Aug 8th 2013
By Teresa Ambord
Well, that's one way to raise money. If you're a resident of New York State and you've fallen behind in your state personal tax payments and owe more than $10,000, you might need to hire a driver or take a cab. That's because last March, the state lawmakers voted to suspend the driver's licenses of tax delinquents as part of the new state budget.
New York is likely not the only state to use pressure tactics to get people to pay up. California, for example, publishes an annual list of the top 500 tax delinquents.
"As more and more states experience cash shortfalls, they're looking for ways to replenish their coffers," observed CPA Robert A. Raiola. Raiola heads the Sports & Entertainment Group for the New Jersey–based accounting firm of Fazio, Mannuzza, Roche, Tankel, LaPilusa, LLC. "As a result, we may see more states following New York's lead with stricter enforcement of existing laws."
New York's Governor Andrew Cuomo said in a press release: "Our message is simple: tax scofflaws who don't abide by the same rules as everyone else are not entitled to the same privileges as everyone else. These worst offenders are putting an unfair burden on the overwhelming majority of New Yorkers who are hardworking, law-abiding taxpayers. By enacting these additional consequences, we're providing additional incentives for the state to receive the money it is owed and we're keeping scofflaws off the very roads they refuse to pay their fair share to maintain."
Of course, not all taxpayers are drivers, especially in a place like New York City. And people who make too little to have to pay taxes also use the roads without paying "their fair share." So it does seem like this is less about equity than revenue.
By March 31, which ends New York State's fiscal year, officials expect this program to increase collections by $26 million and another $6 million per year subsequently. Altogether, New York's tax delinquents owe $1.1 billion, so even though the state has an impressive collection rate of 96 percent, the 4 percent remaining isn't chump change.
The list of tax delinquents includes 16,000 names. USA Today reports that topping the list of New York's tax dodgers is Michael D. Zurawin of Putnam County, who is believed to be the head of a painting supplies company. His tax debt goes all the way back to 2004 and now rings in at $16.7 million.
Kicking off the suspensions, first-round notices will go out soon to all names on the list. Offenders then have sixty days to arrange payment. Those who fail to pay up will be treated to round-two notices, giving them their "last chance" and fifteen days to respond. Those who still don't fork over the money will have their licenses suspended.
Of course, those who are flaunting the law deliberately – not just due to temporary shortages – clearly aren't worried about breaking the law. So why not just drive on a suspended license? If caught, there's a mandatory fine of $200 to $500, depending on the circumstances, plus a surcharge and jail or probation up to thirty days.
If you persist in driving on a suspended license and get caught again, the penalties increase significantly. Beyond that? You could lose your car. In case you want to look over the menu to see if being a scofflaw is worth it, you can check out the specific punishments in New York DMV's handy pamphlet.
New York Commissioner of Taxation and Finance Thomas H. Mattox said in a press release: "It's in every taxpayer's best interest to pay all tax bills in full. If you can't pay in full, our staff is available to help you arrange a payment plan that will satisfy your debt."
For those who are unable to extinguish their tax debts on a timely basis but need the ability to drive to work or certain other places, there is the possibility of applying for a restricted license, though the details are unclear as yet.
One observer suggested that if you can meet the residency requirements in another state, why not apply for an out-of-state license? Something to think about.