New York State Tax Warrants: A Complete Guide for Taxpayers
If you have unpaid taxes, the New York Department of Taxation and Finance (DTF) will notify you of an overdue balance and request voluntary payment. Failure to respond promptly can lead to escalating enforcement actions, which may include a NY tax warrant.
A tax warrant is the NYS DTF’s way of saying they now have a legal claim to your property because of unpaid taxes. The stakes are high: think wage garnishment or even property seizure. But don’t panic! With the right steps and guidance, you can tackle a tax warrant and protect your income and assets before it’s too late.
To get help today, contact us at the Law Offices of Stephen B. Kass, today.
Key Takeaways
- What is it? — A New York State tax warrant is a notice of a civil judgment against you due to an overdue tax balance.
- What does it mean? — A tax warrant means that New York State has a right to seize your property, garnish your wages, and affect your ability to obtain credit.
- What should I do? — Pay off your balance in full whenever possible. Otherwise, consult a tax professional as soon as you can.
- What are my options? — You can agree to a payment plan with the NYS DTF or explore other relief options offered by the state.
What Is a New York State Tax Warrant?
A tax warrant is the state’s legal claim to your assets. It attaches to all of your assets, including assets that you acquire after the warrant is issued. It also gives the DTF the legal authority to claim your assets or income based on the debt you owe.
Despite the term “warrant” being in the name of this document, it is not a criminal judgment or an indication that you could be arrested. Tax warrants are civil in nature, so you do not have to fear being arrested unless your case gets referred to the Department of Justice, but that only happens if the revenue agencies believe that you have committed criminal tax fraud or evasion.
A tax warrant may be filed if you have unpaid income tax, withholding tax, sales tax, payroll taxes, or other types of taxes imposed by New York State. Once a tax warrant is in place, the DTF can legally freeze your bank account, seize your property, or garnish a percentage of your paycheck – but typically, they must send an additional notice before taking those actions.
How Does a NY Tax Warrant Compare to an IRS Tax Lien?
One of the most significant differences between an IRS tax lien and an NYS tax warrant is that state-level claims are typically pursued much more aggressively and quickly. Additionally, IRS tax liens generally last 10 years, while NYS warrants are active for 20 years.
It’s critical to understand that federal tax liens are handled by the IRS, while state tax liens are handled by the NY DTF. You must work with the IRS to resolve federal tax liens and contact the state about NY tax warrants. Both agencies have different rules and processes in place.
How to Search for a New York State Tax Warrant
Are you worried there could be a New York State tax warrant out in your name, but you’re not sure? If so, you should confirm your tax status as soon as possible. The sooner you know that there’s an issue, the faster you take steps to resolve it.
Fortunately, tax warrants are public records, so it’s usually easy to do some research and determine your status. One way is to contact your local county clerk’s office to see if any liens have been filed against you; or you can also contact the NYS Department of Taxation and Finance directly.
You can also find your status online if you prefer. Navigate to the New York Tax Warrant Search Directory and click “Begin search.” You will be prompted to input a security code and agree to a small disclaimer. From there, you will be able to search for any warrants using the taxpayer’s name, the county where the warrant is filed, any warrant IDs you have, or the docket amount or date. Want to search for an IRS lien? Then, check out our guide to IRS lien searches.
Consequences of Not Resolving a NY Tax Warrant
When you receive a tax warrant, it’s important to take action, particularly if you owe more than $100,000 or if you’re delinquent on payroll or trust fund taxes. The consequences of ignoring any tax warrant are already severe, but the NYS DTF may decide to pursue you much more aggressively if you owe a significant amount of tax or have unpaid trust fund taxes.
Failing to resolve your situation or contact the NYS may lead to them garnishing your wages. That means you could be handing over up to 10% of your income to the NYS DTF until your balance is paid off. In New York, the DTF contacts you to request that you voluntarily send in a portion of your wages, and if you don’t comply, they send a notice to your employer instructing them to garnish your wages. Responding to the first notice can save you from professional embarrassment.
The NYS DTF might also place a levy on your bank account – they have the right to seize everything in your account on the day of the levy, up to the amount due plus collection costs. The bank will freeze everything, with no regard to outstanding checks or upcoming direct debits.
The DTF has the authority to seize other assets, as well. That includes your investment accounts, many types of retirement accounts, personal property, and real estate.
