If you are a business owner in New York, you know that taxes are a necessary part of doing business. However, what happens when you make a mistake or fall behind on your tax payments? The New York State Department of Taxation and Finance has strict penalties in place for those who do not comply with their tax laws. In this article, we will discuss how to handle NY State tax penalties from income, payroll, or sales taxes.
Understanding NY State Tax Penalties
Before we dive into how to handle NY State tax penalties, it is important to understand what they are and how they are calculated. The New York State Department of Taxation and Finance has a variety of penalties in place for different types of taxes, including income, payroll, and sales taxes.
Income Tax Penalties
If you own a business in New York, you must pay taxes on any money you make from your business. If you don’t file your tax return or pay your taxes on time, you might have to pay extra money as a penalty. The penalty for filing late is 5% of the unpaid tax for every month it’s late, up to 25%. The penalty for paying late is 0.5% of the unpaid tax for every month it’s late, up to 25%.
Payroll Tax Penalties
Payroll taxes are money taken out of workers’ pay by bosses and sent to the government. Failure to submit your payroll taxes, or submitting them past the deadline, may result in a fine. The fine for filing late is 5% of what you owe for each month late, up to 25%. The fine for paying late is 0.5% of what you owe for each month late, up to 25%.
Sales Tax Penalties
Sales taxes are collected by businesses from customers and given to the government. If you do not pay your sales taxes on time, you may have to pay fines. The late filing penalty is 5% of the unpaid tax for each month it is late, up to 25%. The late payment penalty is 0.5% of the unpaid tax for each month it is late, up to 25%.
How to Handle NY State Tax Penalties
Now that you understand the different types of NY State tax penalties, let’s discuss how to handle them.
File and Pay on Time
The best way to avoid NY State tax penalties is to file and pay your taxes on time. This means making sure you have all the necessary forms and information before the due date and submitting them by the deadline. If you are unable to pay the full amount of your taxes, it is still important to file your return on time to avoid the late filing penalty.
Request an Extension
If you are unable to file your tax return by the due date, you can request an extension. This will give you an additional six months to file your return, but it does not extend the time to pay your taxes. You will still be subject to the late payment penalty if you do not pay your taxes by the original due date.
Pay as Much as You Can
If you are unable to pay the full amount of your taxes, it is still important to pay as much as you can by the due date. This will reduce the amount of the late payment penalty you will owe. You can also consider setting up a payment plan with the New York State Department of Taxation and Finance to pay off your taxes over time.
Request Penalty Abatement
If you couldn’t file or pay your taxes on time for a good reason, you can ask for the penalties to be waived. Good reasons include sickness or death in the family, a natural disaster, or a mistake by your tax person.
Appeal the Penalty
If you think the penalty from the NY State Tax Department is wrong, you can appeal it. Show proof and explain why you disagree with the penalty. The New York Tax Department will evaluate your appeal and make a decision.
How to Avoid NY State Tax Penalties in the Future
The best way to handle NY State tax penalties is to avoid them in the first place. Here are some tips to help you avoid NY State tax penalties in the future.
Keep Accurate Records
One of the main reasons businesses fall behind on their taxes is because they do not keep accurate records. Make sure you keep track of all your income and expenses and have all the necessary documentation to support your tax return.
Stay Up to Date on Tax Laws
Tax laws are constantly changing, so it is important to stay up to date on any changes that may affect your business. This will help you avoid making mistakes on your tax return that could result in penalties.
Hire a Tax Professional
If you are not confident in your ability to file your taxes correctly, it may be worth hiring a tax professional to help you. They can ensure that your taxes are filed accurately and on time, reducing the risk of penalties.
News
According to the Office of the State Comptroller, sales tax payments in January showed a slowdown compared to the previous year across many local municipalities in New York State. While statewide receipts increased slightly by 0.3%, most localities experienced declines in collections, with the largest drop seen in the city of Olean at 17.8%.
Despite a 3.1% increase in Salamanca, overall growth has significantly slowed, prompting caution in sales tax revenue projections for 2024. Western New York region saw a modest increase of 0.2%, with Erie County leading the region’s receipts. New York City, however, saw a notable 3.5% increase in collections, contrasting with a 2.8% decrease in the rest of the state
Conclusion
Dealing with NY State tax penalties can be hard and expensive for business owners. But if you know the types of penalties and how to deal with them, you can reduce their impact. Make sure to file and pay your taxes on time, ask for more time if you need it, and ask for penalty reduction if you have a good reason for not filing or paying on time.
By doing these things, you can avoid NY State tax penalties in the future and stay on good terms with the New York State Department of Taxation and Finance. For any assistance that you may require, feel free to contact us.
