NY State Senate Bill 2025-S700

Senate Bill S700

2025-2026 Legislative Session

Provides for the adjustment of the minimum amount of tax delinquency for which the driver's license of a taxpayer may be suspended

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Current Bill Status - In Senate Committee Investigations And Government Operations Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Jan 08, 2025	referred to investigations and government operations

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2025-S700 (ACTIVE) - Details

Current Committee:: Senate Investigations And Government Operations
Law Section:: Tax Law
Laws Affected:: Amd §171-v, Tax L
Versions Introduced in Other Legislative Sessions:: 2019-2020: S3836
2021-2022: S936
2023-2024: S1147

2025-S700 (ACTIVE) - Summary

Provides for the adjustment of the minimum amount of tax delinquency for which the driver's license of a taxpayer may be suspended, based on inflation; prohibits inclusion in the license suspension program of a taxpayer who receives public assistance or supplemental security income, or whose income does not exceed 250% of the poverty level; authorizes the commissioner to grant exemptions to taxpayers whose payment of past due tax liabilities would create a hardship to the taxpayer in meeting necessary living expenses.

2025-S700 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S700

SPONSOR: KRUEGER
 
TITLE OF BILL:

An act to amend the tax law, in relation to the enforcement of delin-
quent tax liabilities by means of the suspension of licenses to operate
a motor vehicle

 
PURPOSE OF BILL:

To amend section 171-v of the tax law to provide for an additional hard-
ship exemption from New York's driver's license suspension program as it
relates to the non-payment of income taxes.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1 amends section 171-v of the tax law to add an inflation
adjustment to the exclusion from driver's license suspension provisions
for tax debts under 10,000; amends notice provisions to exclude those
not subject to license suspension and increases information regarding
requests for waivers of suspension; and adds an exception to suspension

provisions for taxpayers who make less than 250 percent of the poverty
level.

Section 2 provides for rulemaking by the commissioner.

Section 3 is the effective date.

 
JUSTIFICATION:

Chapter 59 of the laws of 2013 law gave the New York State Department of
Taxation and Finance a new and powerful enforcement tool for collection
of delinquent New York State tax liabilities by authorizing the suspen-
sion of a tax debtor's driver's license if arrangements are not made by
the tax debtor to pay delinquent taxes. Any individual whose tax liabil-
ity (inclusive of interest and penalties) is $10,000 or greater became
subject to revocation of his or her driver's license, regardless of the
financial condition of the taxpayer. These sanctions have been effective
in getting tax debtors to pay delinquent taxes.

However, these laws also have been widely criticized as being too harsh
and punitive.

In 2016, the Tax Section of the New York State Bar Association published
Report No. 1344 on "New York State's Driver's License Suspension
Program" (the "2016 Report").

That Report concluded that the driver's license suspension law is in
conflict with longstanding debtor protection laws when applied to
taxpayers who will experience financial hardship if required to enter
into a payment agreement with the Department for the payment of their
tax debts.

For example, some tax debtors may have so little income or assets that
they are not financially able to enter into an installment payment
agreement or an Offer in Compromise to pay their tax liabilities without
compromising their ability to pay basic living expenses.  Nonetheless,
the program can be used to force payments of tax debt from an indigent
individual under threat of loss of his or her driver's license even
though there are, in many cases, federal and state laws in place that
would protect that individual from any direct tax levy on income and
assets. The limited financial hardship exemptions make the New York law
uniquely punitive when applied to this type of tax debtor since, unlike
federal tax law, New York lacks many relief programs such as (1) the
ability to place a tax debtor in "uncollectible" status if he/she can't
afford to begin a payment plan or submit an Offer in Compromise without
compromising his/her ability to pay basic living expenses or (2) the
ability to enter into what are known as "partial payment" Installment
Payment Agreements which set up a monthly payment plan that takes into
account an allowance for the tax debtor's reasonable basic living
expenses even though the plan may not ultimately fully pay the tax
liability.

