New York, NY asked in Gov & Administrative Law, Tax Law and Business Law for New York

Q: Looking for guidance on unique Statute of Limitations for property seizure in NY state

I had a large amount of losses (from 2009 and 2010) that were initially dis-allowed by the IRS which resulted in an audit and a no change letter

NY State followed suit, and disallowed my losses on my NY return, however, they never followed the Federal when my losses were deemed to be proper. Up until this year, I had spoken to NY just once and explained the situation, and had never heard back or gotten any notices. Recently, they froze my personal bank account due to the outstanding (and erroneous lien), but they removed the lien and unfroze my account after explaining again

The question is, NY seized about 55k of my funds back in 2010, thinking they were owed the tax. Additionally, due to a large loss incurred in 2011, not only did I not owe tax, but I believe I should receive a credit for taxes paid (NOL carryback) in 2009 and 2010. If NY State was still able to put a lien and take my $$ as recently as 2 weeks ago, does the Statute work in reverse if I am owed money

1 Lawyer Answer
James L. Arrasmith
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  • Tax Law Lawyer
  • Sacramento, CA

A: In New York State, the rules surrounding the statute of limitations for tax collections and the ability to claim refunds or credits can be intricate. Typically, there is a limit on how long the state can pursue taxpayers for alleged debts, as well as a limit on how long taxpayers have to claim a refund or credit for overpaid taxes.

Given your situation, where losses from 2009 and 2010 were initially disallowed but later deemed proper by the IRS, and New York State's recent actions to freeze your account due to an outstanding lien, it's crucial to understand these limitations and how they apply to your case.

If New York State seized funds in 2010 based on a tax liability that you believe was incorrect, and you now have grounds to claim a credit due to losses incurred in 2011, the question of whether the statute of limitations works in reverse—allowing you to reclaim funds or apply for a credit for past years—depends on specific NY state tax laws.

For New York State tax claims, taxpayers generally have a limited time frame to file for refunds or credits after the payment of the tax or the filing date of the return, whichever is later. However, the specifics can vary based on the circumstances of the case, including any actions taken by the state that might extend these deadlines.

Given the complexity of your situation and the significant amount of money involved, it would be wise to consult with a tax professional or an attorney who is knowledgeable about New York State tax law. They can provide a detailed analysis of your case, including any potential for reclaiming funds or applying for credits based on the statute of limitations and other relevant factors.

Taking swift action is important, as deadlines for making such claims are critical, and missing these deadlines can result in losing the right to recover funds or apply for credits.

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