Provides for the adjustment of the minimum amount of tax delinquency for which the driver's license of a taxpayer may be suspended, based on inflation; prohibits inclusion in the license suspension program of a taxpayer who receives public assistance or supplemental security income, or whose income does not exceed 250% of the poverty level; authorizes the commissioner to grant exemptions to taxpayers whose payment of past due tax liabilities would create a hardship to the taxpayer in meeting necessary living expenses.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5885A
SPONSOR: Weinstein TITLE OF BILL:
An act to amend the tax law, in relation to the enforcement of delin-
quent tax liabilities by means of the suspension of licenses to operate
a motor vehicle
PURPOSE OF BILL:
To amend section 171-v of the tax law to provide for an additional hard-
ship exemption from New York's driver's license suspension program as it
relates to the non-payment of income taxes.
SUMMARY OF PROVISIONS OF BILL:
Section 1 amends section 171-v of the tax law to add an inflation
adjustment to the exclusion from driver's license suspension provisions
for tax debts under 10,000; amends notice provisions to exclude those
not subject to license suspension and increases information regarding
requests for waivers of suspension; and adds an exception to suspension
provisions for taxpayers who make less than 250 percent of the poverty
level.
Section 2 provides for rulemaking by the commissioner.
Section 3 is the effective date.
JUSTIFICATION:
Chapter 59 of the laws of 2013 law gave the New York State Department of
Taxation and Finance a new and powerful enforcement tool for collection
of delinquent New York State tax liabilities by authorizing the suspen-
sion of a tax debtor's driver's license if arrangements are not made by
the tax debtor to pay delinquent taxes. Any individual whose tax
liability (inclusive of interest and penalties) is $10,000 or greater
became subject to revocation of his or her driver's license, regardless
of the financial condition of the taxpayer. These sanctions have been
effective in getting tax debtors to pay delinquent taxes.
However, these laws also have been widely criticized as being too harsh
and punitive.
In 2016, the Tax Section of the New York State Bar Association published
Report No. 1344 on "New York State's Driver's License Suspension
Program" (the "2016 Report").
That Report concluded that the driver's license suspension law is in
conflict with longstanding debtor protection laws when applied to
taxpayers who will experience financial hardship if required to enter
into a payment agreement with the Department for the payment of their
tax debts.
For example, some tax debtors may have so little income or assets that
they are not financially able to enter into an installment payment
agreement or an Offer in Compromise to pay their tax liabilities without
compromising their ability to pay basic living expenses. Nonetheless,
the program can be used to force payments of tax debt from an indigent
individual under threat of loss of his or her driver's license even
though there are, in many cases, federal and state laws in place that
would protect that individual from any direct tax levy on income and
assets. The limited financial hardship exemptions make the New York law
uniquely punitive when applied to this type of tax debtor since, unlike
federal tax law, New York lacks many relief programs such as (1) the
ability to place a tax debtor in "uncollectible" status if he/she can't
afford to begin a payment plan or submit an Offer in Compromise without
compromising his/her ability to pay basic living expenses or (2) the
ability to enter into what are known as "partial payment" Installment
Payment Agreements which set up a monthly payment plan that takes into
account an allowance for the tax debtor's reasonable basic living
expenses even though the plan may not ultimately fully pay the tax
liability.
The 2016 Report recommended that the law be amended (1) to include a
financial hardship exemption; (2) to increase the threshold amount of
tax debt (plus interest and penalties) that triggers application of the
law; (3) to apply the law to any tax debtor, regardless of the amount of
tax debt owed, if the tax debtor has engaged in egregious conduct to
avoid collection, such as by hiding assets; and (4) to give more
discretion to the Department of Taxation and Finance to waive license
suspension based on the equities of a particular case. The 2016 report
has proved to be a major catalyst for a broad scale effort to amend the
law, particularly among groups representing indigent and financially
compromised taxpayers.
In 2017, the New York State Bar Association issued a follow-up report
(Report No. 1380), to provide greater specificity with respect to the
recommendations made in the 2016 Report, as well as to provide the stat-
utory language necessary for the recommended amendments to the law.
The 2017 Report made the following recommendations, inter alia:
*An automatic exemption for low-income tax debtors who receive public
assistance or supplemental security income or who have income below 135%
of the level specified by the Federal Poverty Income Guidelines
(currently $16,281 per year for a household of one). This conforms to
the driver's license suspension hardship exemption provided under the
New York State child support laws. A hardship exemption for any tax
debtor who can demonstrate that payment of his or her past due tax
liabilities will.leave insufficient income to cover necessary basic
living expenses.
