New York State Installment Agreements
When you owe money to the New York State Department of Taxation and Finance (DTF), ignoring the problem doesn’t make it go away. If you owe money and can’t pay it all upfront, an installment agreement could be the solution you’ve been looking for. An installment agreement allows you to pay your New York state tax debt off over time without draining your finances or forcing you to turn to high-interest loans. With an installment agreement, you can avoid enforcement actions, pay over time, and stay compliant with DTF requirements.
But before you agree to any sort of payment plan, it’s important to know exactly what you’re agreeing to, what happens if you fall out of compliance, and what you’ll pay over time. Our firm can help. Call the Law Offices of Stephen B. Kass, P.C. at 212-843-0050 to discuss your payment options now.
Key Takeaways
- The Department of Taxation and Finance offers installment agreements to individual and business taxpayers as a way to pay NYS tax debts over time.
- You may apply online if you owe less than $20,000 and can pay in 36 months or less. This shows on their web site but when I tried to do for clients under $20K in debt they asked me to call them and do this over the phone.
- You must apply by phone if you owe more than $20,000 or need more than 36 months to pay.
- Making every payment on time is crucial to avoid defaulting on your installment agreement.
- If you default or don’t set up payments, the state may come after you and collect the tax through warrants, garnishments, and levies.
Why Choose the Law Offices of Stephen B. Kass, P.C.?
When you decide to tackle your New York tax debt, choosing the right attorney matters. You need a lawyer with extensive experience negotiating with the Department of Taxation and Finance, as well as an in-depth knowledge of other relief options.
We have over 25 years of experience in tax law, giving us the knowledge and skills needed to handle even the most complex tax issues. We can help with:
- Individual installment agreements
- Corporate tax payment plans
- Sales tax installment agreements
- Negotiating repayment terms
- Stopping collection efforts
- Handling financial disclosures and documentation requirements
As both a tax attorney and a CPA, Stephen B. Kass has an unmatched knowledge of state and federal tax law. Let’s figure out what your options are and which one is best for your needs.
Who Qualifies for an NYS Installment Agreement?
Installment agreements are available to eligible taxpayers who can’t pay their tax bill in full, including individual and corporate taxpayers. Before you can set up an installment agreement, you must meet the following qualifications:
- Have all returns filed.
- Have already received a bill for the amount due.
- Be willing to provide information on your financial condition if requested.
- NYS requires a showing of the ability to make the monthly payment and will go over the budget in detail to confirm the same.
- Commit to filing all future returns by the due date and paying all new tax liabilities by their due date.
If you meet these basic qualifications, you may be able to apply right away. Those who owe less than $20,000 can often request an installment agreement online and get a decision immediately, while those who owe more may have to apply by phone.
How to Apply for an NYS Installment Agreement
If you owe less than $20,000, you can apply online via your New York Department of Taxation and Finance Online Services account. You’ll set your tax debt up to be paid in full in 36 or fewer monthly payments.
Those who owe more than $20,000 or need more than 36 months to pay must apply via phone call. You can call the Department at 518-457-5434, or consider working with a tax professional for the best results. The DTF will make its decision regarding your payment plan by considering your tax payment history, your return filing history, your overall financial condition, and previous adherence to DTF requirements.
In some cases, the Department of Taxation and Finance will require a filed tax warrant before they’ll allow you to set up an installment agreement. This is usually when the amount is larger than $20K and the payment period over 3 years.
What Happens If You Don’t Pay
After you’re approved for an installment agreement, you must make payments on time every month to stay compliant. Your first payment may need to be paid online or via mail.
The Department of Taxation and Finance generally prefers payments to be automatically withdrawn on either the 5th or 15th of each month. If you mail your payments, you’ll need to include your IPA (Installment Payment Agreement) ID number and ensure that your payment is postmarked by the due date.
If you miss a payment, the DTF doesn’t charge late fees. But if your payment is late, you miss a payment, or your bank payment gets returned, the DTF will likely send you a notice. To stay compliant with your installment agreement, you must make your missed payment and your next payment by the next payment’s due date.
Should you fail to make both payments by the next payment’s due date, you’ll be considered in default of your installment agreement. At that point, the entire amount is due immediately, and the Department of Taxation and Finance may resume collection efforts.
Collection Actions
Upon defaulting on your installment agreement, the DTF can collect via several different means. They’ll likely begin with a tax warrant, which is essentially a lien that asserts their right to your assets.
If they already have a tax warrant in place or if you don’t pay after they file a tax warrant, they may begin levying assets. The DTF can legally garnish your wages, freeze your bank account and seize funds from it, and/or seize other assets.
Businesses that default on an installment agreement may struggle to stay operational. Continued failure to pay may result in license suspension, vendor garnishments, or seizure of business assets.
Benefits of Installment Agreements
If you opt for an installment agreement, you’ll enjoy several benefits:
- Avoiding liens and garnishments: The DTF may require a tax warrant for some taxpayers, but in most cases, an installment agreement protects you from tax warrants, levies, and wage garnishment. As long as you stay current on your payments, file all new tax returns on time, and pay new tax liabilities when due, you can avoid more aggressive collection actions.
- Manageable payments: A large tax bill can be a significant financial stressor for individual and business taxpayers. A payment plan that allows you to pay over 36 months gives you more freedom in your monthly budget.
- Protecting your business: If you choose an installment agreement for your business tax debt, you can preserve ongoing business operations by staying compliant with a business installment agreement.
Alternatives to Installment Agreements
While installment agreements are the easiest and most convenient option for many taxpayers, they aren’t the only option available for New York State tax debt. Other options you may want to consider include:
- Offer in compromise: The Department of Taxation and Finance has an offer in compromise program that’s similar to the IRS’s OIC program. It’s only open to those who are insolvent, who are bankrupt, or for whom payment in full would lead to undue economic hardship. Approval is rare, but it may be an option worth considering.
- Penalty abatement: New York has a penalty waiver program that allows abatement if you can show reasonable cause for your late payment. While this doesn’t take care of your entire tax debt, it can significantly decrease what you owe by eliminating penalties.
- Temporary hardship status: The DTF doesn’t have a formal temporary hardship status. However, the Department may be willing to temporarily stop collection actions in certain situations. Consider working with an attorney if you want to explore this option.
If you owe back taxes to the New York Department of Taxation and Finance, you have options—but you should act quickly to protect yourself from aggressive collection actions. An installment agreement may give you a low monthly payment that fits into your budget, shields you from liens and levies, and lets you pay your tax debt off over time.
When you work with the Law Offices of Stephen B. Kass, we’ll take an in-depth look at your taxes and finances to figure out which payment options are best suited to your needs. From negotiating payment options to requesting a penalty waiver, we’re here to help. Call us at 212-843-0050 or contact us online to get the peace of mind that comes with tax compliance.
Sources:
https://www.tax.ny.gov/pay/ipa/
https://www.tax.ny.gov/pay/ipa/ipa-info.htm
https://www.tax.ny.gov/pay/ipa/req-ipa.htm
https://www.tax.ny.gov/pay/ipa/ipa-info.htm#termsandconditions
https://www.tax.ny.gov/pay/ipa/
https://www.tax.ny.gov/enforcement/collections/oic.htm