The 2016 Report recommended that the law be amended (1) to include a
financial hardship exemption; (2) to increase the threshold amount of
tax debt (plus interest and penalties) that triggers application of the
law; (3) to apply the law to any tax debtor, regardless of the amount of
tax debt owed, if the tax debtor has engaged in egregious conduct to
avoid collection, such as by hiding assets; and (4) to give more
discretion to the Department of Taxation and Finance to waive license
suspension based on the equities of a particular case.

The 2016 report has proved to be a major catalyst for a broad scale
effort to amend the law, particularly among groups representing indigent
and financially compromised taxpayers.

In 2017, the New York State Bar Association issued a follow-up report
(Report No. 1380), to provide greater specificity with respect to the
recommendations made in the 2016 Report, as well as to provide the stat-
utory language necessary for the recommended amendments to the law.

The 2017 Report made the following recommendations, inter alia:

*An automatic exemption for low-income tax debtors who receive public
assistance or supplemental security income or who have income below 135%
of the level specified by the Federal Poverty Income Guidelines
(currently $16,281 per year for a household of one). This conforms to
the driver's license suspension hardship exemption provided under the
New York State child support laws. A hardship exemption for any tax
debtor who can demonstrate that payment of his or her past due tax
liabilities will leave insufficient income to cover necessary basic
living expenses.

*A tax debtor's driver's license should be subject to suspension,
regardless of the amount of tax debt owed, if the Department determines
that the tax debtor has taken affirmative steps to evade or avoid the
collection of tax, such as by hiding assets.

*The Department should be granted discretionary authority to waive
license suspension based on the equities of the case. This bill contains
all of the above-stated recommendations of the Bar's 2017 report, with
slight modification, e.g. the exemption for low-income debtors is
expanded to persons who have income below 1250% of federal guidelines,
plus the $10,000 floor is expanded by a cost of living adjustment.
Particularly in upstate communities which are not well-served by public
transportation, it is hoped that this bill will permit tax debtors to be
able to drive to their places of employment and not risk punitive and
counterproductive sanctions which leave them unable to remain gainfully
employed and unable thus unable to satisfy their tax delinquencies.

The 2019 budget amended this section of law by making some of the NY Bar
recommendations and removed individuals on public assistance or receiv-
ing SSI payments from being targeted by this collection program, and
allowing for challenges to a suspension based on these new criteria.
Additionally, the law was amended to say that a suspension could be
challenged if it created an undue hardship.

 
LEGISLATIVE HISTORY:

2023-24: S.1147A/A5885A - Passed Senate

2021-22: S.936/No Same As - Passed Senate

2019-20: S.3836A/A.5633B (Weinstein)- Passed Senate 2018 A.9596-A (Wein-
stein)- Referred to Ways and Means

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

To be determined. By allowing citizens to continue to use their vehicles
in order to get to and from work, it is hoped that this will result in
increased income tax collections to the State.

 
EFFECTIVE DATE:
April 1 next succeeding the date on which it shall have become a law.

2025-S700 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    700
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                                (PREFILED)
 
                              January 8, 2025
                                ___________
 
 Introduced  by Sens. KRUEGER, BAILEY, LIU, MAY -- read twice and ordered
   printed, and when printed to be committed to the Committee on Investi-
   gations and Government Operations
 
