What Does a Tax Warrant Mean in Indiana?
The Indiana Department of Revenue may issue a tax warrant against your assets if you have unpaid back taxes in Indiana. A tax warrant can make selling or taking out loans against your assets difficult or impossible. It can also affect your credit score and impair your ability to obtain new loans or credit cards.
Ideally, you should try to make arrangements on your tax bill before the state issues a tax warrant. However, if there is already a warrant against you, there are options. This guide explains what to expect when dealing with an Indiana tax warrant.
What Is a Tax Warrant in Indiana?
An Indiana tax warrant is a notification or record of your tax debt. The IN DOR files the warrant in the county clerk's office, and the warrant allows the debt to be collected by the county sheriff or a collection agency.
Once filed with the county clerk, the tax warrant becomes a civil judgment against you. It establishes that you owe a debt to the state and creates a lien against your assets. The lien or warrant attaches to your assets. It ensures that if you sell the assets, the DOR has the right to the proceeds from the sale.
Tax Warrant Vs. Arrest Warrant in Indiana
You've probably heard the term warrant about arrests. Don't worry. While these concepts overlap, they are not the same. A tax warrant does not give anyone the right to arrest you. Tax warrants are different than arrest warrants.
A warrant is a legal order that authorizes someone to carry out a certain action. An arrest warrant, for example, authorizes the police to arrest someone. A tax warrant, in contrast, authorizes someone to collect your unpaid taxes and levy (seize) your property.
Process for Issuing Tax Warrants in Indiana
The Indiana DOR can issue a tax warrant if you file a state tax return and don't pay all the tax due. The state can also issue a warrant if you owe tax due to a ruling on a protest.
Before issuing the warrant, the DOR must send you a demand notice. The notice will state that you have 20 days to pay the tax bill in full or explain why you can't pay in full. The notice will also outline the DOR's right to issue a tax warrant, and it will explain the earliest date on which the warrant will be filed.
Finally, the demand notice will provide you with steps that you can take to avoid the warrant. The DOR only has to send you one demand notice, even if it plans to issue warrants in multiple counties. The DOR can issue warrants in any county where you own assets.
How Do Indiana County Clerks Record Tax Warrants?
The DOR can file the tax warrant directly with the circuit court clerk's office, or the DOR can give the warrant to the sheriff, who, in turn, gives it to the county clerk. In either case, the county clerk records the warrant by creating a judgment record.
The judgment record shows your name and the amount of tax, interest, and penalties you owe. It also includes a 10% collection fee, sheriff's costs, clerk's costs, and any other applicable fees. The total amount of all of these costs becomes a judgment against you. Then, the judgment creates a lien that attaches to your property.
What Happens When the DOR Files a Tax Warrant Against You in Indiana?
If you don't pay the tax liability within 20 days of the date on the demand notice, the DOR will file the warrant in the counties where you own assets. When the DOR files the warrant, it adds a collection fee of 10% of your unpaid tax liability to your total amount due.
Once the Indiana DOR files a tax warrant against you, you have two options. You can pay the full amount due or accept the tax warrant's cost and consequences.
When the DOR files the tax warrant, it immediately attaches to your real and personal assets. For instance, it attaches to all vehicles titled in your number or with your Social Security Number. If you have an Employer Identification Number (EIN) for your business, the warrant also attaches to any vehicles registered in the county under that EIN.
In Indiana, tax warrants authorize the sheriff or a collection agency to collect the unpaid state tax debt. Each of these entities has slightly different collection rules.
Sheriff Collection Methods for Indiana Tax Warrants
If your Indiana tax warrant goes to the sheriff, they can collect your total balance. The balance includes the tax, penalties, and interest on your account, but it also includes costs related to issuing and carrying out the warrant. The costs associated with the warrant may consist of the clerk's costs, sheriff's costs, collection fees, and agency fees.
In Indiana, a tax warrant gives the sheriff the right to sell your property at auction, garnish your wages, or levy your bank account. The sheriff chooses the collection methods that make the most sense based on the situation.
Unfortunately, you cannot decide how the sheriff carries out the tax warrant. At this point, the collection process becomes involuntary. If you want control over how your taxes are paid, you must make arrangements before your account gets to the warrant stage.
Indiana Tax Warrants Carried Out by Collection Agencies
If your Indiana tax warrant goes to a collection agency, they also have the right to collect your full balance due. As indicated above, this includes the unpaid state tax plus interest and penalties, and it also includes costs related to issuing and carrying out the warrant.
Like sheriffs, collection agencies can also set up a garnishment against your wages, and they can levy your bank accounts. However, collection agencies do not have the right to seize and auction off your assets.
As of 2022, the Indiana DOR contracts with United Collection Bureau, Inc. (UCB). This is a private company that handles third-party collections for the state. If you receive a letter from this company and you have questions, you or your tax professional may contact UCB directly.
How Long Does an Indiana Tax Warrant Last?
Once filed, an Indiana tax warrant lasts for ten years. However, if desired, the DOR can extend the judgment by filing an alias tax warrant with the circuit court clerk in the county where the warrant was originally filed. That adds another ten years to the tax warrant.
