Can NYS Sales Tax Dept garnish the salary of someone who was never involved in a Corporation in any way nor ever worked the biz?

Asked about 2 years ago - White Plains, NY

In 11/2005, I closed an S-Corp, for which I always paid the appropriate taxes and was the sole shareholder, officer and director. The biz got audited and the NYS Sale Tax Dept claims it owes 330k still for a 6 year period. One of which the store was closed (2006). They are garnishing my wife's salary unjustly as she never worked, never was affiliated, never authorized to sign checks, never had anything to do with the biz. We hored 3 lawyers so far and had i stopped. Each time, they start garnishing her pay after they stop again. They will not prove what they have that they claim makes her responsible although requested in writing by us and an attorney. The tax returns show me solely. They have taken 30k from her and we do not owe his as the store did not make that kind of money, ever.

Attorney answers (4)

  1. Harry N. Konst

    Contributor Level 12

    5

    Lawyers agree

    Answered . Look into filing an "Innocent Spouse" form.

    I am not your attorney. Contact an attorney for advice immediately.
  2. Corey B. Rabin

    Pro

    Contributor Level 3

    5

    Lawyers agree

    Answered . You are in a "pickle" but it can be solved. In the end, you won't be paying money if the obligation arose as you have stated, however, you will not be able to stop their harrassment in the short term. If you want to discuss this further, I can have an attorney in our firm speak with you if you want to move forward. Corey Rabin, Esq. 914-948-2222 x101

  3. Christopher Michael Larson

    Contributor Level 19

    5

    Lawyers agree

    Answered . I hear about this in relation to community property states. In those states, they can do exactly what you are saying because income is considered jointly earned, and debts are considered jointly incurred if both spouses benefit from the non-payment.

    it sounds like a state tax issue, so I am not sure if there is going to be innocent spouse relief for this unless the state provides such a remedy. But my guess is that they think she is jointly liable. So having somebody stop the levy will not address this. I can promise the process for proving that will be more involved than stopping the levy, if it is even possible.

    Christopher Larson
    Insight Law
    Tax Attorney
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  4. Bryon C McKim

    Contributor Level 7

    3

    Lawyers agree

    Answered . Generally, you both are liable because the tax form from the Corporation was your joint 1040. The previous poster is correct as it relates to an "innocent spouse." This is a bit of a process, that you will probably want to consult a lawyer for.
    "You may qualify for innocent spouse relief for a tax year beginning on or
    after January 1, 1999, only if all of the following apply:
    • you filed a joint return for the tax year(s) for which you are requesting
    relief; and
    • there is an understatement of tax on the return(s) that is due to
    erroneous items of your spouse (or former spouse); and
    • you can show that when you signed the return(s) you did not know and
    had no reason to know that the understatement of tax existed (or the
    extent to which the understatement existed); and
    • taking into account all the facts and circumstance, it would be unfair
    to hold you liable for the understatement of tax. "

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