How to Deal with New York Tax Liens
If you owe back taxes to New York State, one thing to always must remember is that simply ignoring the problem won’t make it disappear. It’s false comfort to think that pretending a State tax deficiency isn’t there will be enough to avoid any negative consequences, but unfortunately such thinking isn’t consistent with reality. If you owe a tax liability to New York State and then fail to satisfy that debt over a period of time, the State has the capacity to issue a tax warrant against you. A tax warrant creates a lien against both your real and personal property, and tha New York tax liens allow the State to sell your property to settle your back tax debt.
To issue a tax warrant, the State must confirm a tax deficiency, give the taxpayer a certain amount of time to pay the deficiency, and also send out several notices regarding the deficiency to the taxpayer. In this article, we will discuss the different steps a taxpayer can take to avoid having a tax warrant issued by New York State; we will also go over the different options taxpayers have to remove a tax lien once it’s been imposed by the State. As will be shown, New York tax liens are nothing to take lightly, but if a taxpayer makes the effort and consult with a qualified tax professional, a bad tax situation can improve, no matter what the circumstances.
The Basics of New York Tax Liens
If you have an unpaid state tax liability, the first step in the process of issuing a tax lien is for New York State to send out either a notice of deficiency or notice of determination to your physical address. Notices of deficiency are sent to individual taxpayers, whereas notices of determination are sent to business entities. The State is not required to confirm that the physical address they have on file is up-to-date, so it’s up to you to make sure that the information in their file is correct. Once this initial notice is sent out, you will then have 90 days to make arrangements to settle your tax account, otherwise the State may take further action.
After your time to satisfy your back tax liability has expired, the State will send out a final notice demanding payment. If you fail to respond to this final notice within 21 days, then the State may pursue a tax warrant. When the State pursues a tax warrant, this warrant is filed with the county clerk and becomes a matter of public record. After filing a tax warrant, the state will also send out a final notice to inform you about the State’s creation and pursuit of the warrant.
A tax warrant is similar to an arrest warrant, in the sense that it represents a legal action taken by the State to resolve an issue. However, unlike an arrest warrant, a tax warrant does not give the State the ability to physically detain you, instead, it gives the State the ability to take certain collection actions against your property. With New York tax liens (created by the warrant) in place, New York State gains the ability to seize your financial assets, seize your wages, seize your real and personal property and, most recently, even suspend your driver’s license. Though you can only face jail time for criminal wrongdoing, it’s clear that failing to satisfy your back tax debt with the State can still lead to serious misery.
Addressing New York Tax Liens: Prevention & Cure
As the saying goes, an ounce of prevention is worth a pound of cure, and this is undoubtedly true in the case of New York tax liens. If you receive a notice of deficiency or notice of determination, there are several things you can do to resolve your situation before a tax warrant is issued. For instance, you can pay your debt in full, or you can set up an installment plan agreement (IPA), or you can make an offer to settle for less than the full amount with an offer in compromise. If you address your debt in one of these ways, you can prevent the tax warrant before it becomes a possibility.
If a tax warrant is issued against you, you can remove the lien if you satisfy the debt or if you successfully challenge the validity of the warrant. You may be able to defeat the warrant if you can show that the underlying liability was incorrectly assessed, or if you can show that the State made some material error in the tax warrant filing procedure. Or, New York tax liens may also be addressed through a personal bankruptcy filing, as bankruptcy may allow you to successfully discharge some or all of the state tax debt against you personally (although New York tax liens may still operate against real property). Finally, it’s worth pointing out that New York tax liens don’t last forever. Rather, they’re removed by the passage of time if the State has been unable to collect within 20 years (i.e.New York tax liens have a 20 year statute of limitations). So, while the State has 6 years from the time of assessment to file a tax warrant, the related lien remains in place for 20 years once the warrant has been filed.
Dealing with New York tax liens is a stressful, complicated process which requires patience and energy, no matter the specific facts of your situation. If you’re facing New York tax liens, it’s in your interest to consult with a qualified New York tax attorney who can help you navigate this process more easily. If you find yourself in such a predicament, don’t hesitate to contact Mackay, Caswell & Callahan, P.C. online, or or to one of our attorneys today.
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