Indiana Tax Warrant Release
The tax warrant will be released if the account is paid in full. It can also be released if the DOR realizes that the tax assessment was incorrect or the warrant was issued in error. The DOR can also release a warrant if it's in the state's best interest.
If the DOR decides to release the warrant, it will send a release of judgment to you and to the county clerk in each county where the warrant was filed. If the DOR releases a warrant issued in error, it must do so within seven days after discovering the error. The DOR must also send a copy of the release to each of the major credit reporting bureaus.
Tax Warrant Release for Salvaged Vehicle
If you have a tax warrant and you need to salvage a vehicle, you will need to apply to have the tax warrant released from that vehicle. To do so, you need a letter from the insurance or salvage company stating that the vehicle is no longer operable. The letter should also explain if you are receiving a settlement or claim from the vehicle, and it should note where the funds are being distributed. Finally, it needs to note the VIN of the vehicle.
What If There is a Tax Warrant Against a Vehicle You Purchased?
Unfortunately, in some cases, you may purchase a vehicle from a private owner and then discover that it has a tax lien against it. In this situation, you will also need to apply to have the warrant released. To do so, you need the following:
- Vehicle Identification Number (VIN)
- Sales receipt or bill of sale showing the date and purchase price.
- Notarized affidavit explaining where you purchased the vehicle and from whom — This helps to ensure that you were not purchasing the vehicle from a friend or relative to help them avoid the effects of the tax warrant.
- Information about the warrant — Warrants are public information so you can obtain these details even when the warrant is not in your name.
- Proof of the fair market value of the vehicle — For instance, you can use a fair market value estimation from Kelly Blue Book.
- Photograph of the vehicle.
- Copy of your driver's license or other state-issued photo ID.
Contact the Indiana DOR or the county clerk with this information, and they will guide you through the process of getting the warrant released against your vehicle.
What If You Inherit a Vehicle That Has a State Tax Warrant Against It?
In some cases, you may end up inheriting a vehicle that has a state tax warrant against it. In these cases, you can also reach out to request a warrant release. You need the following:
- Notarized affidavit explaining your heirship or relationship with the deceased person.
- The vehicle's VIN.
- Warrant information from the public record.
- A copy of the owner's death certificate.
- Document showing the fair market value of the vehicle.
- Photo of the vehicle.
- Copy of your state-issued photo ID.
You will need to get the warrant removed before you can sell the vehicle. You may even need to get the warrant released so that you can register and use the vehicle.
Indiana Tax Warrant Expungement
In addition to getting a warrant released, you may also want to get it expunged. A warrant expungement erases it from the public record. Indiana tax warrant expungement can happen in the following situations:
- You have paid and filed all state taxes for the last five years.
- The warrant was issued more than ten years before the expungement request.
- The warrant is not subject to litigation.
The state will not expunge a tax warrant if it was created due to fraud or reckless conduct.
How to Request Indiana Tax Warrant Expungement
To request expungement on your Indiana state tax warrant, submit State Form 56196 (Expungement Request Form) to the DOR.
This one-page form requires your name, address, email address, phone number, and the last four digits of your Social Security Number. It also needs your tax warrant number. If there are multiple tax warrants against you, you should list all the ones you want to expunge.
Then, you need to note if you are current on filing and paying all taxes due to date. Finally, you should detail why you believe the warrant should be expunged. You can attach supporting documents to make your case if necessary.
Although this form looks straightforward, it requires an understanding of the expungement rules. To increase the chances of your request being approved, you may want to work with a tax pro experienced with Indiana tax warrant expungement.
How to Pay a Tax Warrant in Indiana?
If you want to make an Indiana tax warrant payment, you can do so online, through the mail, or over the phone.
To make an Indiana tax warrant payment online, visit the Indiana Taxpayer Information Management Engine (IN TIME). Select bill payments. Be ready to enter your letter ID or tax warrant number. You can make an Indiana tax warrant payment with an electronic check or ACH withdrawal for free. There is a fee to pay with a credit card.
You can pay through the mail by sending your tax warrant payment to the following address:
Indiana Department of Revenue
P.O. Box 595
Indianapolis, IN 46206-0595
If you have questions about your Indiana tax warrant, you can call the Indiana DOR at 317-232-2240. If a collection agency handles your tax warrant, you can contact UCB at 866-599-4313. Or you can visit the company's website at ucbinc.com.
Get Help With an Indiana Tax Warrant
Tax laws vary from state to state. If you're dealing with an Indiana tax warrant, you need a tax pro who is experienced with the rules and procedures of the IN DOR. Using TaxCure, you can search for Indiana tax pros, and you can narrow down your search based on their experience with specific types of tax problems and concerns.
Don't let a tax warrant attach to your assets. Instead, get help with your Indiana back taxes today. An Indiana tax pro can help you release the tax warrant and apply for tax resolution programs such as payment plans or offers in compromise. They have the experience you need to deal with unpaid state taxes and unfiled returns.