 AN ACT to amend the tax law, in relation to the  enforcement  of  delin-
   quent  tax liabilities by means of the suspension of licenses to oper-
   ate a motor vehicle
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Subdivisions  1, 3 and 5 of section 171-v of the tax law,
 subdivision 1 as added by section 1 of part P of chapter 59 of the  laws
 of 2013, and subdivisions 3 and 5 as amended by section 1 of part EEE of
 chapter 59 of the laws of 2019, are amended to read as follows:
   (1)  The  commissioner  shall  enter into a written agreement with the
 commissioner of motor vehicles, which shall set forth the procedures for
 the two departments to cooperate in a program to improve tax  collection
 through  the  suspension of drivers' licenses of taxpayers with past-due
 tax liabilities equal to or in excess of ten thousand dollars MULTIPLIED
 BY THE APPLICABLE INFLATION  ADJUSTMENT.    For  the  purposes  of  this
 section,  the  term  "tax liabilities" shall mean any tax, surcharge, or
 fee administered by the commissioner, or any penalty or interest due  on
 these  amounts  owed  by an individual with a New York driver's license,
 the term "driver's license" means any license issued by  the  department
 of  motor  vehicles, except for a commercial driver's license as defined
 in section five hundred one-a of the vehicle and traffic  law,  and  the
 term  "past-due  tax liabilities" means any tax liability or liabilities
 which have become fixed and final such that the taxpayer no  longer  has
 any  right  to  administrative  or  judicial review, AND THE "APPLICABLE
 INFLATION ADJUSTMENT" FOR A CALENDAR YEAR SHALL BE DETERMINED UNDER  THE
 PRINCIPLES  OF  SECTION  7345(F)  OF  THE INTERNAL REVENUE CODE OF 1986,
 USING THE CALENDAR YEAR OF THE EFFECTIVE DATE OF THE CHAPTER OF THE LAWS
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD02491-01-5
 S. 700                              2
 
 OF TWO THOUSAND TWENTY-FIVE WHICH AMENDED THIS SUBDIVISION AS  THE  BASE
 PERIOD. THE TEN THOUSAND DOLLAR LIMITATION IN THIS SUBDIVISION SHALL NOT
 APPLY  TO A TAXPAYER THAT THE COMMISSIONER DETERMINES HAS TAKEN AFFIRMA-
 TIVE  STEPS  TO  EVADE OR AVOID THE COLLECTION OF TAX, SUCH AS BY HIDING
 ASSETS.
   (3) The department shall provide notice to the  taxpayer  of  [his  or
 her] THE TAXPAYER'S inclusion in the license suspension program no later
 than  sixty  days prior to the date the department intends to inform the
 commissioner of motor vehicles of the taxpayer's inclusion. However,  no
 such  notice  shall  be  issued to a taxpayer: (I) whose wages are being
 garnished by the department for the payment of past-due tax  liabilities
 or past-due child support or combined child and spousal support arrears;
 (II)  WHO RECEIVES PUBLIC ASSISTANCE OR SUPPLEMENTAL SECURITY INCOME; OR
 (III) WHOSE INCOME DOES NOT EXCEED TWO  HUNDRED  FIFTY  PERCENT  OF  THE
 POVERTY  LEVEL AS REPORTED BY THE FEDERAL DEPARTMENT OF HEALTH AND HUMAN
 SERVICES OR ANY SUCCESSOR AGENCY.   Notice shall be  provided  by  first
 class  mail to the taxpayer's last known address as such address appears
 in the electronic systems or records  of  the  department.  Such  notice
 shall include:
   (a)  a  clear  statement  of the past-due tax liabilities along with a
 statement that the department shall provide to the department  of  motor
 vehicles the taxpayer's name, social security number and any other iden-
 tifying information necessary for the purpose of suspending [his or her]
 THE TAXPAYER'S driver's license pursuant to this section and subdivision
 four-f  of section five hundred ten of the vehicle and traffic law sixty
 days after the mailing or sending of such notice to the taxpayer;
   (b) a statement that the taxpayer may avoid suspension of [his or her]
 THE TAXPAYER'S license by fully satisfying the past-due tax liabilities,
 by making payment arrangements satisfactory to the commissioner,  or  by
 demonstrating  any of the grounds for challenge set forth in subdivision
 five of this section, OR BY PRESENTING FACTS TO THE COMMISSIONER RESULT-
 ING IN THE COMMISSIONER WAIVING SUSPENSION  OF  THE  TAXPAYER'S  LICENSE
 BASED ON THE EQUITIES OF THE CASE. Such statement shall include informa-
 tion  regarding programs through which the taxpayer can pay the past-due
 tax liabilities to the department, enter into a payment  arrangement  or
 request  additional information NEEDED TO CHALLENGE THE SUSPENSION UNDER
 SUBDIVISION FIVE OF THIS SECTION OR  DEMONSTRATE  THE  EQUITIES  OF  THE
 CASE;
   (c)  a  statement  that  the taxpayer's right to protest the notice is
 limited to raising issues set forth in subdivision five of this section;
   (d) a statement that the suspension of the taxpayer's driver's license
 shall continue until the past-due tax liabilities are fully paid or  the
 taxpayer  makes  payment  arrangements satisfactory to the commissioner;
 and
   (e) any other information that the commissioner deems necessary.
   (5) Notwithstanding any other provision of law, and except as  specif-
 ically  provided  herein, the taxpayer shall have no right to commence a
 court action or proceeding or to any other legal  recourse  against  the
 department or the department of motor vehicles regarding a notice issued
 by  the  department  pursuant  to  this  section and the referral by the
 department of any taxpayer with past-due tax liabilities to the  depart-
 ment  of  motor  vehicles  pursuant  to  this section for the purpose of
 suspending the taxpayer's driver's license. A taxpayer  may  only  chal-
 lenge such suspension or referral on the grounds that (i) the individual
 to  whom  the notice was provided is not the taxpayer at issue; (ii) the
 past-due tax liabilities were satisfied; (iii) the taxpayer's wages  are
 S. 700                              3
 
