Legal Aid Society of Northeastern New York

Articles

Alternatives to Tax Collection

THERE’S HELP IF YOU CAN’T AFFORD TO PAY INCOME TAX DEBT

 

Federal and New York State (NYS) 2019 income tax payments are due July 15, 2020. For those who owe tax, there is a penalty for failing to timely file if that deadline is missed. There is a separate penalty for failing to timely pay, as well as interest. Penalties start on July 16 if you did not receive an extension and increase for each month or part of a month that your return or payment is late. An extension of time to file a return never extends the July 15, 2020 due date of the payment.

 

Taxpayers who are unable to timely pay their income tax debts have several options. (Some are only available for federal tax debts).

 

If you would be unable to meet your basic living expenses if you paid the tax due, you can ask the IRS to find the amount due is “currently not collectible” (CNC). If it agrees, the IRS should stop all collection activity for a period of time. NYS law does not provide for a CNC status.

 

If you can pay over time, you could ask the IRS or NYS to agree to a payment plan or installment agreement.

 

If you use one of these options, there will be a penalty for failing to timely pay tax and interest will continue to accumulate.

 

When there is doubt that the full amount due can ultimately be collected, you could request an offer in compromise (OIC). You can offer to pay an affordable amount to the IRS or NYS as a settlement to eliminate the outstanding tax debt. Your finances are considered when deciding if an offer can be accepted.

 

If you have questions about these options or other income tax issues, the Legal Aid Society of Northeastern New York’s Low Income Taxpayer Clinic (LITC) may be able to help. The Clinic’s services are free of charge and available in Albany, Clinton, Columbia, Essex, Franklin, Fulton, Greene, Hamilton, Montgomery, Rensselaer, Saratoga, Schenectady, Schoharie, St. Lawrence, Warren, and Washington Counties, and the St. Regis Mohawk Tribe. You can call our LASNNY Legal Line at (833) 628-0087 and ask for our LITC. The Clinic does not generally provide tax preparation services.