Recently enacted New York State legislation revises the 20-year statute of limitations to collect tax liabilities that have been assessed and for which a notice and demand has been issued. The legislation also provides for additional limitations on the Tax Department’s collection powers. This statute of limitations is applicable to all taxes, and any special assessments, fees, interest, additions to tax, penalties, or other impositions by the Department. Under prior law, the 20-year period did not begin to run until a warrant was actually filed.
Further, the 20-year period was extended if the taxpayer acknowledged an indebtedness in writing, or made a payment towards the liability. The new law provides that a tax liability will not be enforceable and will be extinguished after 20 years from the first date a warrant could be filed by the Department. In addition, a payment by the taxpayer or an acknowledgement of an indebtedness in writing by the taxpayer no longer extends the 20-year time limit as under prior law. The new law is effective as of August 17, 2011, but the 20-year time limit starts from the first date a warrant could be filed for a tax liability, regardless of when the tax liability was assessed, whether before or after the effective date of the legislation.