharged in bankruptcy
- Individuals for whom full payment would cause undue economic hardship, meaning they couldn't pay reasonable basic living expenses
The department uses IRS Collection Financial Standards for allowable expenses and considers age, health, dependents, and the ability to borrow against or sell assets. It doesn't allow expenses like private school tuition or voluntary retirement contributions. It may also require full payment of unpaid trust taxes, such as sales or withholding tax, before accepting an offer. Applications use Form DTF-4.1 (for fixed and final liabilities) or DTF-4, with a DTF-5 financial statement and supporting documents. Individuals who owe $15,000 or less in personal income tax can apply online.
Getting a warrant satisfied
A warrant is satisfied when the full warranted balance is paid. The department then files a Satisfaction of Judgment with the Department of State and the county clerk. If you're selling or refinancing, you can request a payoff letter, and title companies commonly accept a Notice of Pending Warrant Satisfaction as proof the lien will be removed. If a sale won't cover the full balance, a release or subordination of the lien may be possible.
New York businesses
Sales tax and withholding tax are trust taxes in New York, and owners and officers can be held personally responsible when they go unpaid. For businesses with federal payroll balances, see payroll tax debt. Most New York residents who owe the state also owe the IRS, and federal adjustments usually lead to state bills, so we look at both from the start.