Unpaid New York Sales Tax Help

You’re in the Right Place If…

Sales tax problems affect all kinds of New York businesses, and McLaud Law P.C. helps with them all. Our services can help in these situations as well as many others… 

• You received a notice, bill, or sales tax assessment from the New York State Department of Taxation and Finance.

• You filed sales tax returns but could not pay the full amount due.

• You have missing sales tax returns.

• You used collected sales tax to cover business expenses.

• You received an estimated assessment that seems too high to reflect your actual liability.

• You were identified as a responsible person for a company’s unpaid sales tax.

• You received a responsible person questionnaire.

• You owe a large balance after a New York sales tax audit.

• You are closing, dissolving, or selling a business with sales tax debt.

• You are facing a tax warrant, levy, income execution, or other collection action.

What Counts as Unpaid New York Sales Tax?

Businesses can accrue unpaid sales tax debt in several ways. They may:

• File a return without paying the balance due
• Overlook filing one or more returns
• Collect less sales tax than the law requires
• Underreport taxable sales
• Claim unsupported exemptions or deductions
• Receive a tax assessment after an audit
• Receive an estimated assessment after failing to file returns

If you aren’t struggling with unpaid sales tax but need more information on compliance, registration, and other topics, our New York sales tax resource center is your next stop.

Responsible Person Liability: When Sales Tax Becomes Personal

Businesses that owe sales tax debt may find their bank accounts, accounts receivable, and other assets at risk – but the real risk with sales tax debt is responsible person liability. If the NYS DTF determines that you are a responsible person, they can hold you personally liable for sales tax debt. 

New York law may hold owners, officers, employees, or other individuals personally liable for unpaid sales tax debt if said individuals were responsible for ensuring the business collects or remits sales tax. This means that the state can seize your wages, bank accounts, and other assets. Even if the business closes, is dissolved, or goes bankrupt, responsible person liability follows you.

Protecting yourself means working with a tax attorney who understands the stakes, knows how to defend you from personal liability exposure, and helps you resolve the debt before it reaches this point. 

How an Unpaid Sales Tax Problem Escalates

Sales tax issues often start out small and escalate in stages. It may start with missing a filing or underpaying a return. Then, penalties and interest cause the debt to snowball, making it harder to catch up, and often pushing businesses behind on the next period’s sales tax payments. 

Ignoring the problem – whether through fear or because you’re unsure of what to do next – escalates the situation. Business owners may face:

• DTF sales tax assessments: The DTF can assess tax on unfiled sales tax returns, potentially significantly overstating what you owe and putting you on the hook to dispute it. 

• Tax warrants: Public records that establish the state’s claim to your assets, DTF warrants are enforceable for 20 years from the date that the warrant could have been filed.
• Income executions: A DTF order to garnish your wages, giving you the option to comply on your own and then contacting your employer to garnish your wages if you don’t comply.
• Bank levies and asset seizures: The DTF seizes business bank accounts and assets (inventory, equipment, fixtures, etc).
• Responsible Person Assessments: If the DTF can’t collect the unpaid sales tax from the business, it will start looking at the individuals who were responsible for the nonpayment. 
• Certificate of Authority revocation: The DTF can take away your license to make taxable sales, rendering you unable to operate.

A tax attorney can help you address all of these threats – if you’re facing an imminent levy or even padlocked doors, we’re ready to jump in. And if you’re behind but not facing severe consequences yet, we’ll intercede and help resolve the sales tax debt before the situation escalates. 

How McLaud Law Helps

Working with McLaud Law P.C. means benefiting from the in-depth knowledge and hands-on experience of a tax attorney and two enrolled agents. 

Our first step is to determine what the NYS DTF claims you owe and whether that amount is correct. By reviewing your financial and tax records thoroughly, we can determine the best path forward using a strategy customized around your unique situation.

