License Suspended for Unpaid Taxes (Long Island, NY)
Since 2013 the Department of Taxation and Finance (“Tax Department”) and the Department of Motor Vehicles (“DMV”) have been working collectively in furtherance of a Driver’s License Suspension Program. This program takes the position that driving is a privilege and if you do not pay your taxes, you could lose that privilege. As a result, New Yorkers owing $10,000 or more in unpaid state taxes may have their driver’s license suspended.
“Driver licenses are a privilege, not a right, and this program has prompted unprecedented action from tax delinquents who were otherwise ignoring their debt” – Thomas H. Mattox (Former Tax Commissioner of New York )
Here is an overview of the license suspension program:
1- Taxpayers with an outstanding balance of tax, penalty, and interest in excess of $10,000 are identified by authorities.
2- Identified taxpayers are mailed a notice of proposed driver’s license suspension referral. This notice informs the taxpayer of the outstanding tax liability as well as warns the taxpayer that if no action is taken within 60-days of notice his or her driver’s license will be suspended.
3- If the tax department does not receive a response within 75-days of mailing the notice it will refer the taxpayer to the DMV for license suspension.
4- Once the DMV receives the referral, it will generate and mail a 15-day notice to the delinquent taxpayer. This notice will notify the taxpayer of the effective date that his or her driver’s license will be suspended.
5- The taxpayer’s driver’s license will be suspended as of the date indicated on the DMV notice. However, the tax department may contact the DMV and halt the pending suspension by rescinding the referral at any time prior to the license being suspended.
Certain taxpayers are NOT subject to license suspension for unpaid tax debts, including:
- Taxpayers with wages being garnished for past-due child support, spousal support, or combination of child and spousal support in arrears are exempted from license suspension for nonpayment of state tax.
- Taxpayers in possession of a commercial driver’s licenses as defined by §501-a of the Vehicle and Traffic Law are also exempt from this program.
UPDATE: New Exemptions to Driver License Suspension Program as of 6/11/19:
- Taxpayers receiving public assistance.
- Taxpayers who receive supplemental security income (SSI).
- Taxpayers whose payment of past due tax liabilities would create a hardship in meeting necessary living expenses.
The Driver’s License Suspension Program has proven to be a very effective tool for collecting back taxes. New York State Governor Cuomo seems to be a huge advocate of this program, based on his public announcements dated: 8/5/13, 3/17/14, and his attempt to lower the threshold to suspend driver licenses from $10,000 to $5,000 for unpaid taxes.
How to Avoid License Suspension
Delinquent taxpayers may avoid having their license suspended by paying their outstanding tax liability in full or entering into an (1) installment payment agreement, (2) income execution, or (3) offer in compromise.
Avoiding License Suspension by Claiming Undue Economic Hardship
Taxpayers who believe the payment of past due tax liabilities creates a hardship in meeting necessary living expenses may complete form: DTF-5.1 Application for Undue Economic Hardship Exemption from Driver’s License Suspension Program.
If you owe New York State $10,000 or more in unpaid taxes and receive a notice of proposed driver’s license suspension referral, it is important that you take action immediately or be at risk of losing the privilege to drive. If you have any questions or need assistance with a tax matter, contact us.
Please Note: Taxpayers may apply for a restricted license allowing him or her to drive to/from work.
Disclaimer: This article is offered for general information and educational purposes and not intended to be tax or legal advice.
Peter Alizio is a CPA and Tax Attorney. When he is not solving IRS and NYS tax problems he likes football and playing amateur chef. He also enjoys meeting new people, preferably over coffee, whiskey or cigars.