WA State Tax Warrants: What to Expect and How to Remove?
Washington is one of the few states that doesn't have a state income tax, but the state has a variety of business taxes including sales tax and the business and occupation gross receipts tax. If you don't pay these taxes, the state can take collection actions against you.
In most states, if you become delinquent on your state tax debt, you will face a tax lien. Tax liens give the state’s tax agency a legal claim to your property, which can put it at risk for seizure. However, Washington State uses a tax warrant instead of a tax lien. Keep reading to learn more about tax warrants in Washington state and how to remove them from your account, or use TaxCure to search for a tax professional today.
What is a Washington State Tax Warrant?
Tax warrants are filed by the Washington Department of Revenue when a taxpayer has become delinquent on taxes like employment security, worker’s compensation, excise taxes, or other obligations. A tax warrant shows the overall balance of the tax debt, including penalties and any interest accumulated on the account.
When a Washington taxpayer gets behind on their taxes, the DOR will file the tax warrant with the county Superior Court. The taxpayer has up to ten days to pay off their tax warrant in full to remove it from their account completely. The DOR will establish a lien if you don’t pay the tax warrant within that period.
Tax Warrants Versus Tax Liens
A tax lien establishes the state's stake in your property, but a tax warrant doesn’t give the Department of Revenue the right to seize any property or assets. A tax warrant simply outlines what you owe, whereas a lien gives the DOR the right to start taking action.
Responding to a tax warrant can prevent your situation from getting worse. Failing to respond to a tax lien could leave your assets and property at risk for seizure.
Property Tax Liens
When you have a property tax lien against your property for unpaid property tax, the County Treasurer must begin the foreclosure process if you have a tax payment that’s been delinquent for three or more years. In contrast, when the lien comes from other types of state tax, this rule doesn’t apply.
Note that the DOR does not collect property taxes, and it doesn't deal with tax liens related to unpaid property tax. However, you will deal with the DOR for most other state taxes.
The Consequences of a Tax Warrant
A tax warrant will outline what you owe the Washington Department of Revenue. You can avoid further consequences if you fully pay off your tax warrant within ten days. If not, the tax warrant will proceed to the Superior Court, and a lien will be created. Once that happens, you could face further consequences as follows.
First, your property will be at risk. Without action on your part, the property will eventually be seized. Once the seizure process starts, it’s difficult to reverse. Depending on the nature of the lien, your assets, like a personal bank account, could also be at risk. If you earn an income, the DOR can contact your employer and order them to withhold a certain percentage of your paycheck. This money will go straight to the DOR, and you won’t have the option of not paying what you owe.
Another consequence of a tax warrant is that it will become public record if a lien is established. Unfortunately, many local newspapers list all Superior Court filings, so your tax lien could be published on the news and the Department’s website. What’s more, this could also impact your ability to take out lines of credit. Lenders who see that you have a lien on your property may not approve you for a loan, credit card, or mortgage as a result.
When a tax warrant is filed against you, you’ll also suffer financial consequences as well. Your penalties will increase to up to 10% on the tax debt balance. Your interest will also accrue every day. You will also get charged $40 in filing fees.
How to Handle Unpaid Taxes and Remove a Tax Warrant in Washington State
When you owe Washington state back taxes and a tax warrant is filed against you, it’s crucial that you determine how to handle your unpaid taxes and have the warrant removed. Depending on your situation, you may have a few different options to consider.
1. Analyze Your Full Financial Picture
First, you need to analyze your full financial picture to better understand exactly what you owe, what you can reasonably pay, and what your budget would allow if you think you may need to pay off your tax debt over a longer period.
This step could take some time if you’re not on top of your finances. You’ll want to list out all of your expenses, determine your average income, write out how much you owe to the Department of Revenue, and figure out how much you can afford to put toward your debt.
2. Consider Your Options
Once you have a better picture of your financial situation, you’ll want to consider your options. Below, we’ll go over the various different ways you can handle your unpaid taxes and get back in good standing with the Washington State Department of Revenue.
Pay Your Balance in Full
The best way to handle unresolved tax debt in Washington state is to go ahead and pay your balance in full in one lump sum. When you make this big payment, be sure to not only cover your unpaid tax debt but also any accumulated interest and penalties as well. Your debt will only be considered paid in full once you’ve also paid off those fines and fees. Once your payment is processed, the Department of Revenue will clear the tax warrant, which will remove any liens that were established.
Set up a Payment Plan with the DOR
Paying off an entire tax debt in one payment isn’t possible for many citizens in Washington State, so it makes sense that the Department of Revenue offers a reasonable solution. Payment plans can help you manage your tax debt over a longer period without worrying about collection consequences from the DOR.
All you need to do is get back into good standing with the DOR by discussing your tax debt, reviewing your ability to pay with the agency, and agreeing to a payment plan. From there, you’ll need to make your regular payments on time. Eventually, your tax debt will be completely resolved.
Tax Debt Settlement
Sometimes, taxpayers run into a financial situation where they owe much more than they can reasonably pay off, even over a long period of time. If you’ve analyzed your financial picture and attempted to re-work your budget unsuccessfully to account for your tax debt, you could be eligible for a tax debt settlement. In WA, these are called rule 100 settlements, but keep in mind that these types of arrangements aren’t given out freely by the DOR.
