What You Need to Know About Your Rights as a Low-Income Tax Payer

You may have a right to appeal this decision either in U.S. Tax Court, or through the New York State tax appeal system. However, you have to act within the time limits stated in the letter. It’s usually 90 days from the date of the letter notifying you of the proposed tax assessment. If you want legal assistance in appealing such a determination, call The Legal Aid Society’s LITC at 212-426-3013. Be sure to state the date of the letter you received and the deadline for appealing, if you are able to tell from the letter.

If part of the refund was due to taxes that were withheld from your wages or was a refundable credit based in part on your wages, you may be able to claim your portion of the refund by filing a request for “injured spouse relief.” Similar relief is available for New York State income tax refunds. To obtain legal assistance in requesting such relief, call our Low-Income Taxpayer Clinic at 212-426-3013.

A warrant can be issued and filed like a civil judgment, for taxes owed to New York State. It allows the State to levy on bank accounts, wages, and other nonexempt assets of the taxpayer in order to collect the tax debt. However, the State cannot levy on exempt assets such as public assistance, SSI, or Social Security. After a warrant is issued, the State can take collection action for many years, while interest and penalties continue to accrue on the outstanding tax debt.

If you cannot afford to pay all your taxes immediately, you should pay as much as you can. Paying your taxes now will reduce the amount of interest and penalties you accrue. Both the IRS and NYSDTF may allow you to pay tax arrears using an installment agreement. An installment agreement generally requires equal monthly payments that will pay the tax in full over time. In certain circumstances, you may want to consider making an “offer in compromise” to settle unpaid taxes for less than the full amount of the balance owed. For advice and assistance in considering your payment options, call our Low-Income Taxpayer Clinic at 212-426-3013.

You may not owe taxes if you were insolvent, or the debt was discharged in bankruptcy, or under some other circumstances. However, you do need to take action to challenge your liability. Forgiveness of credit card debt, home equity loans, or delinquency judgments may be considered income by the IRS and result in tax liability if you do not establish that you fall within an exception to this rule.

Taxpayers have the right to request a collection due process hearing within 30 days of Notice of Intent to Levy, or a Notice of Federal Tax Lien. Requesting a hearing within this period gives the taxpayer a chance to talk to IRS Appeals about other collection alternatives, and usually stays the levy action while the hearing is pending. If the hearing decision is unfavorable, the taxpayer can appeal to U.S. Tax Court. Even if it has been over 30 days since the date of the levy notice (or lien notice), the taxpayer may still request an “equivalency hearing”, but the collection action is not stayed, and there is no right to appeal from the hearing decision.

You may be able to request “innocent spouse relief” from liability on a joint return, depending on the facts and circumstances in your case. You must do this within two years of the date collection action against you commenced. If you think you may qualify for innocent spouse relief, call the Low-Income Taxpayer Clinic at 212-426-3013.

You may be the victim of identity theft. You should try to obtain verification from the company listed as your employer that you were not its employee, and provide that information to the IRS. You need to immediately notify the IRS that you dispute its determination. If you need help in doing this, contact the Low-Income Taxpayer Clinic at 212-426-3013.

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The information in this document has been prepared by The Legal Aid Society for informational purposes only and is not legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. You should not act upon any information without retaining professional legal counsel.