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Understanding New York tax warrants and levies

On Behalf of | Jul 17, 2019 | Firm News |

New York state wants its taxes, and will take a number of steps to collect anything an individual or business might owe. That includes using tax warrants and levies, a couple of tools that put pressure on a person until they pay everything back.

Here’s a quick overview of what to expect from a tax warrant and levy.

A tax warrant results in a lien

A tax warrant is a public record stating that an individual or business owes the state taxes. It’s not an uncommon practice, and you may see headlines about high-profile New Yorkers having tax warrants filed against them or their business.

When New York files a tax warrant against someone, it puts a lien against their real or personal property. This lien can affect things such as obtaining credit or selling property. When a tax warrant is filed, the subject should get a notice in the mail, along with a specified time period to pay whatever the state believes the person owes.

If that person doesn’t pay, or simply ignores the notice, the state may levy assets and begin collecting.

How the state might levy assets

After filing a tax warrant, New York state may serve a levy, allowing them to use a few methods to satisfy the debt, including:

  • Directing a bank to send the state money the person owes
  • Garnishing wages
  • Having someone who owes the person money send it to the state instead
  • Seizing, then auctioning off, the person’s real or personal property

In some cases, the state could even go as far as to change the locks at a place of business or remove all merchandise and assets. Before the state serves a levy, it will usually send a notice explaining whether any property might be exempt.

Lifting the tax warrant and releasing levies

The main way to clear a tax warrant and get the state to lift any liens and levies is to pay whatever debt is owed. Once that happens, the Department of Taxation and Finance can alert the state the tax warrant is satisfied, and that the lien can be removed. Paying back the underlying liability will also lead to the release of any levies.

Paying off debts with one lump sum payment is not always possible, however. An attorney may be able to represent an individual or business and work with state tax officials in order to find some flexibility. That could be an installment plan, for example, that protects any assets from levies.

It’s also important to remember that people make mistakes. If the Department of Taxation and Finance didn’t follow proper procedures, if the levy was unjust or if someone simply doesn’t owe what the state claims, there are options to remedy the situation.