Only individuals who have a true inability to pay will be considered. Your inability to pay must also stem from a valid reason. It’s rare for a tax agency to completely forgive a tax debt. This is because it is unusual for someone to be genuinely unable to pay off any of their tax debt.
Penalty Relief
Have you accumulated several penalties on top of interest on your tax debt? If you were going through a situation that genuinely kept you from being able to pay off what you owe, you can apply for a penalty waiver with the Washington State Department of Revenue. Penalty relief is only awarded in some situations, but if approved, it can help you reduce and pay off your overall tax debt burden faster.
3. Get in Touch with a Tax Professional or the Washington State Department of Revenue
After reviewing your options, you’ll want to make an informed decision on how to proceed with your tax debt. This is the time to contact a tax professional. A tax professional can help you with all the steps above, from reviewing your finances and your ability to pay to reviewing all of your options. They can help you find a solution that best represents your interests and upholds your rights.
4. Find a Resolution and Remove the Warrant
Once you’ve made a decision, it’s time to seek resolution with the DOR. If you hire a tax professional, the tax pro can field all the communication with the DOR agents for you if you’d prefer. That way, you won’t be faced with any attempts at manipulation or agree to something that you really don’t want to submit to.
Once you find a resolution, the tax warrant will be removed from your account. This removal process won’t be complete until you fully pay off what you owe, but if you submit to a payment plan, then you won’t have to face the threat of more consequences as you pay off your debt.
FAQs About Tax Warrants in Washington State
Do you have more questions about tax warrants, tax liens, and other tax issues in Washington State? In general, it’s best to run your tax questions by a tax professional to ensure the answers you receive are accurate. That said, we’ll go over some general answers to frequently asked questions below.
Is a Washington State Tax Lien the Same Thing as a Tax Deed?
No, a tax lien establishes a legal claim to a person’s property or assets, whereas a tax deed is a legal document that grants complete ownership of a property to a government entity. In most states, a tax lien will be established when you fall behind on your tax debt.
In Washington, a state tax lien doesn’t get established after a tax delinquency. Instead, the process goes like this when you don’t take action: Tax warrant filed → tax lien established → DOR may move forward with asset seizure. For property taxes, the process is as follows: Tax warrant established → Tax deed established → Property goes into foreclosure after 3 years.
Will a Washington State Tax Warrant Impact Your Credit Score?
No; tax liens and tax warrants no longer appear on a person’s credit report. That said, a Washington state tax lien search can easily reveal your tax warrant, which is public information. That said, creditors and lenders may still deny an application for a loan due to your tax warrant even though it’s not directly impacting your score.
Can Businesses Face a State Tax Warrant in Washington?
Yes. Washington state sales tax is collected by businesses. These businesses are expected to withhold those sales taxes and submit them to the Department of Revenue at regular intervals. Businesses can quickly fall into a big tax debt delinquency if they fail to withhold the sales tax and spend it on something else. There are several other taxes that businesses based in this state must pay as well.
Can I Settle a Tax Debt in Washington State?
Yes; it is possible to settle a tax debt in Washington State if you’ve fallen behind on payments and you can prove that you financially can’t handle paying off the tax debt due to your current situation. While Washington State doesn’t provide offer in compromise agreements like the IRS, you can file an appeal with the Department of Revenue over your ability to pay.
During the appeals process, you’ll want to provide the financial documents you need to show that a settlement is in everyone’s best interest. The WA DOR uses the phrase "Rule 100 Settlements" to refer to this option.
What Will Happen if I Miss a Payment on my DOR Tax Payment Plan?
Do you believe that you might miss a payment on your DOR payment plan? If so, then it’s necessary to get in touch with the tax agency as soon as possible. Your entire payment plan could be at risk if you miss even one payment. The reason for this is because your payment plan is a legal agreement. You’re obligated to make your payments on time. Failing to do so means the agreement is considered broken.
Will My Tax Warrant Get Reinstated if I’m Late on my Payment Plan?
A tax warrant outlines exactly how much you owe in unpaid taxes. If it’s not paid within ten days, the government may issue a tax lien against you. If you set up a payment plan, the state won't act on the tax lien, but the DOR may start collection actions if you miss a payment and default on your arrangement.
When is it Time to Contact a Tax Professional?
In general, it’s best to contact a tax professional if you’re struggling with your tax situation. A tax professional can empower you to make good decisions moving forward. When you’re facing legal consequences due to your tax debt, it might be best to consult with Washington state tax relief attorneys. Otherwise, look for a tax professional who has experience dealing with your specific tax problem.
Are You Looking for a Tax Pro in Washington State?
Are you worried about Washington state tax liens, warrants, financial penalties, and other consequences you might face as a result of falling behind on paying your taxes? When you’re on the wrong side of the Washington Department of Revenue, it’s important to get informed quickly regarding your options and rights.
When you don’t make a timely payment or an effort to make an arrangement with the tax agency, they have a legal right to pursue various collection efforts against you. Regardless of how far you’ve let your tax situation go, a tax professional can help you find a solution. By empowering you with the knowledge you need and helping you negotiate with the Department of Revenue, a tax professional can help you get back in good standing and resolve your tax issues.
Get in touch with a tax professional in Washington now to get help now.