Tax Analysts Blog

Improving the Transparency of New York’s Tax Collection Process

Posted on Dec 11, 2013

On November 26 the New York State Bar Association Tax Section submitted a report to the Department of Taxation suggesting improvements to the collections process. The report specifically addresses installment payment agreements (IPAs).

Currently, taxpayers can request an IPA if they are “financially unable” to make a single lump sum payment to satisfy their tax liabilities. Once an IPA has been requested, the department will determine whether to grant or deny the request. During the application process, the taxpayer may be asked to submit certain financial information. The department will consider that information as well as the taxpayer’s prior compliance history. The taxpayer may request specific monthly payments and the time period for paying off the liability.

The department has actively promoted IPAs as a means of addressing existing tax liabilities. In 2012 it issued a press release in which Commissioner of Taxation and Finance Thomas H. Mattox said, “This program has helped thousands of New Yorkers put debt behind them. But the taxpayer must take the first step and contact us right away.”

But the New York tax bar noted several improvements that could be made to the program, including more transparency in the process. The report says, “The most important improvement the [department] could make to the IPA process would be to provide more public information on the eligibility requirements and acceptable parameters for IPAs, and the standards of review.”

The report also says there is insufficient information readily available to taxpayers on eligibility and the standards used to review IPA applications. The result is “wasted time and effort by taxpayers, practitioners and the [department] representatives charged with processing IPA applications,” leading to disparate treatment of taxpayers.

Collection of overdue tax liabilities is an essential duty of a state tax department. IPAs are one way to encourage taxpayers that are behind on their tax payments to work out a payment arrangement. But it is easy for those programs to be misused. Similarly situated taxpayers must be treated alike, and taxpayers must be able to quickly find information on the state’s administration of IPAs. It is encouraging that the department sought comments from the tax bar on ways to improve the collections process. Now it should act on those comments and make the necessary improvements to the IPA system.

Read Comments (1)

travis rechDec 11, 2013

This is one area where the IRS looks very strong. The National/Local Standards
the IRS issues establishing allowable monthly expenses makes the process
transparent and predictable.

New York State and California, among many, have no published allowable expenses
and the IPA system there is unpredictable and the determinations given by the
states appear extremely capricious.

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