Tax Collection Nightmare from across the Pond

Tax Relief Scrapped for Travel

In New York State, people with outstanding tax bills in excess of 10,000 US Dollars face losing their driving licenses. The first step is for the New York State Department of Taxation and Finance to send the initial suspension notices – 16,000 of them – to delinquent taxpayers. The taxpayer then has 60 days to arrange payment. Failure will produce a second letter from the Department of Motor Vehicles allowing 15 days to respond. In the continued absence of payment, the driving license will be suspended. Drivers whose licenses have been suspended in this way can apply for a limited license permitting them only to drive to and from work. It’s an interesting approach which has been tried by other states including Rhode Island and Maryland. Attacking American tax debtors via their legendary love for their automobiles sounds like a cheaper process than litigating to collect unpaid tax debts. Undoubtedly, it will have a shock value. And PR impact too. While some people who have lost their driving licenses might be tempted to drive anyway, and risk the attendant arrest and penalties, that won’t be the end of the matter. After 75 days, when the driving license has been suspended, the tax authorities can still go after the tax debt. But if license suspension persuades even half of New York State’s 16,000 tax scofflaws to pay up within 75 days, then the state authorities will think it worthwhile. Would it work in the UK? In principle, almost certainly. And in practice? Linking the DVLA computer system to HMRC’s hardly bears thinking about. And then there are the Human Rights Act implications.