Tax Levies in New York City
& Finding a Tax Levy Lawyer
A tax levy is a legal process by which the Internal Revenue Service (IRS) collects unpaid taxes from a taxpayer. The IRS may seize assets, such as property or wages, to satisfy the debt. This intervention is typically a last resort after other methods, such as payment plans or negotiations, have failed. The program is designed to collect as much of the unpaid tax bill as possible and minimize the financial impact on the taxpayer.
There are many scenarios in which the IRS may place a tax levy in New York. This includes:
- The taxpayer neglects or refuses to pay their taxes. If a taxpayer owes taxes and does not make any effort to pay them, it gives the government the right to levy and start collecting payment. This can include wage garnishment, seizing bank accounts, or taking other assets with monetary value.
- The taxpayer does not respond to IRS notices. The IRS sends out various notices throughout the year to alert taxpayers of their tax obligations. If the taxpayer responds to these notices, a levy will likely be placed on their assets if they simultaneously try to pay the taxes they owe.
- The taxpayer makes an error on their tax return. In some cases, taxpayers may make mistakes on their tax returns. If the mistake is large enough, it could result in a tax bill that the taxpayer cannot pay. The IRS may then place a levy on the taxpayer’s assets to recoup the unpaid taxes.
- The taxpayer has an unpaid tax bill from a previous year. Each year, taxpayers are required to file a tax return and pay any taxes they owe. If a taxpayer does not pay their taxes in full, the IRS may carry over the unpaid balance to the following year. This unpaid balance continues to accrue interest and penalties, making it difficult for the taxpayer to catch up. The IRS may then place a levy on the taxpayer’s assets in an attempt to collect the unpaid taxes.
Before taking any of these actions, there are other methods the IRS will typically utilize to collect unpaid taxes. These methods may include:
- Sending out notices. The IRS will send various types of notices throughout the year to alert taxpayers of their tax obligations. These notices will typically request payment and may also threaten legal action if the taxes are not paid.
- Setting up a payment plan. The IRS offers payment plans for taxpayers in New York who are unable to pay their taxes in full. This allows the taxpayer to make smaller, more manageable payments over time.
- Negotiating an offer in compromise. In some cases, the taxpayer may be able to negotiate an offer in compromise with the IRS. This is an agreement between the New York taxpayer and the IRS that settles the tax debt for an amount that is less than what is owed.
- Advance notice of a third-party contact. The IRS typically contacts taxpayers directly when they are trying to collect unpaid taxes. However, in some cases, the IRS may contact a third party, such as an employer or financial institution. The taxpayer will typically be given advance notice of this third-party contact.
If the taxpayer does not respond to the notices or take any of the steps above, the IRS may then take legal action and place a levy on the taxpayer’s assets.
Once the levy is in place, the IRS will begin collecting taxpayer payment in ways such as:
- Wage garnishment. The IRS may garnish the taxpayer’s wages to collect payment. The amount that is withheld will depend on the taxpayer’s filing status and the number of dependents.
- Bank levies. The IRS may place a levy on the taxpayer’s bank account to collect payment. The amount that is taken will depend on the balance of the account and any outstanding debts.
- Property seizures. The IRS may seize the taxpayer’s property, such as a house or car, to collect payment. The amount that is owed will need to be paid in full to redeem the property.
Delia Law Can Help You With Your Tax Levy
If you are facing a tax levy, take action as soon as possible. This is especially true if you are facing wage garnishment or property seizure that is going to put a strain on your finances. The sooner you act in New York, the better chance you have of resolving the issue and avoiding further legal action that can further drown you in debt.
At Delia Law, we have experience helping our clients resolve their tax levies and can work with you to find a solution that fits your unique circumstances. We understand the IRS can be daunting, and we are here to help at each step of the way. Contact us today to schedule a consultation and witness how we can help you resolve your tax levy.
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.