A New York State tax levy is the Tax Department’s legal seizure of money a bank or someone else is holding for you, to pay a filed tax warrant. The state must file the warrant before it serves a levy. Once the bank responds, the rest of your account should usually be available to you again.
We totally understand the panic of a frozen account. The good news is that a levy follows rules, and knowing them tells you where to start.
If the state has already levied your account, call us at 516-209-2594 or ask for help with it today.
Why Did I Get a State Tax Levy?
You got it because a New York tax balance went unresolved long enough for the state to move to enforced collection. The Tax Department’s Levies page says a levy requires a third party to turn your money over to pay your tax warrant, and that the warrant must be filed first.
Its collection rights page describes the steps before that. The collection unit contacts you if you don’t pay a bill and your appeal time has passed, and if you still don’t pay, it may file a warrant and levy your assets. If you want the background on that earlier stage, we cover what happens after a New York tax warrant is filed.
What the Bank Has to Do
The state serves the levy on your bank, which the Tax Department calls the garnishee.
The Garnishee’s Options
The Tax Department says the garnishee must respond within 90 days, in one of four ways. It sends the funds up to the full amount requested, says there are no funds, says the account holds only exempt funds, or says a turnover order is required.
What Happens to the Rest of the Account
The department states that, usually, once the bank responds, any remaining funds in your account should be available to you. That’s why the first days matter. Knowing what the bank is holding and why is the start of getting your money moving again.
As our own guide to New York tax problems notes, the Tax Department can take funds from your bank accounts without a court order. That’s what separates a state tax levy from a creditor’s judgment.
Money New York Can’t Take
Some money is exempt from being taken to pay a tax warrant. The Tax Department’s list includes Social Security and Supplemental Security Income, public assistance, spousal and child support, unemployment, disability and workers’ compensation benefits, and public or private pensions. The complete list is in Article 52 of New York’s Civil Practice Law and Rules.
If exempt money was caught in the levy, the bank’s response can say so, and it’s worth raising right away.
How a New York Levy Gets Resolved
The Tax Department says that to resolve a levy, you call it at 518-457-5893 during business hours and speak with a representative. What you say on that call depends on your numbers.
Paying in Full
If you can pay the balance, that ends the collection that led to the levy. Ask the representative exactly what’s owed today, because interest accrues until it’s paid.
An Installment Payment Agreement
If you can’t pay it all, the state’s rights page says the Tax Commissioner may release a levy when you have an installment payment agreement that provides for the release. We explain how to set one up in setting up a New York payment plan. If you owe the IRS as well, our overview of IRS installment plans covers the federal side.
When the Balance Itself Is Wrong
The same page says the Commissioner may also release a levy if it creates undue hardship or if the department didn’t follow proper procedures. If the state decides a levy was unjust, it may return the money seized, with interest.
If the State Moves Beyond Bank Accounts
A levy can reach more than a bank balance. The Tax Department’s rights page says that before it seizes real or personal property, it will notify you that it has the right to enforce the warrant that way, and it will only seize property if it expects the sale to bring in more than the costs of seizing and selling it. Seized property must be sold at fair market value.
When the State Collects From Wages Instead
New York can also collect from your paycheck. The Tax Department describes directing your employer to send it a percentage of your wages through an income execution. It’s a separate process from a bank levy, with its own notices.
How We Work a New York Levy Alongside Any IRS Balance
A New York levy may not be the only collection problem on the table, and the IRS runs its own bank levy process on different rules. If you’re not sure which agency is behind the hold on your account, our guide on whether it is a levy or a garnishment helps you tell them apart, and our overview of New York and IRS tax problems compares the two agencies.
When a client’s account has been levied, we find out what the bank is holding, check for exempt money, and work out which resolution the numbers support. For an IRS hold on your account, our page on help with a levy on your bank account is the place to start.
If New York has already levied your account this week, don’t wait for the 90 days to play out. Talk to us in Uniondale or virtually, and we’ll help you decide what to say when you call the state.
FAQ
Why did I get a state tax levy?
Because a New York tax balance went unresolved after the state’s bills and appeal deadlines passed. The Tax Department files a tax warrant first, then may serve a levy on your bank or someone who owes you money.
What happens when you get a tax levy?
Your bank must respond to the Tax Department within 90 days by sending funds, reporting no funds or only exempt funds, or saying a turnover order is required. Once it responds, remaining funds are usually available to you again.
How to get rid of a tax levy?
Call the Tax Department at 518-457-5893 to resolve it. Paying in full ends the collection, and an installment payment agreement can lead to a release. The Commissioner may also release a levy that causes undue hardship.