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How to Deal with New York Tax Liens

If you owe back taxes to New York, always remember is that ignoring the problem won’t make it disappear. It’s false comfort to think that pretending a State tax deficiency isn’t there. That won’t be enough to avoid any negative consequences. Such thinking isn’t consistent with reality. If you owe taxes to New York and fail to timely satisfy them, the State issues a tax warrant. A tax warrant creates a lien against both your real and personal property. New York State tax liens allow the State to sell your property to settle your back tax debt.  

To issue a tax warrant, the State must first confirm a tax deficiency. It must then give the taxpayer a certain amount of time to pay the deficiency. It will also send out several notices regarding the deficiency to the taxpayer. In this article, we will discuss the different steps for a taxpayer to avoid having a tax warrant issued. We’ll also go over the different options taxpayers have to remove a tax lien once it’s imposed by New York. As will be shown, New York tax liens are nothing to take lightly. Nonetheless, if a taxpayer makes the effort and consult with a qualified tax professional, a bad tax situation can improve. That’s true, no matter what the circumstances. 

The Basics of New York Tax Liens 

If you have unpaid state tax liabilities, the first step for the State is for it to send you notice. The notice the State sends is either a notice of deficiency or a notice of determination. It’s sent by the State to your last known physical address. The State sends notices of deficiency to individual taxpayers. It sends notices of determination to business entities. In either instance, there is no requirement that the State confirm that a physical address is up-to-date. Accordingly, t’s up to you to make sure that the information in their file is correct. Once the State sends this initial notice, you will have 90 days to address your tax account. If you don’t, the State may take further action.  

Final Notice

When time to satisfy your back tax liability expires, the State will send out a final notice demanding payment. If you fail to respond to this final notice within 21 days, then the State may pursue a tax warrant. When the State pursues a tax warrant, the warrant is filed with the county clerk of your last known address. It becomes a matter of public record. After filing a tax warrant, the State will also send out a final notice to inform you about the State’s creation of the warrant.  

A tax warrant is similar to an arrest warrant. That is, at least in the sense that it represents legal action taken by the State to resolve an issue. However, unlike an arrest warrant, a tax warrant does not give the State the ability to physically detain you. Rather, it instead gives the State the ability to take certain collection actions against your property. With a New York tax lien in place, New York State gains the ability to seize your financial assets. It can also seize your wages, real and personal property and, most recently, even suspend your driver’s license. So, while you’ll only face jail time for criminal wrongdoing, it’s clear that failing to satisfy back State tax debt can still lead to serious misery. 

Addressing New York Tax Liens: Prevention & Cure 

As the saying goes, an ounce of prevention is worth a pound of cure. This is undoubtedly true in the case of New York tax liens. If you receive a notice of deficiency or determination, there are several things you can do to help yourself. You need to take steps before a tax warrant is issued, though. For instance, you can pay your debt in full. Alternatively, you can set up an installment plan agreement (IPA). Or you can make an offer to settle for less than the full amount with an offer in compromise. If you address your debt in one of these ways, you can stop the tax warrant from becoming a reality. 

Challenging a Tax Warrant

If you have a tax warrant issued against you, you can remove it by satisfying the debt. You can also remove it by successfully challenging the validity of the warrant. You can also defeat it by showing that the underlying liability is incorrectly assessed. Or you do so by showing that the State made some material error in the tax warrant filing procedure. Additionally, New York tax liens are removable by filing a personal bankruptcy and obtaining a discharge. That’s because bankruptcy allows for the successful discharge of personal income tax debts. Notably, however, New York tax liens may still operate against real property.

Twenty Year Term

Finally, it’s worth pointing out that New York tax liens don’t last forever.  They fall off with the passage of time, if the State is unable to collect within 20 years. That is, New York tax liens have a 20 year statute of limitations). So, while the State has six years from the time of assessment to file a tax warrant, the related lien remains in place for 20 years once the warrant has been filed.  

New York Tax Warrant Attorneys

Dealing with New York tax liens is a stressful, complicated process. It requires patience and energy, no matter the specific facts of your situation. If you’re facing New York tax liens, it’s in your interest to consult with a qualified New York tax attorney who can help you navigate this process. If you find yourself in such a predicament, don’t hesitate to contact Mackay, Caswell & Callahan, P.C. online, or or to one of our attorneys today. 

Image credit: vincent desjardins