The Massachusetts Department of Revenue (DOR) is the state’s version of the IRS. It collects the state income tax. When a taxpayer fails to pay a substantial amount of the income taxes it owes, the DOR has a variety of enforcement tools. One of these tools is to order the Registry of Motor Vehicles (RMV) to suspend the taxpayer’s driver’s license until the tax is paid or a payment arrangement is agreed upon. A license suspension does not occur overnight. The taxpayer is sent a notice by the DOR that it is intending to suspend the license. If the taxpayer does not respond, then the DOR can notify the RMV to suspend the license.
If the taxpayer fails to respond and the license is suspended, the taxpayer may want to consider a bankruptcy filing to resolve the issue if he or she cannot afford to pay the taxes. Depending on how old the taxes are, the taxpayer may be able to discharge the taxes in their entirety. If that is the case, then the license cannot be continued to be denied by the state. If the taxes are not completely dischargeable, then a Chapter 13 bankruptcy could be filed which would provide for the repayment of the non-dischargeable taxes. The DOR has generally viewed a Chapter 13 as entering into a payment agreement and the RMV will agree to a reinstatement.
Source: Driver’s License Suspensions for Delinquent Taxes and Bankruptcy, Stephen G. Murphy and Allen Rosenberg, ABI Journal, July 2013. Federal law requires bankruptcy attorneys to disclose the following: We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.