Can Your Driver’s License Be Suspended for Failure to Pay Your Taxes in New York?

Most taxpayers aren’t aware that their driver’s license can be suspended for failure to pay their taxes. In fact, the New York State Department of Taxation and Finance (DTF) has collected hundreds of millions of dollars in back taxes thanks to the driver’s license suspension law. There are certain requirements that must be met as well as exceptions to this law, so if you receive a notice from the State that you owe money, don’t ignore it. Learn the facts and contact a tax attorney to help you resolve your tax issue.

When Can New York State Suspend Your License for Back Taxes?

New York State can suspend your driver’s license if: (1) you owe $10,000 or more in taxes, penalties, or interest, and (2) No collection resolution is in place (such as an Installment Payment Agreement (IPA), Income Execution or Offer in Compromise).

How Does New York Suspend Your License?

Once the DTF determines that you owe $10,000 or more, it will send you a notice of the possible license suspension. The notice will detail what you owe and how you can resolve the tax debt or request further information.

You have 60 days to respond to the notice by either paying what you owe, requesting a payment arrangement, such as an IPA, or providing proof that you fall into one of the exceptions to suspension.

If you fail to respond to the notice, the DTF will notify the Department of Motor Vehicles (DMV) that it is authorized to process the suspension of the taxpayer’s license within 15 days.

Note that there is no right to appeal a license suspension. You must either pay the tax bill or enter into an IPA.

What Are the Exceptions to License Suspension?

You can avoid suspension if you can show you fall into one of these categories:

• You are not the taxpayer with the past-due tax liability
• The past-due tax liability has been satisfied
• Your wages are being garnished by the DTF for payment of the past-due tax liabilities
• Your wages are being garnished for the payment of child support or child/spousal support
• Your license is a commercial driver’s license (CDL)
• You are in the process of seeking Innocent Spouse Relief
• You have filed a petition to stay the past-due tax liabilities under the US Bankruptcy Code
• You are receiving a form of public assistance
• You are receiving Supplemental Security Income (SSI) or
• You would realize undue economic hardship as a result of the suspension of your driver’s license.

What Are the Consequences of Losing Your License?

A license suspension means you cannot operate your vehicle legally. If you’re caught driving with a suspended license, you could face citations, fines, vehicle impoundment, and even potential jail time.

You may apply for a restricted license, which allows you to drive to and from work, school, medical appointments, the DMV, and childcare related to employment. However, this is a temporary solution. Your suspension will not be revoked until you pay your taxes or enter into a payment arrangement.

Notably, New York is part of the Multi-State Driver License Compact (the “DLC”). The DLC is an agreement among 45 states and the District of Columbia that provides that if a taxpayer’s license is suspended in any member state, that suspension will hold in all other member states.

How Can You Avoid or Resolve Your Driver’s License Suspension?

Suspensions can only be lifted permanently when taxpayers pay their tax liabilities or enter into a payment plan to do so.

If you owe back taxes, it is best to consult a tax attorney for assistance unless it is a minor issue, in which case, you should contact the DTF for assistance. An attorney can advise you regarding your options and help you achieve a positive outcome for your tax matter.

We have extensive experience helping taxpayers with IRS and NYS tax problems. Contact us for a consultation.