We work to respond to sales tax audits, accurately calculate what you truly owe, seek penalty relief where appropriate, contest responsible person liability, seek relief via a New York installment payment agreement or offer in compromise, and respond to collection escalation. 

Our goal is to coordinate a resolution strategy for both business and personal assessments so we can set you up for future filing and payment compliance.

What the Process Looks Like

With unpaid sales tax concerns, our process includes:

• A free consultation to discuss your concerns and next steps
• Securing authorization to speak with the NYS DTF on your behalf
• Reviewing your financial records and tax history
• Determining whether the assessment is correct
• Identifying missing documentation
• Preparing the appropriate protest, application, disclosure, or payment proposal
• Negotiating with the DTF on your behalf
• Addressing future filing and payment compliance

Depending on the facts of your case, several different outcomes are possible. We may be able to prevent responsible person liability, protecting your personal assets and income. Our team may also help you seek relief via payment arrangements or a New York offer in compromise. 

If an option for your case, we can also explore the New York Voluntary Disclosure and Compliance Program as a solution.

When to Bring in a Tax Attorney or Enrolled Agent

If your business has a small balance that you know you can pay off, you may not need professional guidance – especially if you know that future compliance will not be an issue. However, we do recommend speaking with an attorney if you:

• Received a responsible person assessment or questionnaire
• Know that the sales tax balance is based on an estimate
• Are the subject of a sales tax audit
• Are missing several sales tax returns
• Have a tax warrant or levy issued against you
• Cannot keep the business running while paying what you owe
• Are accused of willful or fraudulent conduct
• Want to explore an offer in compromise

Early guidance can give you access to the full range of potential solutions, and we always start with a consultation so you can make sure our services are the right fit.

Frequently Asked Questions (FAQs): Sales Tax Attorney

Am I personally liable for my business’s unpaid sales tax in New York?

You may be personally liable if New York considers you a responsible party or if the law imposes liability because you are a partner or LLC member. A full analysis of your risk involves your ownership, financial authority, tax duties, and control over company decisions.

Can NYS DTF take money from my personal bank account?

The DTF may seize funds from your bank account if they have deemed you personally liable for the debt and the collection process has escalated to the point of enforced collection.

What happens if I cannot pay the full balance?

You may qualify for an installment payment agreement, offer in compromise, or another collection arrangement, based on your circumstances.

Can I settle New York sales tax debt for less than I owe?

In some cases, you may be able to pursue an offer in compromise through the New York State Department of Taxation and Finance. Eligibility depends on your financial situation and compliance with New York tax requirements.

Does closing or bankrupting the business clear the debt?

Not necessarily, since responsible party liability can survive the company’s closure and sales tax debt may be difficult to discharge in bankruptcy.

How far back can New York go?

Generally, the New York Department of Taxation and Finance cannot assess additional sales tax three years from the date a return is filed. But there is no three-year limit in cases involving fraud, willfully false returns, and unfiled returns.

What is the difference between an audit and an assessment?

An audit is the process of examining an individual’s or business’s tax returns, financial records, and tax calculations. An assessment is the formal amount that the DTF determines is due. Audits that uncover discrepancies or errors may result in additional assessments.

I spent the sales tax I collected. Can I still fix this?

You should act promptly, but the problem may still be resolvable with the right guidance. The right strategy for your situation may involve filing missing returns, correcting estimates, negotiating payment arrangements, and addressing responsible person exposure.

Unpaid Sales Tax? Let’s Find the Solution for Your Case

You do not have to face the New York Department of Taxation and Finance alone. The team at McLaud Law P.C. can review the assessment, determine whether the balance or personal liability should be challenged, and work toward an appropriate resolution for your situation. 

It all starts with a free case review. Call us at 585-397-7785 or request a free case review online now.

This communication is Attorney Advertising. It is presented for informational purposes only and does not constitute legal advice. Every legal situation is different, and prior results do not guarantee a similar outcome. This communication does not create an attorney-client relationship between McLaud Law P.C. and the recipient.