Business Tax Collections Process

Finance has different collections procedures for business taxpayers that:

are under audit
filed a regular return
are no longer in business

The Business Taxpayer Who has Been Audited

Notice of Determination
If, as the result of an audit, additional tax is due, business taxpayers are generally notified when Finance sends them a Notice of Determination. Taxpayers would also receive a Notice informing them of a reduction in a requested refund.

90 Days to Respond
If the taxpayer wishes to dispute the Notice of Determination, he or she has 90 days to do so by filing a Petition of Hearing. The business taxpayer who has been audited also has many avenues by which the Notice of Determination can be challenged. The taxpayer may decide to dispute the Notice before the Conciliation Bureau or the Tax Appeals Tribunal or both (first to the Conciliations Bureau, and, if the taxpayer is still dissatisfied with the outcome, then to the Tax Appeals Tribunal). For more information see Business Tax Appeals.

Referral to Collections
However, at the end of 90 days, if these challenges are not decided in the taxpayer's favor, or, if the taxpayer has not disputed the findings, the case is referred to the Collections Division. Collections will issue and send a Final Notice for business taxes to the taxpayer.

Initial Contact
Whenever possible, Collections staff will try to reach the taxpayer by phone for 2-3 weeks to discuss payment.

Docketing
If no payment arrangements have been agreed upon, the matter goes to the Receipt and Control Section for docketing. A warrant is generated and docketed in the County Clerk's Office. A copy of the warrant is mailed to the taxpayer.

Legally Enforceable Judgment Debt
Once the warrant is docketed, the tax due is now a legally enforceable judgment debt. At this point, Finance will send the taxpayer a Notice of Collection Proceedings.

From this point on, a number of factors determine Finance's course of action. The taxpayer may pay, in full or in part. Letters may be exchanged - including the taxpayer's responses to prior communications. An outside collections agency may be used.

Seizure of the taxpayer's assets is an option. This may include garnishing an individual taxpayer's wage or padlocking a business taxpayer's business and auctioning off its assets.

Ultimately, if the taxes, penalties, and interest remain unpaid, the taxpayer's credit record will be damaged, making it harder to obtain loans or mortgages in the future.

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The Business Taxpayer Who has Voluntarily Filed a Tax Return
Unlike the business taxpayer who has been audited, the voluntary tax filer who fails to pay tax due faces a shorter period before Collections is involved. This taxpayer also has few, if any, avenues by which the tax due can be challenged or mediated.

Notices
The voluntary filer receives two notices from Finance advising him or her to pay in full, a Notice of Tax Due and a Notice of Demand. Failing to pay, the taxpayer's return is then referred to the Collections Division.

Initial Contact
Collections staff makes every effort to reach the taxpayer by phone, generally for a 2-3 week period.

Docketing
If no payment arrangements have been agreed upon, the case goes to the Receipt and Control Section for docketing. A warrant is generated and docketed in the County Clerk's Office. A copy of the warrant is mailed to the taxpayer.

Legally Enforceable Judgment Debt
Once the warrant is docketed, the tax due is now a legally enforceable judgment debt. Finance sends the taxpayer a Notice of Collection Proceedings.

From this point on, a number of factors determine Finance's course of action. The taxpayer may pay, in full or in part. Letters may be exchanged - including the taxpayer's responses to prior communications. An outside collections agency may be used.

Seizure of the taxpayer's assets is an option. This may include garnishing an individual taxpayer's wage or padlocking a business taxpayer's business and auctioning off its assets.

Ultimately, if the taxes, penalties, and interest remain unpaid, the taxpayer's credit record will be damaged, making it harder to obtain loans or mortgages in the future.

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When A Business Taxpayer is No Longer in Business
A business that no longer operates in New York City is still liable for all tax (plus the penalties and interest accrued due to nonpayment) that was incurred while the business operated.

However, in the course of resolving the delinquency, a business taxpayer who is no longer in business should provide the required documentation proving that the business is no longer active (or active in New York City).

A taxpayer may contact the Collections Division Call Center for more detailed information on the documentation needed to properly close his or her business tax account.

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Call: 212-440-5487