Tax Relief AnswersTax Debt Help in New York: IRS Options and Free Clinics
The short answer
New Yorkers can owe both the IRS and the New York State Department of Taxation and Finance, which the state calls two separate taxing authorities. For a state balance, you can request an installment payment agreement (IPA) online if you owe $20,000 or less and need 36 or fewer monthly payments; larger plans are requested by phone at 518-457-5434. For people in serious hardship, the state also runs its own Offer in Compromise program, separate from the IRS one.
Federal vs state: who to contact for what
| What you owe | Who to contact | Main options |
|---|---|---|
| Federal income tax, IRS penalties | IRS, 1-800-829-1040 (number listed by the state tax department) | Payment plan, Offer in Compromise, Currently Not Collectible status, penalty relief |
| New York State income tax, state penalties | NYS Tax Department, 518-457-5434 for IPAs | Installment payment agreement, one-time extension, NYS Offer in Compromise |
| A problem the state tax department has not resolved | NYS Office of the Taxpayer Rights Advocate, 518-530-4357 | Review after other remedies are used; it does not handle federal tax |
If the debt is federal
Individuals who owe $50,000 or less can apply online for a payment plan; a long-term plan with direct debit costs $29 online as of October 2026, per the IRS payment plans page. See our pages on the IRS payment plan, the Offer in Compromise and Currently Not Collectible status.
New York installment payment agreements
The rules below are from the department's IPA page and its request page, updated June 29, 2026.
- You need a bill first. You cannot request an IPA without a bill. If you just filed a return showing a balance, keep paying until the bill arrives.
- Online limit. Through your Online Services account, for a balance of $20,000 or less and no more than 36 monthly payments. Above either limit, call 518-457-5434.
- Paying within 60 days? Request a one-time extension at 518-457-5434 instead.
- How the state decides. It reviews your payment and filing history and finances, and may file a tax warrant, which the state says creates a lien on your property, as a condition of the agreement.
- Payments. Monthly payments are withdrawn from your bank account on the 5th or 15th.
- Costs that continue. Penalty and interest keep accruing on the unpaid balance, and the state keeps applying your state and federal refunds to the debt. The department says it does not charge late fees. The IPA pages do not state a setup fee; ask when you request the plan.
You must file and pay future taxes on time, and a new bill does not roll into an existing IPA. If you default, the state can modify or end the agreement after 30 days' notice and resume collection, which can include wage garnishment, levies and, for balances over $10,000, driver's license suspension.
New York State Offer in Compromise
The state's Offer in Compromise page, updated September 18, 2026, says the program can consider offers from:
- individuals and businesses that are insolvent or discharged in bankruptcy, and
- individuals who are not insolvent, if paying in full would create undue economic hardship (unable to pay reasonable basic living expenses).
The state uses the IRS Collection Financial Standards to judge basic living expenses. You may apply online if you are an individual, the debt is personal income tax only, you have no open protest or bankruptcy, and you owe the department $15,000 or less. Otherwise apply by mail with Form DTF-5 and Form DTF-4.1 or DTF-4, plus the financial records the page lists. Questions go to 518-591-5000.
Free Low Income Taxpayer Clinics in New York
Low Income Taxpayer Clinics (LITCs) are independent organizations that receive IRS grants and represent people with the IRS for free or a small fee, generally for income at or below 250% of the federal poverty guidelines (2026: $39,900 for one person), per the Taxpayer Advocate Service LITC page. IRS Publication 4134, Rev. 1-2026, lists these New York clinics:
| City | Clinic |
|---|---|
| Albany | Legal Aid Society of Northeastern New York LITC |
| Bronx | Bronx Legal Services LITC |
| Brooklyn | Build Up Justice; Brooklyn Legal Services LITC |
| Hicksville | Sharina World Foundation |
| Ithaca | Cornell University LITC |
| Jackson Heights | 82 St Tax Services |
| Jamaica | Queens Legal Services LITC |
| Long Beach | Economic Advancement Resources Network |
| New York | Fordham Law School Federal Tax Clinic; Mobilization for Justice; The Legal Aid Society LITC |
| Syracuse | Syracuse University College of Law LITC |
FAQ
Does an IRS payment plan cover my New York State tax?
No. The state tax department and the IRS are separate taxing authorities, so each balance needs its own plan.
How much can I owe and still request a New York IPA online?
You can request an IPA online for a balance of $20,000 or less with no more than 36 monthly payments. For more, call 518-457-5434.
Do penalties and interest stop during a New York IPA?
No. The department says penalty and interest continue to accrue on the unpaid balance for the length of the agreement.
Who qualifies for a New York State Offer in Compromise?
Individuals and businesses that are insolvent or discharged in bankruptcy, and individuals for whom paying in full would create undue economic hardship. The state does not accept every offer from qualifying applicants.