New York State Back Tax Relief in 2019

What exactly do we mean by New York back tax relief? If you live in New York, you know exactly what we’re talking about. You might know that New York State is notoriously difficult to work with, for tax professionals and taxpayers alike. If you have back taxes for multiple years that are not filed, penalties can easily make your tax liability balloon. If you owe more than $10,000 in New York State, you can get your driver’s license revoked!

For some it might be obvious how to get this under control, for others – it isn’t so obvious. We’ve seen all types of messes – missing records, missing bank statements, sometimes a situation of missing EVERYTHING. But yet, there is a solution.

File your taxes – (The most important)

New York back taxes need to be filed as soon as possible – otherwise, the State might assume a higher level of income than you actually had and file for you. If it’s been some time, your New York State back taxes can easily balloon as penalties and interest add up quickly. It keeps increasing as the years go on – we’ve seen liabilities of a couple thousand suddenly turn into the tens of thousands or hundreds of thousands (yes, really).

Again – file your back taxes!

True New York back tax relief requires you filing your tax returns, even if the State has filed a substitute return for you. If the State files for you, it takes all the information it can gather from your job and bank records. The New York State Department of Taxation & Finance will give you the least amount of deductions possible on this return, and because you are not a part of the filing process, the substitute returns may be inaccurate. This can cause the state to come after you for more money than you should be taxed on.

Filing a tax return late will replace the substitute return, and can sometimes cut down on the outstanding balance. We understand sometimes it might not be so simple for you to file as the entire process might be a huge burden on you – please consider giving us a call if this is the case and we can guide you through it.

But I don’t have records…

This situation we see all too often. However, it depends exactly what you’re missing. If you worked as an independent contractor (meaning you’ll receive a 1099-MISC instead of a W-2), then you may be able to see the complete record of your earnings (assuming the ‘payors’ properly reported and filed their side with the IRS) through obtaining “Wage & Income” transcripts from the IRS.

The Wage & Income transcript has a record of most tax forms issued to you under your Taxpayer Identification Number (your social, in most cases). With your gross income now clearly available, it’s key to get all your past bank statements and credit card statements together (if you get the electronic version, it’s usually a lot easier to work with) for that respective year. Expenses that can properly be classified as business expenses in accordance with tax law can be deducted from your gross income. A complete accounting of your expenses will allow you to calculate your net income. This is one of the core pieces of information you need to get your New York State back taxes under control

What about an Installment Agreement?

Wait a second – not so fast.

We discussed above filing back taxes if you were an independent contractor. In many cases, we see that someone wants to just get on an installment agreement right away. Many consider paying installments even without making sure their back taxes were filed correctly. In some cases, they’re not even sure if taxes were filed at all. We see a general rush for Taxpayers to get into an installment agreement.

New York State will generally deny the ability to obtain an Installment Agreement if you have not been in compliance with tax filing obligations – this includes New York State back taxes. In other words, if you have not filed your past tax returns, you usually cannot get an installment agreement.

New York State is not as easy to deal with as the Internal Revenue Service. Installment agreements are granted by default for 36 months. Longer-dated (such as a 60-month plan) installment agreements are subject to approval and negotiation.

Ok, let’s get back to filing taxes, I have missing W-2s

Ok, try to find them. Please…no, seriously.

And if not, contact your prior employers to try to get a copy of them.

“Can’t you just see them from those Wage & Income transcripts you mentioned above?”

Yes...but no.

Your Wage & Income transcripts from the IRS will provide all the information needed to file your Federal Income Tax return. It does not however show your New York State taxes paid (withholdings). It also does not show New York City taxes paid (if you live in the city). You need to know how much you paid towards New York State back taxes.

“But I had more than a dozen jobs that year”

Well the alternative for that is that you have to request your W-2s from the Social Security Administration. You must send a letter to request your W-2s in addition to a check for their fee of $81 (that’s the fee as of when we wrote this). We recommend when submitting your request, that you do several years at a time. Why? This is because your $81 fee covers your entire request, not just a single year.

Offer in Compromise

An option for you might be the Offer in Compromise program (otherwise known as a “OIC”). NYS allows some taxpayers to settle their outstanding balance for less than what is actually owed. In some cases, this is your best chance at reducing penalties and interest. Note that New York State will not settle if they can still somehow collect within their 20-year statute of limitations. What about filings? New York back tax relief requires you first to file all past tax returns before considering an Offer in Compromise.

Getting New York Back Tax Relief

We’ve seen situations which are simple to fix but we’ve also seen every possible mess imaginable. We’re curious to hear from you to see if we can get your New York State back taxes into order.

The New York State authority can be intimidating for taxpayers to interact with, sometimes even more so than the IRS! You might think New York State back tax relief is impossible, but it’s not. If you feel overburdened and stressed about the situation, consider giving us a call and obtaining a free consultation. Taxpayers should be careful trying to negotiate with any state tax authority without proper representation.