Proposal Could Raise $4.5 Million in First Year Revenue
Governor Andrew M. Cuomo today announced legislation in the FY 2019 Budget that allows the state to tap the unclaimed funds of debtors to pay off tax debts for which a warrant hasn't been filed.
"This is a common sense reform that cuts red tape and bureaucracy and holds debtors responsible to pay what they owe," Governor Cuomo said. "With this legislation, we will hold scofflaws accountable and ease burdens on hardworking taxpayers across New York."
Under current law, New York may apply a taxpayer's unclaimed funds, such as from dormant accounts or unclaimed estate proceeds, to fixed and final warranted tax debt, but unclaimed funds cannot be assessed for unwarranted debt. A tax warrant is the equivalent of a legal judgment and may be filed during the collection process. Unwarranted tax debt is considered fixed and final pending a possible tax warrant if not resolved.
The current unclaimed funds program against warranted debt has generated $40 million since it took effect in 2015. Of that, $21.5 million has come from the automated funds offset of more than 117,000 taxpayers. Additionally, The Tax Department does a manual review of unclaimed funds, which has brought in the remaining $18.5 million.
By allowing unclaimed funds to be used to offset unwarranted tax debt, the state projects first year revenue at $4.5 million combining both automated offsets and manual exceptions. The subsequent total annual revenue projection from unwarranted debt is $3 million.