3 Things You Should Know About a New York State Levy If You Owe Back Taxes

If you owe taxes to New York State, it can pursue collection of the debt against your real estate, personal assets, and income using a levy. A levy is a legal seizure of property to satisfy a tax debt. If you have a tax problem, here’s what you should know.

1. What types of levies exist?

New York can use various types of levies to collect back taxes, including the following:

• Bank levies that last for a 90-day period;
• Levies on third parties, such as customers or tenants;
• Refunds and offsets; and
• Seizure and sale of property at tax auction.

With respect to seizure of property, New York State Agents at the Collections and Civil Enforcement Division have the power of a sheriff; they can take cash the taxpayer has on hand (or in a cash register) and seize for auction any of the taxpayer’s real or personal property. During seizure, they may even have locks changed at the taxpayer’s place of business and may remove the taxpayer’s merchandise and store it elsewhere until the sale.

Note that a New York State Income Execution (IE) is also a type of levy, but it is issued against a taxpayer’s gross wages. An IE differs from other types of levies and has its own rules. Read our related post on Income Execution for more information.

2. How is a levy imposed?

 In order for New York State to have legal authority to pursue collection against the taxpayer’s real and personal assets, the State must first file a tax warrant. A tax warrant is a public record on file at the county clerk’s office and with the Secretary of State. It can be found by anyone searching the database on the Department of State’s website. The Tax Department also publishes a list of the Top 250 business and individual warrants, which is updated monthly.

The State does not give notice to the taxpayer until after the warrant is filed so it is crucial for taxpayers to respond to any letters from the State regarding unpaid taxes. Ignoring them will result in a tax warrant.

The tax warrant remains in effect until the underlying tax liability is completely satisfied, or the warrant expires. Tax warrants are good for 10 years against real property, and 20 years against personal property. The Statute of Limitations on collections begins on the first day that a tax warrant could have been filed.

Note that if the State does not file a warrant for a personal income tax within 6 years, the liability will be extinguished.

3. How can a taxpayer avoid or fight a levy?

There are no collection appeal rights against a New York State tax warrant. Anyone who has a tax problem should act quickly. New York’s Voluntary Disclosure Program may be an option for those who have not paid taxes or filed their tax return but have not yet been contacted by the government. For those who have received a notice about their delinquency, an Installment Payment Agreement or Offer in Compromise may help in resolving the tax matter.

Tax warrants have serious consequences. If you are or could be subject to a levy, contact us for a consultation.