Many people fall behind in paying taxes to both the U.S. Internal Revenue Service (the “IRS”) compromised of income taxes for an individual tax payer, corporate income taxes, payroll taxes, and other federal taxes and the New York State Department Taxation and Finance (“NYS”) compromised of sales taxes, income taxes, payroll taxes, and other state taxes. This is a problem for both the tax payer and the federal and state governments, as such, there are programs in place to negotiate the debt owed to both respective governmental agencies. Our office can negotiate your tax debt and come to a resolution that suits you moving forward.
The following statistics are provided by the IRS; the Internal Revenue Service had approximately 76,000 employees who processed roughly 133,949,000 tax returns in 2019. This statistic has not changed much since last year and highlights the fact that the IRS is inundated with work. Understanding these statistics, it is quite clear why it is so very hard to deal and negotiate with the IRS.
Currently, the IRS are now even more backed up then they were prior to COVID-19. The IRS extended the tax deadline from April 15, 2020 to July 15, 2020. Despite the tax deadline extension, the IRS is firmly behind where they would have been this year because of Coronavirus. Thus, negotiating tax deb can be more difficult at the present time, but our office has the necessary systems in place to negotiate on your behalf with ease and confidence.
An IRS Levy is broad enforcement tool and allows the following methods of enforcement; the seizure of your property to satisfy your tax debt, garnishment of your wages, take, or freeze money in your bank or other financial accounts. Moreover, the IRS is permitted to seize and sell vehicles, real estate, and other personal property to satisfy your IRS liability. If you have received a Final Notice of Intent to Levy and Notice of your right to a Hearing, it is important to call our office to handle this matter for you. This notice is the step right before the IRS pursues a levy against you and compliance is of the utmost importance when dealing with the IRS.
Please see the following IRS programs that our office will use to negotiate your tax liability:
Extension to Pay: Are agreement plans that provide taxpayers an additional 120 days to pay the IRS debt owed in full. This allows the taxpayer to avoid any late payment penalty.
72 Month Installment Agreements: Are payment plans that provides the taxpayer 72 months or 6 years to payback the IRS.These plans are available to taxpayers with up to $50,000 in tax debt owed. The IRS may require financial documents but typically do not require a complete financial statement.
84 Month Installment Agreements: Are payment plans that provide taxpayers 84 months or 7 years to repay their IRS debt. These plans are available to taxpayers with over $50,000 but under $100,000 owed to the IRS. The IRS may require financial documents but typically do not require a complete financial statement. Finally, the IRS will likely also require this payment plan have automatic payments set up prior to finalizing this plan.
Partial Pay Installment Agreements: Are payment plans that provide an alternative to taxpayers who cannot afford either 72 or 84-Month Installment Agreements. The Partial Payment Installment Agreement is a plan which is based on your financial statement, which considers your income and expenses. Despite all penalties and interest accrued being applied to these plans, the taxpayer will likely pay significantly less after making payments for 10 years. A reduction to the total balance owed is possible because the taxes owed will be eventually be classified as non-collectable due to the statute of limitations. Moreover, tax liens will be filled, and the IRS may ask for updated financial statements every 24 months, which may lead to increased payments if the taxpayer has an increased income. Overall, this is an affordable option for those taxpayers who qualify.
Currently Non-Collectible (CNC): Are an option that requires financial statements to be provided. This option allows for eligible taxpayers to avoid a monthly repayment plan while allowing the taxpayer to be in good standing with the IRS. The IRS will likely require financial statements every year to continue to have the taxpayer’s debt in a Current Non-Collectible status.
Offers in Compromise (OIC): Are payment plans that allow taxpayers to settle their entire IRS debt for less than the total owed. The IRS will not accept an Offer in Compromise if the taxpayer is believed to have an ability to pay the debt either as a lump sum or in a repayment plan offered.
Discharging IRS Debt through Bankruptcy: The only IRS debt that is dischargeable through a Chapter 7 Bankruptcy is income taxes. Taxes other than income taxes, such as payroll taxes, can never be eliminated through Bankruptcy. The income tax debt that a client is seeking to be discharge must be at least three years, the tax return showing the debt must have been filed and the debt must have been accessed IRS over 240 days prior to filing for Bankruptcy.
New York State taxes are among some of the highest taxes in the United States. Many people have difficulties with their taxes especially if not deducted or accounted for properly through the previous year of taxes. See the below graph compliments of taxfoundation.org, to further compare and express that New York State Taxes are the among some of the highest in the United States of America. As one can see the average individual state income taxes for NY is 8.82%. This is a huge burden financially for New York Residents because in comparison some other states do not even collect state income taxes. However, if you read our overview you will obtain a better understanding of your tax liabilities and how our office may help you to resolve your specific tax issues.
New York Tax Warrants:
Is equal to a civil judgement against the taxpayer in New York state. This is the first step in the states action toward obtaining a method of enforcement. This warrant is required before the state may enforce the tax liabilities against. This warrant allows the state to then seek to seize and sell assets of either real or personal property and garnish your wage. The state would then apply the proceeds of the funds collected through their enforcement and apply it toward your total liabilities owed. Click the following hyperlink provided to ensure you do not tax warrant, search your name in the New York State Tax Warrant Notice System.
