Collecting Out of State: The Policy and Practice of New York’s Tax Department

By Dolores Rodriguez

More than a year ago Allied Interstate Inc., a fully licensed, bonded and insured collection agency, contracted with the New York State Department of Taxation and Finance to collect for out-of-state cases. In the past, the department has had difficulty collecting when the taxpayer moves to another state. These cases are now being referred to Allied, since they can obtain legal action in the respective states. The department carefully monitors Allied and is free to break the contract if the collection agency employs tactics that are considered unethical.

Prior to turning a case over for collection, the department sends the taxpayer a 30-day notice. Allied tries to recover taxes by making telephone calls or through correspondence. As of the Dec. 11 committee meeting, there are 178 cases going out for legal action and 400 cases worth more than $100 million are to follow. The objective is to inform the taxpayer that even though they have moved out of state, their debt is still due.

Cases that return to New York go back to the department since Allied does not have in-state jurisdiction. Warrant and judgement is transferred to other states that take each judgement and file it in their home state. Once that is accomplished, Allied can pursue the case.

Offers in compromise are made with the department and not with Allied. Allied will notify the department when this situation occurs.

Allied fees are based on what is collected or on a contingency basis. Once a case has been forwarded to Allied, contact should remain with the collection agency unless there are extenuating circumstances.