Unpaid Taxes and the NYS PAID Program

The NYS PAID (Penalty and Interest Discount) Program allows an individual taxpayer who owes back taxes to save a substantial sum of money if the debt is paid before the expiration date of the program, which is March 15, 2010.  The NYS PAID program applies only to New York State taxes and stipulates that for individuals with a tax assessed prior to December 31, 2003, 80% of the accrued penalties and interest owed on the back taxes will be eliminated if paid by the due date.  For tax debts assessed between December 31, 2003 and December 31, 2006, 50% of the accrued penalties and interest owed on the back taxes can be eliminated if paid by March 15, 2010.

What Happens to Unpaid Tax Debt After March 15, 2010?

The NYS PAID Program expires on March 15, 2010.  Once the due date has passed, individuals who owe New York State taxes from prior to  2006 will lose their opportunity to get the significant savings offered by the program.  For taxes assessed or finally determined between 12/31/03 and 12/31/06, the taxpayer will lose the chance to save 50% of their accrued penalty and interest unless paid prior to March 15, 2010.  For taxes assessed or finally determined prior to 12/31/03, the taxpayer will lose the chance to save 80% on the interest and penalties owed once the March 15, 2010 deadline passes.

Are All Penalties Covered By The NYS PAID Program?

The NYS PAID Program will not cover penalties that resulted from any kind of fraud, the willful failure to collect and pay withholding taxes, or the substantial understatement of income penalty on the income tax return of an individual.  A “substantial” understatement is generally characterized by understating income by more than 25%.  If penalties resulted from a failure to disclose reportable transactions or from fraudulent reports, the debt will not qualify for the NYS PAID Program discounts.

What Happens to The Remainder of My Debt?

If an individual pays the full unpaid tax liability and the reduced penalty and interest due prior to March 15, 2010, the remainder from the original tax debt will be deemed paid in full and there will be no additional tax liability owed to New York State.  New York State has been sending out notices to potential beneficiaries of the program, but if you do not receive a notice you should contact your tax advisor.  New York Sstate is also attempting to collect liabilities that are no longer subject to collection and therefore you need to contact a lawyer who specializes in tax to determine whether the collection statute has expired with respect to the listed liabilities. To obtain the reduced payoff amount, individuals may also contact the New York Tax Department online at: www.nystax.gov or by calling (518) 457-1726 to determine your eligibility.

A lawyer who specializes in tax will be able to provide the best guidance and answer any questions related to the NYS PAID Program.  New York taxpayers are encouraged to seek the guidance of an experienced tax attorney in their area to discuss the details of their tax issues.