Once a Tax Warrant is issued New York State may serve a levy one or more banks that you have accounts with. This includes joint accounts where you may share account with someone not liable for the debt owed. A levy freezes your account, and funds are not accessible until a resolution is met with the state with regards to your tax liability.
Income Execution Orders:
Unlike the other enforcement methods by New York State, the state may issue an income execution before or after they file a tax warrant. Once a income execution order is received, to comply you must make the first payment within twenty (20) days after receiving notice. An income execution order requires either ten percent (10%) of your gross income or twenty-five percent (25%) of your disposable earnings, each time you are paid. To further calculate your income execution payment please click on the following hyperlink Income Execution Payment Calculator.
After exhausting all other collection efforts, the state will review your file for possible seizure. If it is determined to be in the best of New York State to seize your property, they may seize your vehicles, cash register contents, business etc. This is permissible under New York Civil Practice Laws and Rules Article 52 (CPLR Article 52), see the prior hyperlink for more information under this statue.
Driver’s License Suspension:
If you have at least ten thousand ($10,000) in tax debt owed to NYS, the NYS Tax Department is allowed by law to seek suspension of your New York State driver’s license New York State will send you a Notice of Proposed Driver’s License Suspension, this provides you sixty (60) days to resolve your tax debt with NYS. If not resolved in sixty days, New York State will then contact the Department of Motor Vehicles (DMV) to recommend suspension of your NYS License.
There are exemptions to NYS Driver’s License Suspension for delinquent tax debt owed to New York State. The following circumstances exempt you from having your driver’s license suspended by enforcement of your tax debt owed to NYS; you hold a commercial driver’s license (CDL), your wages are currently being garnished, you pay child or spousal support, you receive public assistance benefits, you receive Supplemental Security Income (SSI).
New York State offset programs
New York State may also apply any refund you receive from NYS to any of the following entities if you owe money to any of the following entities: NYS Tax Department, another NYS agency, the Internal Revenue Service (IRS) or tax debt owed to another state.
Money Exempt from Enforcement:
The following money or property is exempt from New York State Tax enforcement: Social Security and Supplemental Security Income, public assistance such as welfare, spousal support, alimony or child support, unemployment, disability, workers compensation benefits and pensions.
Installment Payment Agreement (IPA):
An Installment Payment Agreement under the NYS Taxation Department provides taxpayers with a balance of $20,000 or less the option to pay off their balance over time. New York State allows installment agreements are available only up to a maximum of thirty-six (36) months. This is different from the IRS installment agreements because the maximum time to pay debt in an installment agreement with NYS is about half that of the time provided by the IRS.
Offer in Compromise (OIC):
A New York State Offer in Compromise allows qualified financially harmed taxpayers to resolve large tax liabilities. The state would deem insolvent taxpayers qualified and would further evaluate individuals if they have not filed bankruptcy or dissolved their business. The state would analyze if payment of the debt in full would create an undue economic hardship in solvent taxpayers. Undue economic hardship occurs when the taxpayer is unable to pay reasonable living expenses. Our office will use any all-mitigating circumstances or facts to argue that you the taxpayer would face an undue economic hardship if you had to remit your full tax liability. We will use the following information to help explain your financial hardship to New York State; your age, employment status, employment history, any long-term illness, any medical condition, any disability. Our office may also if applicable use the following special circumstances to argue undue economic hardship, any special educational expenses, any medical catastrophe, or natural disaster. Moreover, other factors that can be argued include your inability to borrow more or liquidate assets to resolve you tax liability. COVID-19 is a special circumstance that our office will be arguing in the future because of its unforeseeable, overreaching and devastating financial harm caused to taxpayers.
By NYS law you have the right to object or protest any NYS Tax Department bill of notice received. There are multiple ways you can have our office do this for you.
Informal Protests are the cheapest and fastest option when protesting, and our office would with your consent. We would contact the NYS Tax Department on your behalf and contest the bill or notice you so choose.
Our office can either request a conciliation conference or file a petition for a Tax Appeal hearing. In both options our office would represent you and vehemently fight for your well-being and interests.
The main difference between NY and IRS tax debt is the manner of their enforcement. The Internal Revenue Service will likely collect any tax refund you receive if you have an open and unpaid federal tax liability. New York State could do the same, but it would not likely have the same effect, because state tax refunds are typically significantly lower than federal tax refunds. New York state however has more immediate ways to affect your life and harsher methods of enforcement. New York driver’s licenses are a privilege not a right and are easily suspended for non-compliance. The IRS may suspend your passport but this not a document that is sued every day for most people. New York may issue tax warrants, levies, income execution orders, and seizures, please read our section on NY Tax Enforcement for information regarding these enforcement methods. These methods are like a federal IRS Notice of Levy, please see our section for more information regarding this IRS enforcement method. Lastly, New York is also tougher to obtain an installment agreement, and they only provide you thirty-six months to repay the debt owed unlike the IRS with their seventy-two (72) and eighty-four (84) month installment agreements.