 being  garnished  by  the department for the payment of the past-due tax
 liabilities at issue or for past-due child support or combined child and
 spousal support arrears; (iv) the taxpayer's wages are  being  garnished
 for  the payment of past-due child support or combined child and spousal
 support arrears pursuant to  an  income  execution  issued  pursuant  to
 section  five  thousand  two hundred forty-one of the civil practice law
 and rules; (v) the taxpayer's driver's license is a commercial  driver's
 license  as  defined  in  section  five hundred one-a of the vehicle and
 traffic law; (vi) the department incorrectly found that the taxpayer has
 failed to comply with the terms of a payment arrangement made  with  the
 commissioner  more  than  once  within  a  twelve  month  period for the
 purposes of subdivision  three  of  this  section;  (vii)  the  taxpayer
 receives  public assistance or supplemental security income; [or] (viii)
 [the taxpayer demonstrates that suspension of  the  taxpayer's  driver's
 license  will cause the taxpayer undue economic hardship] THE TAXPAYER'S
 INCOME DOES NOT EXCEED TWO HUNDRED FIFTY PERCENT OF THE POVERTY LEVEL AS
 REPORTED BY THE FEDERAL DEPARTMENT OF HEALTH AND HUMAN SERVICES  OR  ANY
 SUCCESSOR  AGENCY;  OR (IX) PAYMENT OF THE PAST-DUE TAX LIABILITIES WILL
 CREATE A HARDSHIP FOR THE TAXPAYER IN MEETING NECESSARY LIVING EXPENSES.
   However, nothing in this subdivision is intended to limit  a  taxpayer
 from  seeking  relief  pursuant  to  an  offer in compromise pursuant to
 subdivision fifteenth of section one hundred seventy-one of this article
 or from joint and several liability  pursuant  to  section  six  hundred
 fifty-four  of this chapter, to the extent that [he or she] THE TAXPAYER
 is eligible pursuant to such section, or establishing to the  department
 that  the  enforcement of the underlying tax liabilities has been stayed
 by the filing of a petition pursuant to  the  Bankruptcy  Code  of  1978
 (Title Eleven of the United States Code).
   §  2.  The  commissioner  of  taxation  and  finance is authorized and
 directed to promulgate any rules and regulations necessary to  implement
 the  provisions  of  this  act  in accordance with the provisions of the
 state administrative procedure act.
   § 3. This act shall take effect on the first of April next  succeeding
 the date on which it shall have become a law.

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Senate Bill S700

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Sponsored By

Liz Krueger