*A tax debtor's driver's license should be subject to suspension,
regardless of the amount of tax debt owed, if the Department determines
that the tax debtor has taken affirmative steps to evade or avoid the
collection of tax, such as by hiding assets.
*The Department should be granted discretionary authority to waive
license suspension based on the equities of the case. This bill contains
all of the above-stated recommendations of the Bar's 2017 report, with
slight modification, e.g. the exemption for low-income debtors is
expanded to persons who have income below 1250% of federal guidelines,
plus the $10,000 floor is expanded by a cost of living adjustment.
Particularly in upstate communities which are not well-served by public
transportation, it is hoped that this bill will permit tax debtors to be
able to drive to their places of employment and not risk punitive and
counterproductive sanctions which leave them unable to remain gainfully
employed and unable thus unable to satisfy their tax delinquencies.
LEGISLATIVE HISTORY:
2023: A.5885/S.1147 - A. Cal/Passed Senate
2019-20: A.5633-B/S.3836-A - A.Ways and Means/Passed Senate
2018: A.9596-A - A. Ways and Means
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
To be determined. By allowing citizens to continue to use their vehicles
in order to get to and from work, it is hoped that this will result in
increased income tax collections to the State.
EFFECTIVE DATE:
April 1 next succeeding the date on which it shall have become a law.
STATE OF NEW YORK
________________________________________________________________________
5885--A
Cal. No. 168
2023-2024 Regular Sessions
IN ASSEMBLY
March 23, 2023
___________
Introduced by M. of A. WEINSTEIN, TAYLOR, EPSTEIN -- read once and
referred to the Committee on Ways and Means -- ordered to a third
reading, amended and ordered reprinted, retaining its place on the
order of third reading
AN ACT to amend the tax law, in relation to the enforcement of delin-
quent tax liabilities by means of the suspension of licenses to oper-
ate a motor vehicle
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivisions 1, 3 and 5 of section 171-v of the tax law,
2 subdivision 1 as added by section 1 of part P of chapter 59 of the laws
3 of 2013, and subdivisions 3 and 5 as amended by section 1 of part EEE of
4 chapter 59 of the laws of 2019, are amended to read as follows:
5 (1) The commissioner shall enter into a written agreement with the
6 commissioner of motor vehicles, which shall set forth the procedures for
7 the two departments to cooperate in a program to improve tax collection
8 through the suspension of drivers' licenses of taxpayers with past-due
9 tax liabilities equal to or in excess of ten thousand dollars multiplied
10 by the applicable inflation adjustment. For the purposes of this
11 section, the term "tax liabilities" shall mean any tax, surcharge, or
12 fee administered by the commissioner, or any penalty or interest due on
13 these amounts owed by an individual with a New York driver's license,
14 the term "driver's license" means any license issued by the department
15 of motor vehicles, except for a commercial driver's license as defined
16 in section five hundred one-a of the vehicle and traffic law, and the
17 term "past-due tax liabilities" means any tax liability or liabilities
18 which have become fixed and final such that the taxpayer no longer has
19 any right to administrative or judicial review, and the "applicable
20 inflation adjustment" for a calendar year shall be determined under the
21 principles of section 7345(f) of the Internal Revenue Code of 1986,
22 using the calendar year of the effective date of the chapter of the laws
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD03422-03-4
A. 5885--A 2
1 of two thousand twenty-four which amended this subdivision as the base
2 period. The ten thousand dollar limitation in this subdivision shall not
3 apply to a taxpayer that the commissioner determines has taken affirma-
4 tive steps to evade or avoid the collection of tax, such as by hiding
5 assets.