If you have never filed your taxes before, your best option is to have our office enroll and apply on your behalf for the NYS Tax Department’s Voluntary Disclosure and Compliance Program. This will afford you the opportunity to avoid monetary penalties and possible criminal charges. We will explain to the state, what taxes you owe, and you will be required to pay them. If you cannot afford paying them all we can arrange repayment for these tax arrears over time. Finally, when entering this program, you will also be required to enter to an agreement to pay all your future taxes.
Do you believe that your taxes are too high for your property? Are your taxes too high based on an inaccurate valuation of your property? Our office can help you get your property valuation reassessed with hope of lowering your property taxes based on a property valuation adjustment. Our office will have to appear with you before the BAR which consists of members appointed by the city council, town board or village board. We will argue and submit evidence to prove that you are entitled to a reduction in your property assessment.
The only NYS debt that are non-dischargeable through a Chapter 7 Bankruptcy are sales taxes and payroll taxes and other fiduciary taxes where the business owner is holding tax monies on behalf of others. Fiduciary taxes such as sales and payroll taxes, can never be eliminated through Bankruptcy. The income tax debt that a client is seeking to be discharge must be at least three years old, the tax return showing the debt must have been filed and without allegations of fraud and the debt must have been accessed IRS over 240 days prior to filing for Bankruptcy.
Our office has strong negotiation capabilities in seeking a broad array of possible negotiated outcomes. However what gives us more leverage than the average tax negotiation company, accountant or attorney, even if they are a savvy negotiator is the leverage that we have by impliedly or sometime vocally showing creditors that the individual tax payor and/or business owner have alternatives in terms of litigation and bankruptcy options and some “good cards to play” that we can leverage to get the tax payor a better negotiated deal.
We start out by meeting with you and understanding your facts, goals and challenges. The initial consultation will lay out alternatives and options in what may be a complex and difficult situation. If you decide to use our services we will then do an intake for get more detail and documents form you in order to pursue your negotiated tax debt matter. If you do retain us, we will enter into a retainer agreement that will clearly lay out the terms of our retention.
Please contact us at 631-271-3737 for a free legal consultation regarding resolving tax debt owed to IRS and/or NYS.
Our Consultations are Free, but Our Legal Advice May be Invaluable.
(C) NEGOTIATION – how we get started – retained, figure out which years and types of taxes and status of collection and amount owed: we need to get POA to have authority, filing/catching up on tax filings, transcripts, need up to date; records same. Introduce ourselves. How we get a deal and why does client need us.
(D) DEFENSE – kinds of defenses and litigation people do with IRS ; Q of personal liability; ie, Statute of Limitations; Innocent Spouse Defense; Lack of Personal Liability; Not a Responsible Officer; Try to reduce penalties and interest.
(E) BANKRUPTCY – Bankruptcy Options: SDNY decisions/mediation ; new cases; softening of standard; Chapter 7, 13 and 11.
2. NYS -SAME ; NEEDS INFO.:
3. For BOTH – what do we do to help our clients? Why are we needed? What r our advantages in negotiating?
4. MORE INfO – – For each tax section paragraph need: more specifics as to how debt formed; how to get this deal; what docs/info are required; strategy and their advantages/disadvantages.
5. Real Life Cases – pls give fact patterns.
6. Strategy to outrun SOL.
TAXES (Additional Outline) Camron – pls finish part about NYS. For IRS let’s review and see if we can elaborate. Outline for each can include (BUT separate IRS and NYS and make references to their own instructions/bulletins/ statements): 1. WHAT TAXES -What kind of taxes are charged by each and what can happen that people owe money- error, mistake, fraud, non-filing 2. WHEN /HOW PURSUED – When do these agencies pursue the debts owed and how do they notice and take steps to pursue. 3. PENALTIES / INTEREST / COLLECTION METHODS – calculations; added amounts ; wages, bank accounts, retirement accounts, property liens/sales, business closing 4. LITIGATION – when they are in court; how/when to defend. Defenses. 5. BANKRUPTCY OPTIONS – 5 years to pay priority debt with interest in a 13 or 11. In a 7 can discharge some non priority debts *6. NEGOTIATION IN GENERAL- This is focus of section is this; what negotiations are offered with each a. Getting Started – file taxes; transcripts; proof; notices of appearances and other authority to negotiate. b. What we can do for you c. Strategies d. Statute of Limitations e. Defense/Mitigation – (i) Innocent Spouse; (I)Not a Responsible Officer; (iii) Less Income than Estimate; (iv) Error * 7. NEGOTIATION OPTIONS – a. Offer in Compromise b. Reinstatement – c. Installment Plan d. Partial Installment Plan e. Uncollectible Status *8. OUTCOMES – negation outcomes can temporary or permanent; payment plan or settlement; SOL; BK discharged; uncollectible status can be re-examined.