What is a New York Income Execution?

A New York State wage garnishment, or income execution, is a court order requiring an employer to withhold a certain amount of an employee’s salary. This is done in order to satisfy an outstanding delinquent tax liability.

If you want to know more about New York income executions, how they work, and how to deal with one, read on. To get help now, contact our legal team today.

What is a New York Wage Garnishment?

An income tax execution is a type of levy that could be issued against your wages if you fail to resolve your tax debt. Because of this, it’s also referred to as wage garnishment. The New York State Department of Taxation & Finance (DTF) may use this legal procedure in certain cases where a taxpayer fails to respond to notices reminding them of their tax debt. 

If taxpayers fail to resolve outstanding income tax debt, the DTF may proceed with collection action by issuing an income execution. They may also file a tax warrant before or after the income execution is issued.

This type of wage garnishment differs from other tax penalties, such as IRS wage garnishment. The key difference here is jurisdiction – a New York income execution is issued in relation to state income tax debt, while an IRS wage garnishment is a federal income tax collection action.

How Does Income Execution Work?

The circumstances under which an income execution can be issued follow specific criteria outlined by the NYS Department of Taxation & Finance. While the exact details and timeline may differ from case to case, generally speaking, income tax executions are issued after the tax debt has become delinquent, meaning it remains unpaid after the expiration of any grace periods, notices, or payment deadlines.

Taxpayers will be notified by the DTF if they have an outstanding tax debt to pay. Reminders will be issued, which detail the amount owed and also offer information relating to state payment plans if the full debt cannot be paid at once.

If you don’t pay the debt in full, et up a payment plan, or make other arrangements, then the DTF may escalate their attempts to resolve the debt with collection actions, including issuing tax warrants and potentially suspending your driver’s license.

Below is an example of how the general timeline looks when it comes to wage garnishment/income execution:

Notice of Tax Due

A taxpayer will receive several notices from the Department of Taxation and Finance regarding their unpaid state income taxes. These notices typically will details about the amount owed, payment deadlines, and instructions on how to resolve the debt. 

Demand for Payment

If a taxpayer fails to respond to initial notices or pay the outstanding tax debt, the Department of Taxation and Finance may issue a formal demand for payment. This demand serves as a final notice to the taxpayer to satisfy their tax obligation before the situation becomes more severe.

Final Assessment

When a payment deadline has passed and the tax debt remains unpaid, the DTF finalizes its assessment of the outstanding tax liability. This may involve reviewing the taxpayer’s financial records, tax returns, and other relevant information to determine the total amount owed.

Service of Income Execution

The income execution is typically served on the taxpayer, either in person or by mail, to notify them of the state’s intent to collect the outstanding tax debt through wage garnishment. The taxpayer may also receive additional documentation outlining their rights and options for resolving the debt.

Resolution & Compliance

To comply with an income execution, the taxpayer must voluntarily remit 10% of their gross income, or 25% of their disposable earnings, to the DTF. The first payment must also be made within 20 days of being served notice of execution. 

If the taxpayer doesn’t comply with this, then the DTF will send the income execution directly to your employer, demanding they remit the 10% of your wage.

An income execution can be resolved by paying the full debt owed or otherwise making payment arrangements with the DTF. If you cannot afford to make payments or pay in full, you may want to look into the state’s offer in compromise program.

Consequences of Income Execution for Employees

For individuals and employees facing wage garnishment, the financial and legal consequences can be significant. Once an income execution has been issued by the New York State Department of Taxation and Finance, individuals who fail to comply with the execution will be bypassed, and the execution will instead be issued directly to their employer. 

For employees, wage garnishment can result in a 10% reduction in take-home pay, plus potential processing fees. This can make it difficult to meet financial obligations like rent, mortgage, groceries, and other bills. As well as the immediate financial impact of wage garnishment, facing an income execution can also have long-term consequences for one’s financial health. 

Having a portion of one’s wages garnished can make it challenging to meet savings goals, maintain good credit, or qualify for loans or credit cards in the future. Wage garnishment may also indirectly affect an individual’s credit score (if their reduced take-home pay causes them to miss credit card or car loan payments), making it harder to access affordable financing options or competitive interest rates down the line.

On top of that, failing to address the underlying tax debt that led to the income execution could result in further financial and legal consequences, including penalties, interest, and more severe collection actions such as bank levies or property liens. 

For these reasons, it’s vital that individuals facing an income execution look to take immediate steps to address their tax debt, and if possible, seek assistance from a tax professional who can help you identify your options and move forward as quickly as possible. 

Consequences of Income Execution for Employers

Employers who are issued with an income tax execution for an employee are legally obliged to comply with the order. These obligations primarily involve withholding a portion of the employee’s wages as specified by the income execution and remitting the withheld amounts to the New York State Department of Taxation and Finance.

In such cases, employers should carefully follow the instructions outlined in the Income Tax Execution order to ensure compliance with state tax laws and regulations. Generally, this requires deducting a specific percentage or amount from the employee’s wages each pay period until the outstanding tax debt is satisfied. 

In addition to withholding and remitting the specified amounts to the DTF, employers are also responsible for accurately reporting and documenting wage garnishments on the employee’s pay stubs or other relevant payroll records. Failure to properly comply with withholding requirements, or to accurately report wage garnishments, may result in penalties or legal consequences for the employer.

