It’s not speeding. It’s not driving while under the influence. It’s not talking on your cell phone.
In New York State, it just got a whole lot easier to lose your license – for not paying your tax debt. Beginning this year, drivers who owe more than $10,000 in state taxes face losing their license until the debt is paid.
The crackdown is reflects a revenue raising measure in the state budget approved by lawmakers in March of this year.
Gov. Andrew M. Cuomo said, about the initiative:
Our message is simple: tax scofflaws who do not abide by the same rules as everyone else are not entitled to the same privileges as everyone else. These worst offenders are putting an unfair burden on the overwhelming majority of New Yorkers who are hardworking, law-abiding taxpayers. By enacting these additional consequences, we’re providing additional incentives for the state to receive the money it is owed and we’re keeping scofflaws off the very roads they refuse to pay their fair share to maintain.
Why such drastic measures? Money, of course. The Empire State boasts a 96% voluntary compliance rate for businesses and individuals but the remaining 4% remains a sore spot. The Tax Department estimates that it will increase collections by $26 million this fiscal year alone – about $6 million each year thereafter – by pushing this program.
More than half of the anticipated collections appears to be owed by one individual taxpayer: Michael D. Zurawin of Putnam County. According to a list of top offenders in the state, he owes a whopping $16.7 million in delinquent personal income taxes alone for offenses dating back to 2004.
The first round of suspension notices will be mailed out to 16,000 delinquent taxpayers. Those folks have 60 days to arrange for payment. After the first round of notices, there will be a second round – the “this is your last chance” threat – and then the taxpayer’s license will be suspended.
In New York, driving with a suspended license can land you in hot water. Depending on the circumstances, it can be punishable by a mandatory fine of $200–$500 plus a surcharge and jail or probation of up to 30 days. If you do it more than once, the fines and jail time increase pretty significantly – do it repeatedly and you can also lose your car. You can check out the specific punishments by checking out the NY DMV’s handy pamphlet (downloads from my tax library as a pdf).
As a follow-up I have confirmed that there is a “restricted” license that you can apply for in the event that your license is suspended. The restricted license would allow you to commute to and from work only. It is not clear what you would have to do to qualify or how such restrictions would be enforced (do you have to offer your commuting route to the DMV?). It didn’t make the list of common restrictions on their site so I’ve asked for more details. I’ll let you know what I find out.
From the Taxgirl
An Enrolled Agent and U.S. Tax Court Practitioner, I represent taxpayers in front of the IRS and the U.S. Tax Court on self-prepared tax returns and tax returns prepared by other tax preparers. I handle CDP hearings, collection cases and contested issues in IRS audits. With more than three decades of experience working with small individual returns to large, multi-company and multinational companies returns I have a broad breadth of experience and am in the position to help you.
As an Approved Continuing Education Provider, I am available to speak to organizations throughout the United States on Tax and Tax Research issues.
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