Tax Debt in New York City

& Finding a Tax Debt Lawyer

When an individual, family, or business fails to pay their taxes on time, they accrue tax debt. As these taxes remain unpaid, the IRS adds penalties and interest payments that increase the amount owed. Tax debt can easily get out of control if not promptly addressed.

Filing one’s taxes on time is not a guaranteed way to avoid tax debt. If a taxpayer leaves any part of their taxes unpaid by the due date, the IRS will begin collection efforts right away. If you live in New York City, New York and are experiencing tax debt, you should understand a few key things about the situation.

New York Tax Debt Penalties and Interest

The average tax debt penalty is 0.5% of the overdue amount. This percentage may increase to up to 25%. The IRS compounds this penalty monthly.

In addition to penalties, the IRS can add interest to any unpaid amount. Any penalties that have been levied are included in the original amount, meaning that the taxpayer must pay interest on the penalties as well as what they owe for taxes. Therefore, it is in your best financial interest to resolve any tax debt quickly and efficiently.

IRS Tax Debt Collection in New York

When the IRS identifies tax debt, they send the taxpayer a determination of their tax liability. This is a statement of how much you owe and how you can submit your payment. Unfortunately, the IRS does not take any tax credits into account, so the amount that they declare that you owe may not be accurate. In order to take advantage of tax credit programs with tax debt, you need to contact a tax attorney.

If the New York IRS does not receive payment after initial notifications, it will move to seize assets and property. This usually begins with wage garnishments, financial account levies, tax liens, etc. If the amount is over $51,000 and the IRS has attempted to use a tax lien or levy to recover the money, the agency will limit your passport privileges. This means you will face an inability to renew your passport and will not be permitted to travel out of the country until the tax debt is resolved.

Remember, the IRS will only contact you initially via mail. Therefore, do not trust any phone calls or emails you receive about your tax debt.

How to Resolve Tax Debt

There are ways to resolve your tax debt and avoid additional fees and punishments in New York City, New York. The simplest way is to pay your tax debt in a lump sum. However, this is not financially possible in all situations.

A repayment plan may be appropriate in situations where paying a lump sum is not possible. You can negotiate the terms of your repayment plan with the IRS, which helps you to avoid further harassment or action. However, you may still be responsible for interest and penalty payments while you have an outstanding balance.

As a last resort, you may be able to resolve your tax debt by filing for bankruptcy. Though this route may help to resolve your tax debt issue with the IRS, it creates a host of other issues and penalties. Your credit score will suffer, and you can lose major assets like your home, car, and personal items. Consider bankruptcy if you have worked with a tax attorney and explored all other options.

Avoid New York Tax Debt Relief Companies

Tax debt relief companies claim to help individuals with tax debt but end up costing them more. These companies have high employee turnarounds and frequently go out of business, making them extremely difficult to work with. In addition, they will levy hidden charges and fees that can cost more than your tax debt. The aim of these organizations is to take money from taxpayers without providing a real service.
If you are considering one of these companies, opt to work with a tax lawyer instead.

Delia Law Can Help With Tax Debt in New York City, NY

Our team at Delia Law is here to help you with your New York tax debt issues. With many years of experience in tax law, we have a thorough understanding of how to navigate tax debt. We offer our clients reliable, trustworthy legal services for all tax issues, complete with the client-lawyer privilege to keep any confidential information away from the IRS.

Why You Should Always Consider Hiring a Tax Lawyer

Tax debt can cause serious problems for you and your family. However, when you work with a tax attorney, you have an advocate who understands the system and who can work to help you through this financial obstacle. Whether you need help communicating with the IRS or filling out applications and documents, a tax attorney provides key services that can minimize the damage that your tax debt creates.

Many people do not receive the tax help they need because they complete paperwork incorrectly, miss deadlines, or make mistakes. When you have a tax attorney, you avoid key errors that can create further issues with the IRS.

For more information, contact Delia Law at our New York City, New York office.

New York-Specific Tax Laws


New York residents are required to pay taxes on income that was earned as well as for federal taxes. In fact, some people who don’t even live in New York must pay state taxes. If you lived elsewhere but acquired the money through a source in New York, you must pay state taxes on that income.

There are four main types of taxes in New York:

  • State income tax. New York State has a graduated income state tax, which means your tax rate increases as your income increases. The state’s tax rates range from 4% to 10.90%. For example, if you make under $8,500 annually, you will only be subjected to a 4% tax rate. However, if you make $25,000,001 and over, you are now facing the higher end of the state’s tax bracket at 10.90%.
  • Local tax. The local tax is a county-specific tax, and the rates also differ based on income. For example, in Tompkins County, the local tax rate is 4%. In contrast, in Suffolk County, the rate is 4.25%. The variation in local tax rates can make a significant difference in the overall amount of taxes you owe.
  • City tax. City taxes are only applicable to those who live or have earned money in New York City. This applies to individuals, trusts, estates, partnerships, S-corporations, and corporations. The city tax rate is 3.078%, 3.762%, 3,819%, and 3.876% depending on the bracket your income qualifies for.
  • Corporate tax. If you are a business owner, you are also required to pay corporate income tax. The tax rate on your corporate income ranges from 6.50% to 7.25%. These taxes generated from businesses is one of the main sources of revenue for the state of New York, and it helps to fund many of the state’s programs and services that benefit its residents.
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