My father operated/owned a business that closed down nearly 10 years ago. He owes sales/witholding tax to NY State and after penalties/interest, amounts toa considerable amount of money. He has very limited income, owns no assets and resides out of state. What are our options (e.g. Amnesty?) and what can NY State legally do to collect from someone that no longer resides / works in that state?
I would need a little more information in order to give you a firm answer. However, in general, the State of New York basically has the same collection rights against your father that it would still resided within New York. This could include liens or garnishment my wages. There are a number of viable solutions to the problem. Some options may allow your father to avoid a significant amount of the past to liability. These solutions would be based upon additional facts which you would need to supply.
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Unpaid sale/use and payroll taxes involve the nonpayment of a fiduciary tax. Tax agencies will follow a person to the grave if the unpaid taxes become known, and impose a lien on the owner's estate.
NY , where I am licensed to practice, can secure a judgment, if it has not already, and file that judgment in NJ.
If he is judgment proof, and he has not purposefully made himself such by fraudulently transferring assets to you or others, the State of NY will, after proper returns are filed, assuming the records can be recreated, declare the taxes noncollectable.
From time to time tax amnesty is a program implemented by a state taxing authority or the IRS (such as filing reports of unreported overseas bank accounts). but I am not aware that any such amnesty program is currently in effect in NY. They usually have a limited period after which they expire.
I hope this answer helps. More facts are required.
The foregoing is not intended to be legal advice upon which you may rely as I have not been retained for this purpose.
The situation, as my colleagues point out, is serious when taxes are collected but not remitted. However, I must disagree that this is something that will follow you to your grave. The big issue with collected but unremitted taxes is that the criminal statutes usually apply. That means that even bankruptcy will not protect an individual from collected but unreported sales taxes. That being said, criminal statutes usually have a statute of limitations. For example, the statute of limitations for collected but unreported sales and use tax in Florida is 5 years. After that, the state is barred from prosecuting you. I do not know the statute of limitations in New York, but perhaps someone could chime in that does.
Has the state contacted your father about the issue? If the state got a judgement against your father's business, then the lien would attach to those business assets for the state required number of years. To give you an idea, it is 10 years in Florida.
If the state got a personal judgement against your father, then that could be a personal lien that could attached to your father's assets for a statutory period of years (again, 10 years in Florida). This is probably the area where you might have a chance of having to deal with the issue (if a personal lien was filed).
To answer your question about being out of state, New York could do all they want in the state of New York, but they would need personal jurisdiction over your father in his current state to enforce those state action. That being said, a lot of states have reciprocity agreements to enforce state tax judgments of their sister states and least for asset liens.
So - my guidance would be that you have a slim chance of exposure, but if the dollar amount is enough, then it would not hurt to have a sit down with a local state and local tax attorney knowledgeable in this area. There are a LOT of people that do federal tax work that claim to know state tax law. Be sure to find someone that actually practices in this area regularly and also knows the criminal side.
I hope this helps and good luck!
James Sutton, CPA Esq