New York State Tax Department Implements New Hardship Eligibility For Settlement Program

The New York State Department of Taxation and Finance announced today new reform measures that will improve tax administration on behalf of taxpayers statewide.  New eligibility consideration for severe economic hardship will allow the Department to offer more favorable payment terms to taxpayers with overwhelming tax liabilities.  The new eligibility factors will be added to the Department's existing liability settlement program known as the Offer in Compromise Program. 

"The changes to the Offer in Compromise Program will allow us to provide relief for taxpayers experiencing undue economic hardship," explained Commissioner Thomas H. Mattox.  "The global economic downturn has made it more important than ever for government to provide more flexible payment options while at the same time protecting all taxpayers with a common sense approach to settling outstanding debt that may otherwise go unpaid."

Prior to the changes, the Offer in Compromise Program limited the Department to accepting settlement offers due to insolvency or bankruptcy.  Now, the Department can consider other factors that may make it unduly burdensome for a taxpayer to pay a liability in full.  These factors could include extraordinary individual or family health care costs, or unemployment.  Each case will be carefully analyzed so that all taxpayers are protected. No settlement will be accepted that could decrease overall compliance or that would be counter to the best interests of the State.

"In many cases it is in the State's best interest to settle with a taxpayer experiencing financial hardship," said Commissioner Mattox.  "For example, if paying the entire liability means a taxpayer will lose his or her home to foreclosure, it's clearly in the best interest of the State, as well as the taxpayer, to agree to some form of settlement alternative."

The Department will also implement a fixed twenty year statute of limitations.  Delinquent debt collection rates decrease over time, and debt of an age older than twenty years is typically uncollectible.

Taxpayers who want more information about the Offer in Compromise Program can visit the Department of Taxation and Finance's website at www.tax.ny.gov or call 518.457.5434.