A Notice of State Tax Lien is a public claim against a taxpayer's property or rights to property, both owned at the time the lien is filed and acquired after the lien is filed. Examples include the taxpayer's home, other real estate, boats, accounts receivable, etc. The Notice of State Tax Lien is filed in the county where the taxpayer's business or residence is located or in the county where the taxpayer has an interest in property and serves as both a public notice to the taxpayer's creditors and to establish priority status among the creditors.
Three requirements must be met before the Department of Revenue files a Notice of State Tax Lien:
- A Notice of Tax Due (a tax bill) has been prepared either because the taxpayer has filed but not paid the correct amount of tax liability or through an audit or assessment for non-filing of a return.
- The Notice of Tax Due has been mailed to the taxpayer, demanding payment.
- The taxpayer has neglected or refuses to pay the full amount of tax, penalty, interest, and fees due.
Taxpayers should be aware that once filed, a lien might harm their credit rating. Federal law allows a consumer-reporting agency to retain and report the Notice of State Tax Lien for seven years after the tax liability has been paid.
To avoid the issuance of a Notice of State Tax Lien, the taxpayer should either pay the tax liability in full at the time of notice or contact the Department of Revenue immediately to negotiate a satisfactory payment agreement. It should be noted that depending on several factors, including the amount of the debt and the tax history, a lien might still be filed against the taxpayer under a payment agreement.
Copies of tax liens can be obtained from the county court clerk in the county where the lien is filed.
Inquire about a Notice of State Tax Lien
The Department of Revenue will release a Notice of State Tax Lien under the following circumstances:
- When the tax liability, including any applicable penalty, interest, and fees, has been paid in full; or
- After a bond is submitted by the taxpayer, and approved by the Department of Revenue, guaranteeing payment of the debt; and
- When all fees associated with the filing and releasing of the Notice of State Tax Lien have been paid. These fees are normally added to the balance owed.
Incorrect liens are Notices of State Tax Lien filed in error by the Department of Revenue. The following is a listing of instances where a tax lien may have been filed in error:
- The entire amount owed was paid in full before the lien was filed.
- The tax was assessed and the lien was filed while the taxpayer was in bankruptcy and subject to an automatic stay.
- An incorrect assessment was made.
For one of these referenced instances, the taxpayer may ask for an administrative review. An administrative review is not appropriate when the taxpayer is challenging the underlying tax debt that generated the filing of the tax lien.
If the Department of Revenue agrees with the taxpayer, the Notice of State Tax Lien will be released at no cost to the taxpayer. At the taxpayer's request, the Department of Revenue will also notify the major credit reporting companies by mail that the tax lien was filed incorrectly. Credit reporting companies are required to remove the lien listing from the taxpayer's credit report upon receipt of this notification.
Inquire about an incorrect lien