New York Tax Warrant

A New York tax warrant is a legal document issued by the New York State Department of Taxation & Finance. It serves as a formal notice of a taxpayer’s outstanding state tax liabilities in New York and secures the state’s interest against any assets owned by the taxpayer, functioning essentially as a lien. Once issued, a tax warrant ensures that the state is paid out of the sale of any real estate or other assets before the taxpayer is paid, and is a common precursor to various collection actions against the taxpayer, including levying bank accounts, garnishing wages, seizing property, or placing liens on assets.

Simply put, a tax warrant is the state’s way of escalating collection efforts when attempts to collect unpaid taxes through voluntary means have been unsuccessful. A tax warrant is often the first step toward property seizure, and it’s a very serious matter requiring immediate attention from the taxpayer.

How Do Tax Warrants Work?

When a taxpayer fails to pay their outstanding tax liabilities or respond to collection notices, the New York State Department of Taxation & Finance may issue a tax warrant against the taxpayer. Before a tax warrant is issued, you will be formally notified and given the opportunity to resolve it before it is filed.

Once a tax warrant is issued, it creates a legal claim against the taxpayer for unpaid taxes. The warrant is recorded in public records, establishing a lien on the taxpayer’s property and assets. From this point, the NYS has the legal ability to take various collection actions against the taxpayer, including:

• Levying Bank Accounts: The state may seize funds from the taxpayer’s bank accounts to satisfy the outstanding tax debt.
• Garnishing Wages: The state may garnish a portion of the taxpayer’s wages or salary to fulfill the tax obligation.
• Seizing Property: The state may seize and sell the taxpayer’s property, such as real estate, vehicles, or other assets, to satisfy the tax debt.

Tax Lien vs Warrant – What’s the Difference?

There is essentially no difference between a tax lien and a tax warrant. They both have the same function whether you’re comparing a state or federal lien or warrant. Some states use the word lien, while others, like New York, use the word warrant. Both represent legally binding claims against your assets.

Can I Go to Jail for a Tax Warrant?

No. A tax warrant is not the same as a warrant for arrest, and it does not mean that you’ll be sent to jail. In New York State, individuals cannot be incarcerated specifically for having a tax warrant issued against them. Remember, unpaid taxes are usually a civil matter, not a criminal tax matter.

That said, it’s important to recognize the necessity of resolving any tax debt issues promptly and comprehensively. While you can’t be imprisoned because of a tax warrant, failure to address your tax debt could escalate the situation and potentially trigger more severe legal and financial consequences down the road, and criminal charges are a possibility in extreme situations.

When Do Tax Warrants Expire?

Tax warrants issued by the New York State Department of Taxation & Finance stay in place for 20 years. While a tax warrant is active, an individual’s ability to sell or transfer assets, as well as borrow money, is severely restricted.

How to Release a NY Tax Warrant

Fundamentally, in order for a tax warrant to be released, the tax debt must be paid. At the very least, a payment plan must be arranged if the debt cannot be settled in one payment. 

Here’s a general outline of the process of releasing an NYS tax warrant:

Contact the NYS Department of Taxation & Finance

Taxpayers can reach out to the NYS Department of Taxation & Finance to discuss their situations and explore their available options. You will likely find the relevant contact information on any official notices that have been issued to you regarding the debt. Alternatively, you could contact the Collections and Civil Enforcement Division to begin resolving your debt.

Negotiate a Payment Arrangement

If taxpayers are unable to pay off the debt in one full payment, it may be possible to negotiate a payment arrangement with the New York State Department of Taxation & Finance. The details of your payment arrangement will vary depending on your specific situation, but generally, this looks like setting up an installment agreement to pay off the tax debt in monthly payments.

Submit Documentation & Make Payments

In order to qualify for a payment arrangement, taxpayers will have to provide certain documents to prove the reality of their circumstances. This could be proof of payment or financial hardship or documents to support their request for the removal of the tax warrant. If you’ve made a payment arrangement, then of course it’s vital to follow through and stick to your agreement in order to eventually release the warrant.

Keep in mind that if you arrange a payment plan with the NYS Department of Taxation & Finance to settle your warrant, it will remain in place until the debt is fully paid off. The difference is the state will not pursue collection actions against you, but technically, the warrant will still remain.

If you believe you’ve had a tax warrant erroneously filed against you, it is possible to release it, although you’ll likely need to seek professional help. A qualified tax professional like those at McLaud Law can help you navigate that process with confidence.

Satisfaction of Judgement

Once a tax warrant has been released (i.e., the debt is paid off), the Department of Taxation & Finance will issue a Satisfaction of Judgement. This document is official proof that the warrant has been paid and might be necessary documentation when taking out a future loan.

If you need a Satisfaction of Judgement letter before the state sends you a copy, you can request a Notice of Pending Warrant Satisfaction once the payment has been guaranteed and cleared by your bank.

It’s important for taxpayers to work closely with the New York State Department of Taxation & Finance, to ensure that all requirements are met and that the judgment is properly satisfied. Seeking professional assistance from experienced tax professionals can also be helpful in navigating this process.

Searching for NYS Tax Warrants

The NYS Department of Taxation & Finance regularly updates a public database of tax warrants. This means that you can easily do a search if, for some reason, you suspect that there is a tax warrant out against you. You can search for your name and filter your search by county, warrant ID number, and other details in order to locate an active tax warrant.

New York Tax Warrants FAQ

Can I take out a loan with a tax warrant?

Generally speaking, most lenders won’t want to provide a loan to someone with an active tax warrant. However, if you’re seeking a loan to pay off the tax debt, it may be possible if the state agrees to subordinate the tax warrant. 

Subordinating the warrant just means that the state allows the lender to place a lien on the property that supersedes the state’s claim to the asset. Generally, NYS will be willing to do so if you agree to use the proceeds of the loan to pay off your tax debt. 

However, you must contact the DTF and explain the situation, first. If you’re thinking about taking this route, it is advisable to consult with a tax professional, as successfully navigating this process can be difficult without experience.

What happens if I ignore a New York tax warrant?

Ignoring a state tax warrant will likely lead to collection actions against you, and will make it extremely difficult to borrow money and sell or transfer assets. For as long as a New York tax warrant goes unpaid, you’ll be subject to whatever collection actions the DTF chooses in order to satisfy the debt. Again, that may include wage garnishment, asset seizure, levy on bank accounts and retirement accounts, etc. 

How long can New York State collect back taxes?

New York State has up to 20 years during which to collect back taxes from delinquent accounts. In contrast, the IRS has a 10-year statute of limitations on collections. In other words, if you fail to pay both state and federal taxes, the IRS will be able to come after you for 10 years, and NYS will be able to come after you for 20 years.

Professional Help with New York Tax Debt

Having a tax warrant issued against you can ruin your finances and create untold stress for years to come. If you’re dealing with a New York tax warrant, it’s vital to seek the professional help you need to figure out a way through. And if you’ve got lingering debt that might soon result in a tax warrant, taking action now can help you avoid devastating collection actions against your property.

Our experts at McLaud Law are ready and able to provide you with reliable guidance. Talk to us today about your state tax debt, and let us help you to find the best step forward for your situation. To get help now, contact us today. Give us a call or fill out the form for a free consultation.