Tax Debt Law Harshly Affects Low-income Earners

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Elaina Aquila and Gabrielle Kornblau, along with Emerson Argueta and Jessie Boas, all students in the Legislative and Policy Advocacy Clinic, wrote an op-ed for the Times Union about a tax law that allows the state to suspend an individual’s driver’s license for owing back taxes.

Imagine struggling to keep a roof over your head and food on the table to take care of your family on a limited income. Now imagine doing that without a driver’s license.

New York’s Tax Law (Section 171-v) authorizes the state to suspend an individual’s driver’s license if they owe $10,000 or more in back taxes, inclusive of penalties and interest. Enacted in 2013 in the midst of a budgetary crisis to pressure scofflaws to pay their taxes, the law has been wildly lucrative, generating more than $700 million in state revenue. A closer look, however, raises a critical question: What happens to individuals who cannot pay their debt?

The unintended consequences of the law constitute the reality for many low-income New Yorkers. Struggling New Yorkers can face mounting tax debt because of a failing business, family health emergency, or disability. The state pursues payment from these individuals even when they rely exclusively on public assistance or Supplemental Security Income, contrary to state and federal laws that exempt these sources of income from collection. The impact is especially harsh on upstate New Yorkers who lack meaningful access to public transportation.

Some individuals want to obtain a restricted driver’s license, but cannot afford the $75 application fee. Even with this license, the taxpayer is not permitted to drive to the grocery store or to religious services; if the taxpayer is or becomes unemployed, they can drive for only three days to look for work; without a job, they also are not allowed to drive their children to school. Some drive without a license out of desperation to try to make a living or raise a family, resulting in more driving-related fees and offenses.

Assemblywoman Helene Weinstein, D-Brooklyn, has introduced legislation to create a financial hardship exemption to this provision in the Tax Law. If enacted, it would automatically exclude from license suspension those individuals who are on public assistance, receive Supplemental Security Income, or who make 250 percent or less of the federal poverty line. The standard is consistent with eligibility for low-income tax clinic assistance.

This proposed exemption would not forgive an individual’s tax debt; it merely allows them to retain their driver’s license. Further, the amendment clarifies that no one who tries to hide or deceive the state about their income — regardless of the amount of debt they owe — would be exempt from license suspension.

The Tax Law should not make it harder for already-struggling individuals to provide for themselves and their families. At minimal cost, the state could relieve low-income individuals of the burdens imposed by a license suspension, allowing them to earn a living and start paying taxes again. Legislators must amend our tax law to incorporate these essential financial hardship exemptions — to reflect fairness, efficiency, and common sense. Weinstein’s bill does just this.

Read the full op-ed.

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