One of the scary things about owing taxes is that in some circumstances, the government can take money directly from your paycheck. The recently enacted 2013-2014 New York State budget bill expands these opportunities for New York State, allowing the NYS Department of Taxation and Finance to issue income executions without first issuing a warrant.

At first glance, making it easier for the State to levy wages does not sound like a benefit to the taxpayer.  Delaying or avoiding a warrant, however, can be a great help to a taxpayer.

Previously, the State could not levy taxpayer assets, including the taxpayer’s wages, without first filing a warrant for unpaid tax, interest and penalties with the County Clerk and the NYS Department of State.  A warrant is a public record, acts as a judgment and generally stays in effect for twenty years.  Warrants seriously harm a taxpayer’s credit rating.  Making matters worse for the taxpayer, warrants remain on a credit record for seven years even if the liabilities have been fully paid.  Look here to search the NYS Department of State website for warrants filed against specific businesses or individuals.

Sometimes taxpayers do not respond to notices and visits from the State.  The recent change in the law makes it possible for the State to take another step in enforcing collection, by levying the taxpayer’s wages, without adding the harmful effects of a warrant. The wage garnishment will be permitted only after the State has unsuccessfully attempted to resolve the liabilities with an Installment Payment Agreement.

It remains to be seen whether this change is a positive development for the State, the taxpayer or both.