Drivers Licenses Suspended for Non-Payment of Taxes
Taxpayers in New York can face a driver’s license suspension if the taxpayer owes $10,000 or more in taxes, penalties, or interest, and no resolution has been made to resolve the tax debt. When New York State identifies delinquent taxpayers, it sends a notice informing them that they have 60 days to enter into a collection resolution with the State. The taxpayer may either challenge the notice or work out a payment arrangement. If there is no resolution within 60 days, the State will notify the Department of Motor Vehicles (DMV) of the delinquent taxpayer. DMV, in turn, will send a further notice to the taxpayer stating that, unless the taxpayer addresses the tax liabilities within 15 days, his license will be suspended. The license suspension program also applies to taxpayers who are on a payment plan but fall behind in the payments. The law provides that when a taxpayer fails to comply with the terms of a current payment arrangement more than once within a twelve month period, the Tax Department is required to immediately instruct the DMV to suspend the taxpayer’s license. There is no 60-day grace period that applies in such case.
Once notified by the DMV, it is crucial that the taxpayer act promptly to resolve his tax issues or risk losing his license. Suspensions can be stopped when taxpayer pays or reaches a payment plan, such as an installment payment agreement or some other conciliatory arrangement whereby the tax debt is paid.
In all of these cases there is a limited opportunity to appeal. For example, a taxpayer can challenge a suspension by arguing that the past-due liability has already been satisfied. Or, the taxpayer can argue that the department incorrectly determined that he has failed to comply with the terms of a payment arrangement more than once within a 12-month period. A taxpayer has no right to sue in court. The applicable motor vehicle laws have been amended to clarify that a taxpayer has no recourse under the motor vehicle provisions that are otherwise available to a driver facing suspension for a non-tax reason. Stated differently, license suspension does not provide the taxpayer the right to contest the underlying tax liability.
Clearly, the purpose of the program is to aid in the collection of past-due tax liabilities by revoking the driver’s licenses of those taxpayers owing $10,000 or more. The liability must be certain and not subject to further review. The problem is that driving without a valid license is a crime. The further problem is that the law covers any taxes and related statutory assessments, including penalties and interest, due on the unpaid tax.
There do exist certain exceptions to the program. For example, commercial drivers are not subject to driver’s license suspension. In addition, those who already have a wage garnishment in place to pay child support are also exempt. Other exceptions include taxpayers who are seeking innocent spouse relief or those for whom enforcement of past liabilities has been stayed by a petition in bankruptcy. Notably, the law contains no exception for “hardship.” New York State will allow limited suspensions in some cases, such as to allow certain trips to and from work, school, or medical treatment. These limited suspensions do not allow for drives in the country or the mall. Violating the terms of a restricted use license can lead to revocation of the privilege of driving under a restricted use license for up to five years.
New York is not the only state suspending driver’s licenses for non-payment of debt. There are more than 40 states that allow for the suspension of driver’s licenses of people with unpaid criminal or traffic court debt. Lawyers and other advocates across the country are currently arguing that such laws are unconstitutional because they unfairly punish poor people and violate due process by not giving drivers notice or an opportunity to show they cannot afford to pay the fees. For example, in Maine, a driver’s license may be suspended for non-payment of child support or non-payment of a traffic fine. Lawsuits have been filed in at least seven of those states.
In conclusion, New York taxpayers owing $10,000 or more in taxes, penalties, or interest to the state should be aware that the state may revoke their driver’s licenses if the debt is gnored. If there is no resolution within 60 days of receipt of notice by the taxpayer, the State will likely notify the DMV to start proceedings to suspend the taxpayers drivers license if nothing is done within 15 days of issuance of such further notice by the DMV. Commercial drivers or taxpayers who have a wage garnishment in place to pay child support are also exempt. Other exceptions involve taxpayers who are seeking innocent spousal relief or those for whom enforcement of past liabilities has been stayed by a petition in bankruptcy. Finally, New York is not the only state suspending taxpayer driver’s licenses and, so, the movement has now captured the attention of lawyers and other advocates across the country who are testing the fairness of those laws.
An experienced Hudson Valley tax attorney can assist taxpayers in our area who have been notified of unpaid federal or state taxes.
Mark A. Krohn, LL.M Taxation, CPA and a partner at J&G, is in charge of the Business Law Team and is also a member of the Trust & Estates Team. He can be reached by phone at our Walden, NY office at 866-303-9595 toll free or 845-764-9656 and by email.