Understanding New York Tax Warrants 

November 13, 2018

Falling behind on tax obligations is a very common phenomenon.  It can happen for a whole variety of reasons. As New Yorkers, we understand, perhaps better than anybody, the difficulty of balancing life with past and current tax obligations. It’s very common for New York taxpayers to get caught up with their many other responsibilities.  So much so that past financial issues become too much to handle. In these situations, tax debtors can face severely negative repercussions. The exact severity will depend on the particulars of each given scenario, of course.  One common consequence, though, is the placement of federal tax liens and New York tax warrants.

As we’ve discussed, New York residents face multiple types of state and local taxes. So do New York non-residents with taxable New York income.  Not only do all New York residents face a statewide personal income tax and sales tax, we also must grapple with many other local excise taxes.  These include taxes such as the MTA tax, various sin taxes, city and county taxes, and so forth. Imagine the following scenario.  A New York resident that manages to fully pay his or her federal tax obligation.  Nonetheless, he or she can’t keep up with his or her NYS tax liability.  In such a case, New York has the power to implement what is referred to as a “tax warrant.” Doing so ensures that the tax liability  to New York State is satisfied.  

In this post, we will discuss the basics of New York State tax warrants.  We’ll do so by examining the procedural requirements and purposes of such warrants.  Thereafter, we’ll briefly discuss the interplay of tax warrants and federal tax liens issued by the Internal Revenue Service.

Basics of NY Tax Warrants 

Simply put, a New York State tax warrant is a legal filing which creates a lien against a taxpayer’s property.  In effect, a New York tax warrant functions as a judgment against property and enables the state to seize it.  It does so for the express purpose of satisfying a NYS tax debt. Tax warrants may be imposed on New York taxpayers without respect to the particular type of tax debt.  In other words, it’s possible for NYS to file a tax warrant for unpaid personal income taxes, sales taxes, and other taxes.  This means that New York taxpayers  need to be aware that they can face a tax warrant if they fall behind on state tax obligations.  

To implement a tax warrant, the State of New York must follow specific procedures.  They’re meant to ensure that debtors have adequate notice of their tax situation. For individuals, the State Department of Taxation and Finance must file the tax warrant in the county clerk’s office corresponding to a person’s residence.  For businesses, the Department will file the warrant in the clerk’s office corresponding to its principal place of business.

Once filed, the Tax Department will send a notice of the tax warrant to the State Department of New York. That notice advises the State Department that the tax warrant has been filed. Upon receipt of the notice, the State Department will post the tax warrant in its electronic database. This electronic database is searchable by the general public.  Posting in the database gives tax debtors the ability to check their tax status at any time. When a tax debt is later satisfied, the Department of Taxation and Finance withdraws the warrant and the State Department updates the warrant status on its website.  

NY Warrants v. Federal Tax Liens 

It’s not uncommon for those who owe New York State back taxes to also owe the federal government. In such cases, taxpayers may face both a tax warrant issued by New York and a tax lien issued by the IRS. In this situation, one might wonder which filing takes priority over the other.  Because both creditor are pursuing the same debtor, a situation may occur in which one creditor can’t liquidate taxpayer property.  That’s because of a lien priority creating a preference for the other creditor.  In this scenario, it’s typically the IRS tax lien which takes priority over the New York tax warrant. That’s because whenever a taxpayer owes the IRS back tax debt, the Internal Revenue Code creates an automatic “silent lien.”

Tax warrants are undoubtedly intimidating and financially hazardous for businesses and  individuals alike.  Therefore, it’s important to keep in mind that there are ways to avoid their nasty consequences.  Quick action to remedy the situation is always a good start. Additionally, if a taxpayer has the resources to compromise the obligation, a tax warrant can be removed with minimal damage. 

Call a New York Tax Lawyer for Help Today

It’s in every taxpayer’s best interest to take the steps necessary to avoid a tax warrant.   If you do find yourself saddled with a New York tax warrant, however, don’t panic.  Instead, reach out to a qualified professional who can assist you deal with the warrant. The New York tax lawyers at Mackay, Caswell & Callahan, P.C., have a tremendous amount of experience dealing with New York tax warrants.  We’re available to help whenever you need assistance. With offices throughout New York including Albany, New York City, Rochester and Syracuse, a New York tax attorney is available to assist you.  Contact us today! 

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