If you owe back taxes, the government can take serious action to collect. A tax warrant is a legal claim filed by a government entity, like the New York State Department of Taxation and Finance (NYS DTF), when you haven’t paid your taxes.
This guide will explain what a tax warrant is, particularly in New York State. We’ll cover the following:
- What a tax warrant is and what it means for you
- How unpaid taxes turn into a warrant
- How a warrant is different from a lien
- What to do if you have a warrant
- How to get proof of payment
- How to get a loan if you have a warrant
What is a Tax Warrant in New York?
A tax warrant is essentially a civil judgment against a taxpayer for an amount of unpaid tax. It’s the legal mechanism the New York State Department of Taxation and Finance (NYS DTF) uses to make a claim against your assets if you haven’t paid your taxes.
When a tax warrant is filed, it creates a lien against your real and personal property. This lien gives the state the right to seize and sell your assets in order to satisfy the tax debt.
How Tax Warrants Are Issued in NY
Tax warrants are filed electronically with the New York State Department of State and with county clerks’ offices, which makes them a matter of public record.
Typically, before a warrant is filed, the NYS DTF will notify you of the overdue tax bill and give you a chance to resolve the debt before taking further action.
What happens if New York State issues a tax warrant against me?
New York State tax warrants can have serious consequences:
Asset Seizure and Wage Garnishment
The state can take your wages, income, and property to pay off your tax debt. This often involves wage garnishment, where a portion of your paycheck goes directly to the state.
Impact on Financial Transactions
Because a tax warrant creates a lien, it can create difficulties if you try to sell or refinance property.
Public Record and Credit Impact
Your tax debt may become public record. Although it’s not explicitly stated in the articles I reviewed, a tax warrant is a civil judgment, and civil judgments almost always hurt your credit score.
Resolving a Tax Warrant in New York
If you’re facing a tax warrant in New York, you have a few options for resolving it.
Full Payment
The easiest and most direct way to resolve a tax warrant is to pay the warranted balance in full. Paying the full amount satisfies the warrant, removes the lien against your property, and prevents the Department of Taxation and Finance (DTF) from taking further collection actions.
Installment Payment Agreements (IPAs)
If you can’t pay the full amount right away, you may be able to set up an Installment Payment Agreement (IPA) with the NYS DTF. This allows you to pay off the debt over time in smaller, more manageable amounts. Keep in mind that even with an IPA, the lien will remain in place until the debt is fully paid.
Seeking Professional Assistance
Dealing with tax warrants can be complex, so it’s often a good idea to seek professional help. Contacting a tax attorney or other qualified tax professional can be crucial. A tax pro can help you understand your rights, navigate the complexities of tax law, and negotiate with the NYS DTF on your behalf.
Releasing or Subordinating a Tax Lien
Sometimes, you can get the tax lien released. For example, if you’re selling property, you might be able to negotiate a lien release with the state.
Another option is lien subordination. This happens when the state agrees to let another lender take priority over their claim. This might be useful if you’re trying to get a loan to pay off your tax debt. The bank will likely want to be first in line to get paid back, and the state might agree to take a backseat.
To discuss lien release or subordination, you’ll need to contact the relevant tax authorities directly.
Getting proof of payment
After you pay, make sure you get a “warrant payoff letter” or “Outstanding Judgment Balance Due” letter. This document proves you paid the warrant.
How to request a payoff letter: Contact the agency that issued the warrant and ask for documentation that confirms the debt is satisfied.
Why this is important: This documentation is crucial for clearing up your credit report and ensuring government records are accurate. Don’t skip this step!
Can you get a loan with a tax warrant?
Having a tax warrant makes it tough to get a loan. Lenders see it as a big red flag.
One possibility is “subordination.” A lender might give you a loan if the state lets their lien take priority over the tax warrant. But, you’d have to convince the state to do that.
Some lenders specialize in lending to people with tax debt, so that’s another place to start your search.
Common questions about tax warrants
- What happens if I ignore a New York tax warrant?
- Ignoring the warrant will only lead to more aggressive collection tactics from the state.
- When do New York State tax warrants expire?
- New York tax warrants are valid for 20 years.
- Can I move out of state to escape a NY tax warrant?
- No. The warrant follows you, no matter where you move.
- Can you go to jail for a tax warrant?
- Generally, no. Tax warrants are civil matters, not criminal ones.
Key Takeaways
Understanding what a tax warrant is, and what it means, is crucial. A tax warrant is a serious legal action that can have significant consequences for you and your property. Don’t ignore it.
Address a tax warrant proactively. If you receive one, explore your options for resolving the tax debt as quickly as possible, such as setting up a payment plan.
And, it’s almost always a good idea to consult with a qualified tax professional or attorney. They can review your situation, explain your rights, and guide you toward the best possible outcome.