A let’s-make-a-deal bid to collect some of $47.5 billion in back tax bills for the cash-starved state has brought in a paltry $50 million — less than one tenth of one cent per dollar owed.
The state Department of Taxation and Finance recently sent out 700,000 “in vitations” to companies — many defunct — and people slapped with tax warrants going back as far as 1966.
The nearly broke state is desperate to collect from these alleged deadbeats, some whose corporate, income and sales-tax debts have ballooned to many times their original amounts.
But the state is hemmed in by amnesty laws that lets delinquents off the hook after 20 years.
The state’s “invitations” offered to forgive 80 percent of the penalties and in terest on tax bills more than six years old. For debts three to six years old, the discount was 50 percent.
If everyone took the bait, the state would have collected about $13 billion.
The state hoped to raise $250 million.
It collected $50 million as of Friday, two weeks after the deadline.
Nearly 30,000 corporations and individuals sent checks, a spokesman said. The biggest payment was $395,000.
The Penalty and Interest Discount program, or PAID, was meant to help reduce the state’s budget deficit, but it will barely make a dent in the $9 billion gap.
“Clearly, the revenue did not meet expectations,” said Matt Anderson, a spokesman for the state Budget Division. “But it’s $50 million the state didn’t have before, and that’s helpful in this difficult fiscal climate.”
The letters to debtors didn’t mention that New York law bars the seizing of property, bank accounts or other assets to enforce liens after 20 years, with few exceptions.
One letter terrified an 83-year-old former New Yorker who owned a gas station/auto shop in Queens that closed more than 25 years ago.
It said he owes $8.6 million in taxes and penalties going back to 1982 and 1985.
Here’s the deal, it said: Write a check today for $1.9 million, and save $5.7 million.
“He’s scared to death they’ll take his home away,” said his lawyer, Sid Davidoff. The Florida retiree, whose wife is ailing, knew of no tax debt before the letter — and doesn’t owe a dime, the lawyer said.
“They’re basically saying you can get a bargain by paying a debt that the state can’t collect and never proved was owed,” Davidoff said.
* $47.5B – Back taxes owed statewide by 700,000 New York delinquents.
* $250M – Amount state hoped to collect in this year’s discount amnesty program.
* $50M – Amount actually collected.
Source: NYS Department of Taxation and Finance