A tax warrant is also public information, so not paying off what you owe could impact your professional and personal reputation. Lenders might also be hesitant to work with you. Warrants can stay in place for up to 20 years, meaning the consequences of failing to address them will be long-lasting.
How to Resolve a NY Tax Warrant
Instead of dealing with the complications that come with a NY tax warrant, it’s better to address the issue directly. One of the best ways to completely fix the situation is to pay off what you owe in full, including any penalties, interest, or fees.
If that’s not an option, your next best alternative is to set up a payment plan. An installment agreement will allow you to pay off what you owe over time. In exchange, the DTF will agree not to pursue additional collection efforts. However, they may leave the warrant in place until you complete the installment agreement and pay in full.
Another potential option is to file for an offer in compromise agreement. This type of agreement allows you to pay off less than what you owe, but the state will only accept your offer if it represents the most you can afford to pay based on your income and assets. Depending on your circumstances, there could be other ways to reduce your balance due, such as penalty abatement.
Once you’ve paid what you owe, the state will file a satisfaction of judgment, which shows that the tax liability related to the warrant has been paid. If you need immediate proof that you’ve paid off your tax liability, you can request a pending satisfaction.
The DTF may also be willing to do the following if it helps to collect the tax:
- Warrant release – The DTF releases the warrant from one or more pieces of property, typically so that you can sell the property to pay your taxes.
- Subordination – The DTF lets another lender take priority, generally so that you can take out a loan against an asset to pay your taxes.
A tax attorney can help you identify the best option for your situation.
What If You Ignore a Tax Warrant?
If you do nothing, the state can move forward with wage garnishment or asset seizure as explained above. Additionally, they have the right to the funds if you sell your property. For example, say that the DTF issues a tax warrant for $20,000. You sell an RV that you own outright for $30,000. The state takes $20,000, and you get the rest.
Or to give you another example, imagine that you sell your home for $300,000 and you owe $200,000 to your mortgage lender. Before transferring the title, the closing company will send $200,000 to your mortgage lender and $20,000 to the DTF to satisfy the warrant. Then, you will get the remaining amount.
If the property you’re selling isn’t worth enough to satisfy the warrant in full, the warrant will continue to exist. To transfer the title in these situations, you will need to request a release. That rule prevents taxpayers from saying that assets have no value and then transferring them to friends or relatives.
FAQs About New York State Tax Warrants
Do you have more questions about New York State tax warrants, the consequences of ignoring them, or how to resolve them? While we’ve provided some general information below, you should consider talking with an attorney about your unique situation.
Can you go to jail for a NY tax warrant?
No; a tax warrant is not the same as a warrant for your arrest.
How long does a NY tax warrant last?
A tax warrant can last up to 20 years.
Will a tax warrant appear on my credit report?
A tax warrant won’t automatically appear on your credit report or directly impact your credit score, but tax warrants are public information. Lenders or creditors who discover a tax warrant may opt not to work with you.
Can I sell property with a tax warrant?
Yes, you can sell your property even if you are currently under a tax warrant; however, all the money you receive from the sale (up to the face value of the warrant) must be remitted to the NYS DTF. The money will go towards reducing or satisfying your tax debt. If the proceeds of the sale are less than the warrant, you will need to obtain a release.
Can I resolve a tax warrant without paying in full?
Yes, you may be able to resolve a tax warrant by setting up a payment plan, negotiating an offer in compromise, or requesting release or subordination.
Why Work With a New York Tax Attorney?
When you work with a tax attorney, you gain a legal advocate who will fight for your best interests. The right lawyer will focus on protecting your assets and minimizing the overall impact of the NYS DTF’s enforcement actions.
New York tax laws are complex, and a tax attorney can educate you about your options and help you find the best type of relief.
Take Action Today: Resolve Your New York Tax Warrant
Don’t wait to act if you’ve received a tax warrant from the New York Department of Taxation and Finance. The longer you wait, the greater the potential consequences and the fewer relief options available to you.
A tax warrant doesn’t have to ruin your finances. Here at The Law Offices of Stephen B. Kass, we can help you begin working towards a quick and effective resolution.
Please schedule a consultation with our New York tax resolution lawyers now to discuss your path forward. Schedule your appointment by completing our online form or contacting our New York office directly at (212) 843-0050.
Sources:
https://www.tax.ny.gov/enforcement/collections/tax-warrants.htm
https://www.tax.ny.gov/enforcement/collections/release-subordination-of-lien.htm
