Assessments

If you do not include payment or full payment when you file a tax return or audit, the state Department of Revenue will enter an assessment. Once it is finalized and your appeal period closes, the assessment will move on to Collection Services. At this point the tax liability has the same status as a court judgement, meaning that Collection Services can collect involuntarily by various means. The first letter Collection Services sends is a “Final Notice Before Seizure,” which gives you ten days to fully pay before further collection becomes necessary.

Payment Agreement

The Commissioner of the Department of Revenue is authorized to enter into a payment agreement with the taxpayer if the tax bill has been finally assessed without appeal and the commissioner determines that an installment plan will help facilitate the collection of the tax liability. Payment agreements may not extend beyond a 12-month period. The agreement may be terminated at any time if any of the following circumstances occur:

• Information provided by the taxpayer to the commissioner or department is determined to have been inaccurate or incomplete.
• The taxpayer fails to pay any installment at the time that it is due.
• The taxpayer fails to timely pay any other tax liability that is due to the department.
• The financial situation of the taxpayer has changed significantly.
• The taxpayer fails to provide a financial update when requested.
• The commissioner believes the collection of any tax under the agreement is in jeopardy.

Lien

Regardless of your arrangements, if you do not appeal or fully pay the final assessment, the State will protect its interests by recording a lien for your property. Since this lien represents the State’s interests, you will not be able to transfer or sell your property until it is paid. While the State does not actively notify credit agencies of a lien, it is a matter of public record. So it can still affect your credit if an agency decides to check.

Tax Levy

The state may also levy on the tax liabilityor’s property, resulting in an order for the sheriff or another official to seize the property, hold a public sale, and give the sale proceeds to the department. The levy is based on the final assessment and not the tax lien.

Garnishments

-Wage: The Department of Revenue can garnish any form of compensation you receive from your employer, meaning a 25% reduction in your gross wages until the garnishment is fulfilled.
-Financial Institutions: Banks, credit unions, and the like can all be issued garnishments. The Dept. of Revenue claims the full tax liability in the form of money from the account concerned.
-Other: Garnishments can be issued to anyone in possession of property you own, including rented or insured properties.

Final Notice Before Seizure

Once your tax liability has reached the Collection Services Division you will receive a letter titled Final Notice Before Seizure. The notice gives you 10 days to resolve your tax liability before further collection action is necessary. You will only receive the one notice before the Department takes further action.

Writs of Execution

A writ can be issued to the sheriff closest to your property. Real property in its right, title, and interest will be offered to the highest bidder. This bid value is added to the tax liability and associated interest for the total amount that you must pay if you want to get your property back within the one-year redemption period. Personal property, however, does not have such a period.