What Is a New York Tax Warrant? How to Avoid and Remove Tax Warrants
If you don't pay your NY state taxes, the New York State Department of Taxation and Finance can take all kinds of collection actions against you. One of the first collection actions is a tax warrant. Tax warrants open the door to other types of enforcement actions, and they can make it difficult to buy or sell property and take out loans.
Is the NY DTF threatening to issue a tax warrant due to your tax debt? Is there already a tax warrant against you? This guide explains state tax warrants and how to get them removed.
What Is a NY State Tax Warrant?
A NY tax warrant is a lien against your assets. It secures the New York State Department's interest in your assets when you owe tax debts. Once a warrant is in place, the state can move forward with asset seizures and wage garnishments. If you sell assets while there is a NY State tax warrant against you, the state has the rights to the proceeds from the sale.
New York State can issue tax warrants for unpaid state income tax, but the Department can also issue warrants for unpaid business taxes such as franchise tax, sales tax, and/or withholding tax.
How Do NY State Tax Warrants Work?
The NY DTF files the tax warrant in the county where you live or do business as well as with the New York State Department of State. The liens attach to your assets, making it very difficult to get loans or sell property.
To give you an example, imagine that you want to get a line of credit against the equity in your home. When the lender looks into your situation, they will see a tax warrant against you. This means that the state has a stake in your home. The bank won't loan you the money unless the state agrees to subordinate or remove the lien.
Now, imagine that you decide to sell a vehicle for $25,000. You owe $5,000 on a car loan, and there is a $10,000 tax warrant against you. When you sell the vehicle, you don't get to pocket the $25,000. Instead, $5,000 automatically goes to the car loan lender and $10,000 goes to the state for the tax warrant.
Beyond that, a tax warrant is the first step toward seizing your assets. Once the state issues the tax warrant, it has the right to move forward with asset seizures, bank account levies, and income executions (garnishments).
NYS Tax Warrant Vs NYS Tax Lien
NYS tax warrants and NYS tax liens are effectively the same things. Many states use the word lien, but the New York State Department of Taxation and Finance uses the term warrant. They both refer to a lien against your assets. They both secure the state's right to your assets or the proceeds of the sale if you sell your assets.
NY Tax Warrant Vs IRS Tax Lien
Again, a tax warrant and a tax lien are the same things. They both do the same job. They secure the tax authority's interest in your assets. If you have $10,000 or more in tax debt, the IRS can issue a tax lien. The NY DTF doesn't publish a number for when the state will issue a tax warrant. It just says that if you don't resolve your tax debt in a timely fashion, the state can issue a tax warrant.
An IRS tax lien stays in place for 10 years. The IRS generally cannot collect tax debts that have been assessed more than 10 years ago. In New York State, tax warrants last for 20 years. If you don't take action, the warrant will exist for two decades.
IRS tax liens and NY tax warrants are both precursors to tax levies or asset seizures. Generally, the warrant or lien must be in place before the IRS or NY State can take your assets. However, if the IRS or NYS believes that the tax collection is in jeopardy, they may be able to move forward with a seizure without issuing a warrant/lien.
Can You Go to Jail for a Tax Warrant?
No, you will not go to jail if the NY DTF issues a tax warrant against you. A tax warrant is like a tax lien. It is not the same as a warrant for your arrest or a bench warrant.
The word "warrant" refers to a document issued by a government authority to give the police or another body the right to carry out an action. For example, an arrest warrant is issued by the courts, and it gives the police the right to arrest you. Similarly, a tax warrant is issued by the NY DTF, and it gives the state a legal stake in your assets.
This doesn't mean you should ignore a tax warrant. They are very serious. Again, once there is a tax warrant against you, the state can claim the proceeds when you sell an asset. It can also move forward with a seizure of your assets. But don't worry — you can't be arrested for a tax warrant.
New York State Tax Lien Search
Tax warrants are public records. The NY DTF publishes a public database of tax warrants and updates it twice a week. If you want to see if there is a tax warrant against you, check out the NY State Tax Warrants search tool. You can search by your name, and you can also narrow down the search by the county where the warrant was filed, warrant ID number, docket amount, docket date, and type of tax.
What If I Don't Resolve the Warranted Balance?
If you don't resolve the warranted balance, the tax warrant will continue to stay in place. As explained above, a tax warrant makes it very difficult and potentially impossible to get loans. It also means that the state will take the proceeds when you sell your assets. Even worse, the NY DTF can move forward with other collection actions, including taking your assets, seizing the funds in your bank account, or garnishing your paycheck.
When Do New York State Tax Warrants Expire?
New York State Department of Taxation and Finance tax warrants stay in place for 20 years. During this 20-year period, your ability to sell or transfer assets or borrow money will be severely compromised.
How to Release a NYS Tax Warrant
To get a New York State tax warrant release, you must pay the tax bill in full. If you set up a payment plan, the NY DTF won't pursue additional collection actions against you, but the warrant will stay in place until you have fully paid off your state tax bill.
You may also be able to get the warrant released if the New York Department of Taxation filed it in error. You should contact a tax pro to help you. Once the tax has been paid, the NY DTF will notify the county clerk and the Department of State so they can remove the tax warrant from your records.
What Is a Satisfaction of Judgment?
Once you pay off the New York State tax warrant, the DTF will issue a Satisfaction of Judgment to the county clerk. This shows that you have paid the tax liability. The state will also send you a copy. If you need a Satisfaction of Judgment letter before the state issues it, you can request a Notice of Pending Warrant Satisfaction if one of the following applies:
- You have given the NY DTF guaranteed funds (certified check, bank check, wire transfer, money order, or cash) for the full payment.
- You have paid in full by credit card.
- You have made a payment that's posted in the NY DTF system, and you have proof that it has cleared your bank account.
For example, if you're trying to take out a loan and you need to prove that you have taken care of this lien, you will need a Satisfaction of Judgment or Pending Warrant Satisfaction. Or, if you're trying to sell the property and you need to prove that it is not encumbered, you may also need one of these documents.
Get Help With New York State Tax Warrants
Tax warrants can be financially devastating. They can create economic hardship. They can also lead to even worse involuntary collection actions. If you're dealing with a tax warrant, you need to reach out to a local New York tax pro.
Using TaxCure, you can search for tax lawyers, CPAs, and enrolled agents in your area, and you can customize your search to ensure they have the experience you need. Then, review their profiles and give a tax pro a call. They'll talk with you about your state tax warrant and help you decide the best steps forward for your situation.
You don't have to deal with the NY DTF on your own. You can get help from an experienced professional — contact a NY State tax pro today.