To ensure legal compliance with Income Tax Execution orders, employers can choose to familiarize themselves with state tax laws and regulations governing wage garnishment and collection actions. On top of that, employers can also contact the Department of Taxation and Finance to promptly address any questions or concerns they might have about the process. 

How to Deal with a NY Income Execution

The easiest and most straightforward resolution to an income execution is, of course, to pay the tax liability. Having your wages garnished is a hugely stressful scenario, with all manner of consequences as we’ve seen above. 

If you agree that the tax liability has been correctly calculated, and you have no dispute about the process up to this point, paying the debt or arranging alternative payment options is the best way forward.

That said, individuals subject to an income execution have the right to dispute the underlying tax debt if they believe it was issued in error, or if the total amount owed is incorrect. Doing so will likely require the assistance of a tax professional, who can help you prepare your case, gather the necessary documents and evidence, and help you communicate with the DTF. 

Navigating such disputes without legal representation may be possible, but it’s going to be more challenging and time-consuming unless you have the relevant expertise.

It’s also important to be aware that certain exemptions and protections may apply to individuals facing wage garnishment under an income execution. For example, individuals experiencing financial hardship due to wage garnishment may be eligible for exemptions or adjustments to the amount withheld from their wages.

If you’ve got outstanding tax liabilities, it’s important to explore the options available to you as soon as possible. It may be that you can qualify for a New York tax payment plan, which will allow you to make monthly payments against your debt. Or you may be able to negotiate a settlement through an Offer in Compromise. This would involve making a one-off payment to satisfy the tax debt for less than is actually owed. 

Regardless of your situation, in most cases, it really helps to seek the guidance of an experienced tax professional. They can help you identify your options, progress your case, and also take a lot of the stress and pressure off of negotiating with the DTF. And for individuals facing complex legal issues or disputes related to income tax, seeking legal representation may be a necessity.

How to Prevent a New York Income Tax Execution

Having an income execution issued against you can be a nightmare, both financially and emotionally. Whether you’re dealing with one, have resolved one, or just want to improve your tax process, there are key practices that can help you avoid this kind of stress in the future.

Maintain Accurate Records

The first step to preventing tax issues down the line is to get into the habit of keeping good, organized records. Keeping thorough and accurate records of income, expenses, and deductions throughout the tax year can help you feel confident when it comes to filing taxes each year.

File Tax Returns on Time

Stick to your filing deadlines and submit tax returns to the NYS Department of Taxation and Finance by the due dates. This can help avoid penalties and interest charges for late filing and gives you more time to address any potential errors or issues that may arise from filing.

Communicate with Tax Authorities

Whether you’re dealing with state or federal tax liabilities, it really helps to open communication as soon as you receive any notice of payment due. If you believe your liability was calculated in error, or if you’re unsure about how you’re going to pay a tax debt, either way it’s important and helpful for all parties to maintain contact.

Seek Professional Help

If you’re dealing with a tax liability, consider seeking guidance from tax professionals to navigate your situation and ensure compliance. Tax professionals can provide valuable advice on tax planning, preparation, and resolution strategies tailored to individual circumstances, helping minimize the risk of facing collection actions, including income executions.

Bottom Line on Income Executions

A New York income execution, or wage garnishment, can have significant financial and legal implications. If you’re an individual or an employer who has been issued with one, it’s vital to get proactive and communicate with the DTF. Speaking with a qualified tax professional can also help you to manage the situation effectively, as well as help to minimize stress. 

If you’re uncertain about your options or just want to get help in addressing your tax liability as efficiently as possible, our tax experts here at Timothy S. Hart Law Group are ready to help. Contact us for a free consultation today.

New York Income Execution – FAQ

Can an employer fire you for a garnishment?

Generally speaking, no. Federal law prohibits taking unfavorable employment action for one garnishment, therefore firing an employee in this case would be considered unlawful in the State of New York. Additionally, NYS law prohibits employers from firing you solely because of an income execution. However, in some states, multiple garnishments may result in legal termination if the employer chooses to do so.

What should I do if I’ve been improperly served with an income execution?

If you believe you have been incorrectly served with an income execution, it’s vital to first of all review your records and gather documented evidence of your case. From that point, it would be advisable to seek the help of a tax pro, who can guide you in filing a dispute with the DTF.

What triggers an income tax execution in New York State?

In New York State an income tax execution or wage garnishment is typically triggered when a taxpayer fails to resolve their outstanding state income tax debt after receiving multiple notices and opportunities to pay. Delinquent tax liabilities and a failure to respond to tax authorities can result in the eventual issuance of an income execution.

How do I stop wage garnishment in New York?

A wage garnishment or income execution in New York can be stopped by paying the tax liability, negotiating a payment plan or offer-in-compromise, or seeking an official dispute if you feel the execution is incorrect. A last resort may also be to file for bankruptcy, but for most, this would be an extreme and unnecessary method to take.

What are my rights if I receive an income tax execution notice in New York?

There are certain legal rights for those who receive an income execution in NYS. These include the right to request a hearing to contest the execution, if you believe it was issued in error, or if you disagree with the amount being garnished. 

You also have the right to seek legal assistance to better understand your options, and protect your interests throughout the process.