Professor Elizabeth Cooper and two Legislative and Policy Advocacy Clinic students, Joshua A. Liebman and Christopher Ziemba, wrote an op-ed for New York Law Journal regarding a New York state tax law that allows the Department of Taxation and Finance to suspend the driver’s license of anyone who owes $10,000 or more in state taxes.
Taxes, like death, are a certainty. We try not to think much about either one. We were all shuffling through pay stubs, receipts, government forms and computer programs in preparation for tax day last month. Those at the top hire skilled attorneys and financial advisors to pay as little as possible. Those in the middle sweat through the process, hoping they haven’t missed anything, hoping for a few dollars back in their pockets at the end.
But what about those at the bottom?
Anyone can experience financial turmoil in life. You can lose a job. You can take a risk on building a business that is still teetering between success and collapse. You can get sick, and as medical bills pile up, your savings dwindle. Debt and even poverty can come swiftly, through mistake or just simply through bad luck. And taxes follow. With a certainty.
Recently, the state of New York created a powerful tool to enforce this certainty. In 2013, the legislature passed Tax Law 171-v, giving the state’s Department of Taxation and Finance the power to suspend the driver’s license of anyone who owes $10,000 or more in state taxes. The law has proven to be an effective tool to pressure those who ignore their tax debts, and it has helped the state collect over $400 million in the past three years.
But there is a deep flaw in the program.
For those New Yorkers who are already struggling to meet their basic living expenses, the sanction has proven to be devastating. Outside of major cities with functional public transportation, a driver’s license is absolutely critical. Without one, simple things like getting groceries or visiting family become terrible challenges. Maintaining employment becomes incredibly difficult. Gaining employment becomes unfeasible. Accessing medical treatment becomes impossible.
Losing the right to drive can be damaging to those of any income, which is why the suspension program has been so effective at enforcing tax collection. But the burden that the program places on those who are experiencing economic hardship is simply insurmountable. As one struggles to recover from debts and escape poverty, the very thing that can most help in this struggle is taken away.
Crucially, the license suspension program has no exemption for economic hardship. The law was designed to force collection against those who are able but unwilling to pay. But enforcing it against those who are willing but unable to pay does not help collection, because there is no money to be collected. Without a hardship exemption, the license suspension program is simply punishing poverty.
The department may claim that its “Offer in Compromise” program is available to settle tax debts for less than the full amount owed. But the Department makes no effort even to inform taxpayers about this program when it seeks to suspend their driver’s licenses. And there are deep flaws in this program as well. The procedural and documentation requirements are extensive, much more than what the IRS requires for its compromise program. There is no guidance for the taxpayer on how to negotiate an acceptable amount, again unlike IRS practice, which provides clear, direct and simple guidance to its tax debtors. For those who can barely afford to meet their basic living expenses, let alone to pay for financial and legal services to help navigate the state’s complex tax bureaucracy, this is another insurmountable challenge.
In short, many New Yorkers struggle to afford basic living expenses and struggle to pay what taxes they can. But they now find themselves burdened by odious procedures, opaque policies and a punitive license suspension program meant to pressure those who could pay their tax debts but choose to ignore them—not to punish those economically disadvantaged New Yorkers who would be willing to pay but simply can’t.
We urge New York’s Department of Taxation and Finance to allow for a hardship exemption to the driver’s license suspension program. We urge the department to simplify and clarify its procedures for settling a tax debt. We urge the department to understand that low-income New Yorker’s already face tremendous burdens, and we urge the department not to add to these burdens when there is no realistic prospect of collection. And if the department is unwilling or unable to make these reforms, we urge the state legislature and the governor to press for these reforms and, if necessary, to fix the laws themselves. There is no justification for punishing poverty in this way.
Reprinted with permission from the May 10, 2017 issue of New York Law Journal. © 2017 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.