NYS Tax Department [ 7 Reasons ] You May Owe NY Back Taxes

One of the most common questions that hear  is “why do I owe NYS tax?” 

IRS or NYS Tax Problem? 7 [ Must Know ] FAQs

Experienced IRS & NY tax attorney Charles Rosselli gives you valuable tips and strategies so that you do not get taxing advantage of by the IRS, NY Tax Department or a so-called tax resolution firm. 

You made a mistake

You didn’t file your NYS tax returns

You filed your NYS tax returns late

If you filed your NYS tax return late, you will be charged 5% of the tax due for each month (or part of a month) the return is late, up to a maximum of 25 percent. 

In addition to the late filing penalty, you will also be charged interest that is compounded daily.

You failed to make NY estimated tax payments

If you are self employed and not making quarterly estimated tax payments, this can be the root cause of the tax problem. 

Often, I know there is a problem when I ask someone if they have been paying their federal and NYS estimated taxes and I get a puzzled look. 

If you are self employed, 1099,  or work on commission, you often don’t get income taxes taken out of your income as you are paid during the course of the year. 

As such, you are required under the tax laws to remit and pay your estimated income taxes to the IRS and New York State every quarter.

If you have not been paying your estimated taxes during the year, it is difficult for many taxpayers to come up with the often large tax balances due when it comes to tax time.

To prevent a high tax bill in future, you will need to carefully manage your income tax withholdings and estimated tax payments.

You took an early withdrawal from a retirement account

Did you make an early withdrawal from a retirement account, such as a 401(k), and didn’t take into account the tax liability?

Often, a taxpayer will first receive a Notice of Deficiency from the Internal Revenue Service.

Once the NYS Department of Taxation and Finance picks up the early withdrawal, you can expect a tax notice regarding the increase in taxes due to New York State.

You were personally assessed sales or withholding tax 

Many New York business owners mistakenly believe that forming a corporation protects them from a personal tax liability. Wrong. 

If you own or owned a business that was required to charge NYS sales tax, you are responsible for collecting sales tax and remitting the sales tax to New York State.

If you don't remit the sales tax to New York State, you will  be assessed for the sales tax that the business was required to collect.

If you also have employees, you must withhold income tax from their earnings and pay employment tax ( Medicare and Social Security), and other taxes.

Similarly, if you were required to collect and remit withholding tax on behalf of a business, the New York State Department of Taxation and Finance can also hold your personally responsible in certain circumstances. 

If the notices for payment go ignored, the New York State Tax Department will issue a tax warrant  and begin aggressive enforcement action including but not limited to wage garnishments, bank levies, and asset seizures.

If you are in a situation where you owe NYS sales tax, you have criminal as well as back tax issues that you need to be aware of.  We can help.

A Few Other Reasons You Owe NYS tax

Like it or not, tax laws change.

You may have lost a property tax deduction or perhaps there is a change in your filing status. 

If you had good fortune on your side, perhaps you had lottery or gambling winnings.

Often, those sources of income are not taxed.

Lastly, you may not have had enough withholdings or deductions.

This leaves more income to be taxed resulting in either a lower refund or the need to pay additional taxes.

Help if You Owe NYS tax  [the first step]

You received that dreaded notice in the mail from the New York State Department of Taxation and Finance.

What do you do now?

If you ignore the problem, it will only get more expensive over time.  

The NYS Tax Department is highly aggressive. 

The NYS Tax Department processes NYS tax returns and through it’s collection divisions and their agents will collect on any owed NYS taxes. 

The NYS Tax Department will issue a tax warrant against you.

If you need your bank account or income to pay your living expenses, the NYS Tax Department will continue to levy or garnish you until every dollar is collected, including penalties and interest [ compounded daily ]. 

If you owe over $10,000, your NYS Driver's license will be suspended.

Owe at least $20,000, the first step is to contact our office to see if we can be of help. If we can assist you, we will start the process of stop enforcement action against you and solving your tax problems.