Wisconsin Tax Warrants: What to Expect and How to Resolve
If you don't pay your taxes in Wisconsin, the DOR may issue a tax warrant. This is one of the first collection actions the state takes, and it lays the groundwork for the DOR to pursue advanced collection actions such as garnishments and seizures.
You may be able to avoid a tax warrant by setting up a payment plan, but even then, the state may still issue a warrant. This guide explains what to expect if the WI DOR issues a tax warrant against you.
What Is a Tax Warrant?
A tax warrant is a lien against your personal and real property for unpaid taxes. The Wisconsin Department of Revenue can file a tax warrant for any amount of unpaid taxes. The warrant is a public record filed with the Clerk of Court in any county where you own real property.
How Do Tax Warrants Work?
If you sell an asset with a tax warrant attached to it, the proceeds from the sale up to the amount of the warrant go to the DOR to cover your unpaid taxes. If you have a loan on that asset, the sale proceeds will go to the lender, and then, any remaining amounts will go to the DOR.
For example, imagine the state issues a tax warrant for $10,000, and it attaches to all of your assets. You own a vacant plot of land, and you sell it for $7,000. All of the proceeds of this sale go to cover your warrant. Now, there is a warrant for $3,000 against your remaining assets.
You also decide to sell your vehicle. You sell it for $12,000, but you owe the bank $8,000 for your car loan. The first $8,000 from the sale goes to cover the car loan. Then, $3,000 covers the remaining part of the tax warrant. You get to keep the final $1,000.
How Does a Tax Warrant Affect You?
Generally, having a warrant makes it very difficult to borrow against your assets. Lenders are not going to allow you to use your assets as collateral if the state already has a stake in those assets. However, if you are using the loan to pay off your tax bill, you may be able to convince the DOR to subordinate its warrant behind the loan.
If you die or transfer your assets, the warrant will stay attached to the assets. For example, say that you die and you leave your car to your niece. You don't have a loan on the car, but there is a $4,000 tax warrant attached to it. If your niece sells the vehicle, the proceeds of the sale will go to cover the warrant first. Then, she will be able to keep any remaining amounts.
Tax warrants also attach to your future assets. Say, for example, that there is a $20,000 tax warrant attached to your assets. Your grandfather gave you a new car as a birthday present; now, the tax warrant is attached to that vehicle. Similarly, if you inherit assets, the tax warrant also attaches to them.
Tax warrants make it difficult to carry on your financial life. If you are proactive about making payment arrangements with the state, you can often avoid a tax warrant.
How Are Tax Warrants Satisfied in Wisconsin?
To satisfy your tax warrant, you must pay the tax debt as well as any interest, penalties, and fees. Then, the DOR will notify the clerk of the court that you satisfied the warrant, and the clerk will remove the warrant from your record.
It usually takes 30 days from the date of payment for the state to issue a satisfaction certificate. This allows the DOR to ensure the check clears. You may be able to get the certificate sooner if you pay in verified funds.
The DOR will also satisfy a warrant if the taxes are refunded or discharged. For instance, if you appeal an assessment and the appeal successfully eliminates your tax liability, the warrant will be satisfied.
How Long Do Tax Warrants Last?
In Wisconsin, tax warrants last for 20 years, and they can be renewed indefinitely. The clerk of court can renew a tax warrant up to 180 days before the existing one expires. The renewal starts on the expiration date and starts a new 20-year term.
What Should You Do If the DOR Issues a Tax Warrant?
To get the warrant removed from your record, you will need to pay the tax in full. If possible, consider paying with a loan or credit card. Alternatively, set up a payment plan with the DOR and try to pay off the liability as quickly as possible.
Talk with a local tax professional to find out the best option in your situation. They have experience with the WI DOR, and they'll be able to help you figure out how to minimize the impact of the tax warrant.
FAQs About Wisconsin Tax Warrants
Tax warrants can be complicated, and unfortunately, when the DOR sends notices, they are usually scary and hard to understand. Here are answers to some of the most common questions about tax warrants.
What Is a Warrant Release?
A release is when the DOR removes the warrant even though the taxes have not been paid or discharged. According to Chapter 71, section 91 of the Wisconsin State Statutes, the DOR will release a warrant if it is "depriving the taxpayer of a substantial right". The statute does not qualify the concept of substantial right deprivation.
What Is a Partial Release?
A partial release is when the DOR removes its warrant from a specific piece of property. Usually, this happens when you want to sell the asset, but the sale proceeds won't be enough to pay the warrant.
What Is Lien Subordination?
Lien subordination is when the DOR agrees to let its tax warrant take priority behind another lender. Generally, this comes into play when you want to take a loan out against an asset so that you can pay your tax bill, but the lender will only let you use your asset as collateral if the DOR agrees to a lien subordination.
Are Tax Warrants on Your Credit Report?
The DOR does not notify the credit bureaus about tax warrants. However, warrants are public records, and if the credit bureaus find out about the warrant, they may add information about the warrant to your tax return.
What If the Warrant Appears on Your Credit Report After Satisfaction?
If you have satisfied a tax warrant and it still appears on your credit report, contact the clerk of courts for a record of satisfaction. There is a small fee for this service. Then, send the record of satisfaction to the credit bureau.
What Is the Difference Between a Tax Levy and a Tax Warrant?
A WI DOR tax levy is when the DOR seizes your assets for unpaid taxes. Levies may include wage garnishments, bank account levies, and asset seizures. In most cases, the DOR must issue a tax warrant before it can move forward with a tax levy.
Does the DOR Notify You About Tax Warrants?
The DOR does not need to notify you before issuing a tax warrant. However, the taxes must be assessed, and they must be delinquent. In most cases, you will get a demand for payment before the state issues a tax warrant.
Tax Companies are Mailing Me About My Warrant, Are they Legit?
When a tax warrant is filed, it becomes public record. There are many companies that watch the public records related to warrants and will send mail to taxpayers that end up on this list. Are they legit? They likely do provide help with tax problems, however, they set unrealistic expectations with their marketing messages about settling taxes many times. Be aware that if a tax warrant is filed against you, it is highly likely you will receive many mail marketing messages that promote settling for less.
It is best to contact a local professional who is not using shady marketing tactics to obtain new clients. Realize these mailings cost a lot of money to go out, and these fees are then added to your bill indirectly in their pricing. Hiring one of these companies you may end up paying a lot more for services that are subpar.
Is a Tax Warrant a Warrant for Your Arrest?
No, a tax warrant is a lien. It is not a warrant for your arrest. The word warrant means a "document issued by a government official that allows the police or another entity to take action against you."
A warrant for your arrest means that the police are authorized to arrest you. A warrant for unpaid taxes means that the clerk of court has the right to place a lien against your assets.
Can You Get Arrested for a Tax Warrant?
No, you cannot get arrested if there is a tax warrant against you. It is possible to go to jail for unpaid taxes, but only in very rare situations involving criminal tax fraud.
Get Help With Wisconsin Tax Warrants
When dealing with state taxes, you should work with a local professional. Tax pros based in Wisconsin have extensive experience dealing with this tax agency, and they know its processes inside and out. In contrast, if you call a big nationwide tax firm, they generally lack state-specific experience.
To get help now, use TaxCure to search for a local pro. You can filter your search results to find someone with experience with WI tax warrants in particular. Then, you can find professionals that have experience with Wisconsin tax warrants.
Tax debt is very stressful, but with the right help, you can get relief and move on with your life.