6 (3) The department shall provide notice to the taxpayer of his or her
7 inclusion in the license suspension program no later than sixty days
8 prior to the date the department intends to inform the commissioner of
9 motor vehicles of the taxpayer's inclusion. However, no such notice
10 shall be issued to a taxpayer: (i) whose wages are being garnished by
11 the department for the payment of past-due tax liabilities or past-due
12 child support or combined child and spousal support arrears; (ii) who
13 receives public assistance or supplemental security income; or (iii)
14 whose income does not exceed two hundred fifty percent of the poverty
15 level as reported by the federal Department of Health and Human Services
16 or any successor agency. Notice shall be provided by first class mail
17 to the taxpayer's last known address as such address appears in the
18 electronic systems or records of the department. Such notice shall
19 include:
20 (a) a clear statement of the past-due tax liabilities along with a
21 statement that the department shall provide to the department of motor
22 vehicles the taxpayer's name, social security number and any other iden-
23 tifying information necessary for the purpose of suspending his or her
24 driver's license pursuant to this section and subdivision four-f of
25 section five hundred ten of the vehicle and traffic law sixty days after
26 the mailing or sending of such notice to the taxpayer;
27 (b) a statement that the taxpayer may avoid suspension of his or her
28 license by fully satisfying the past-due tax liabilities, by making
29 payment arrangements satisfactory to the commissioner, or by demonstrat-
30 ing any of the grounds for challenge set forth in subdivision five of
31 this section, or by presenting facts to the commissioner resulting in
32 the commissioner waiving suspension of his or her license based on the
33 equities of the case. Such statement shall include information regarding
34 programs through which the taxpayer can pay the past-due tax liabilities
35 to the department, enter into a payment arrangement or request addi-
36 tional information needed to challenge the suspension under subdivision
37 five of this section or demonstrate the equities of the case;
38 (c) a statement that the taxpayer's right to protest the notice is
39 limited to raising issues set forth in subdivision five of this section;
40 (d) a statement that the suspension of the taxpayer's driver's license
41 shall continue until the past-due tax liabilities are fully paid or the
42 taxpayer makes payment arrangements satisfactory to the commissioner;
43 and
44 (e) any other information that the commissioner deems necessary.
45 (5) Notwithstanding any other provision of law, and except as specif-
46 ically provided herein, the taxpayer shall have no right to commence a
47 court action or proceeding or to any other legal recourse against the
48 department or the department of motor vehicles regarding a notice issued
49 by the department pursuant to this section and the referral by the
50 department of any taxpayer with past-due tax liabilities to the depart-
51 ment of motor vehicles pursuant to this section for the purpose of
52 suspending the taxpayer's driver's license. A taxpayer may only chal-
53 lenge such suspension or referral on the grounds that (i) the individual
54 to whom the notice was provided is not the taxpayer at issue; (ii) the
55 past-due tax liabilities were satisfied; (iii) the taxpayer's wages are
56 being garnished by the department for the payment of the past-due tax
A. 5885--A 3
1 liabilities at issue or for past-due child support or combined child and
2 spousal support arrears; (iv) the taxpayer's wages are being garnished
3 for the payment of past-due child support or combined child and spousal
4 support arrears pursuant to an income execution issued pursuant to
5 section five thousand two hundred forty-one of the civil practice law
6 and rules; (v) the taxpayer's driver's license is a commercial driver's
7 license as defined in section five hundred one-a of the vehicle and
8 traffic law; (vi) the department incorrectly found that the taxpayer has
9 failed to comply with the terms of a payment arrangement made with the
10 commissioner more than once within a twelve month period for the
11 purposes of subdivision three of this section; (vii) the taxpayer
12 receives public assistance or supplemental security income; [or] (viii)
13 [the taxpayer demonstrates that suspension of the taxpayer's driver's
14 license will cause the taxpayer undue economic hardship] the taxpayer's
15 income does not exceed two hundred fifty percent of the poverty level as
16 reported by the federal Department of Health and Human Services or any
17 successor agency; or (ix) payment of the past-due tax liabilities will
18 create a hardship for the taxpayer in meeting necessary living expenses.
19 However, nothing in this subdivision is intended to limit a taxpayer
20 from seeking relief pursuant to an offer in compromise pursuant to
21 subdivision fifteenth of section one hundred seventy-one of this article
22 or from joint and several liability pursuant to section six hundred
23 fifty-four of this chapter, to the extent that he or she is eligible
24 pursuant to such section, or establishing to the department that the
25 enforcement of the underlying tax liabilities has been stayed by the
26 filing of a petition pursuant to the Bankruptcy Code of 1978 (Title
27 Eleven of the United States Code).
28 § 2. The commissioner of taxation and finance is authorized and
29 directed to promulgate any rules and regulations necessary to implement
30 the provisions of this act in accordance with the provisions of the
31 state administrative procedure act.
32 § 3. This act shall take effect on the first of April next succeeding
33 the date on which it shall have become a law.
