Authorizes the denial of renewal of professional, business or trade licenses where a taxpayer has outstanding tax debt which the taxpayer has failed to settle

Summary of provisions

Section 1 amends §32 of the Executive law by adding a section three, which mandates that state agencies deny the renewal of professional licenses to individuals unable to provide proof that they do not owe tax debt.

Section 2 amends §401 of the State Administrative Procedure Act to state that an individual must submit a self-certification, under penalty of perjury, that they do not have a tax debt when seeking to renew a license, and states that agencies may deny the renewal of a license to individuals that owe tax debt.

Section 3 amends §53 of the Judiciary Law to state that an individual must submit a self-certification, under penalty of perjury, that they do not have a tax debt when seeking to renew their license as an attorney or counselor at law.

Section 4 lays out an effective date of January 1, 2012.

Existing law

Existing law does not give state agencies the authority to deny the renewal of licenses based on a licensee owing tax debt to New York State.

Statement in support

The ability to effectively collect taxes is crucial for the functioning of State government. While the Department of Tax and Finance has various powers and tools at its disposal to try to collect tax debt, according to the department there was an outstanding collectable tax debt of $2.5 billion as of April 30,2009.

In several other states, such as Illinois, Massachusetts, Minnesota, Missouri, Rhode Island, and Wisconsin, revenue departments have the power to suspend or deny the renewal of professional licenses, and other licenses, if an individual owes a tax debt to the state. These programs have proven successful, and have been expanded and improved over the last few years. In Illinois, an improvement in their ability to match tax debt records with those of licensing agencies brought an additional $4 million in revenue collected between February 2009 and the end of

June, 2009. Massachusetts granted the power to suspend or deny the renewal of professional and driver's licenses to their Department of Revenue starting in 2008, and from September 2008 to July 2009 this program collected an additional $9 million in revenue.

This legislation would allow the State to deny renewal of professional or business licenses if an entity was found to owe taxes to the State, which is defined as having a tax warrant issued against them. All State agencies that license professionals would add as part of the license renewal application a form in which individuals would, under penalty of perjury, affirm that they did not owe a tax debt, or had entered into an agreement with the Department of Tax and Finance to payoff the tax debt. This is similar to the system which State agencies use to check compli- ance with an individual's child support obligations. If any agency was informed, or found out during any audits that an individual owed tax debt at the time of the affirmation, they would be able to take action against an individual, including revoking their license as a penalty for lying on their renewal application.

Prior legislative history

This is a new bill.

Budget implications

There will be costs associated with the creation of new self-affirmation forms as part of the license renewal process. This bill shall also lead to increased collections of outstanding tax debt, which would supersede any costs, as these programs have in all other states that implement them.

Effective date

The effective date of this act is January 1, 2012.