§ 105-242. Warrants for collection of taxes; garnishment and attachment; certificate or judgment for taxes. - North Carolina Statutes

§ 105‑242.  Warrants forcollection of taxes; garnishment and attachment; certificate or judgment fortaxes.

(a)        Levy and Sale. – Ifa taxpayer does not pay a tax within 30 days after it is collectible under G.S.105‑241.22, the Secretary may take either of the following actions tocollect the tax:

(1)        Issue a warrantdirecting the sheriff of any county of the State to levy upon and sell the realand personal property of the taxpayer found within the county for the paymentof the tax and the cost of executing the warrant and to return to the Secretarythe money collected, within a time to be specified in the warrant but not lessthan 60 days from the date of the warrant. The procedure for executions issuedagainst property upon judgments of a court apply to executions under a warrant.

(2)        Issue a warrant toany revenue officer or other employee of the Department charged with the dutyto collect taxes, commanding the officer or employee to levy upon and sell thetaxpayer's personal property found within the State for the payment of the tax.Except as otherwise provided in this subdivision, the levy upon and sale ofpersonal property by an officer or employee of the Department is subject to andmust be conducted in accordance with the laws governing the sale of propertylevied upon under execution. The Secretary may sell the property levied upon inany county and may advertise the sale in any reasonable manner and for anyreasonable period of time to produce an adequate bid for the property. Levy andsale fees, plus actual advertising costs, must be added to and collected in thesame manner as taxes. The Secretary is not required to file a report of salewith the clerk of superior court, if the sale is otherwise publicly reported.

(b)        Garnishment andAttachment. – Intangible property that belongs to a taxpayer, is owed to ataxpayer, or has been transferred by a taxpayer under circumstances that wouldpermit it to be levied upon if it were tangible property is subject toattachment and garnishment in payment of a tax that is due from the taxpayerand is collectible under G.S. 105‑241.22. Intangible personal propertyincludes bank deposits, rent, salaries, wages, property held in the EscheatFund, and any other property incapable of manual levy or delivery. A person whois in possession of intangible property that is subject to attachment andgarnishment is the garnishee and is liable for the amount the taxpayer owes.The liability applies only to the amount of the taxpayer's property in thegarnishee's possession, reduced by any amount the taxpayer owes the garnishee.G.S. 105‑242.1 sets out the procedure for attachment and garnishment ofintangible property.

No more than ten percent (10%)of a taxpayer's wages or salary is subject to attachment and garnishment. The wagesor salary of an employee of the United States, the State, or a politicalsubdivision of the State are subject to attachment and garnishment.

(c)        Certificate of TaxLiability. – The Department may file a certificate of tax liability to collecta tax that is owed by a taxpayer and is collectible under G.S. 105‑241.22.A certificate of tax liability must state the taxpayer's name and the type andamount of tax owed. If the taxpayer resides in this State or has property inthis State, the Department must file the certificate of tax liability with theclerk of the superior court of a county in which the taxpayer resides or hasproperty. If the taxpayer does not reside in this State or have property inthis State, the Department must file the certificate of tax liability in WakeCounty.

The clerk of court must recorda certificate of tax liability in the same manner as a judgment. A recordedcertificate of tax liability is considered a judgment and is enforceable in thesame manner as other judgments. The legal rate of interest set in G.S. 24‑1applies to the principal amount of tax stated on the certificate of taxliability. The tax stated on a certificate of tax liability is a lien on realand personal property from the date the certificate is recorded.

A certificate of tax liabilityis enforceable for a period of 10 years from the date it is recorded. If thecertificate is not satisfied within this period, the remaining liability of thetaxpayer is abated and the Department must cancel the certificate. An executionsale initiated before the end of the 10‑year period may be completedafter the end of this period, regardless of whether resales are requiredbecause of the posting of increased bids. The Secretary may accept tax paymentsmade after a certificate has expired, regardless of whether any collectionactions were taken before the certificate expired. A taxpayer may waive the 10‑yearperiod for enforcement of the certificate for either a definite or anindefinite time.

The 10‑year period inwhich a certificate of tax liability is enforceable is tolled during thefollowing periods:

(1)        While the taxpayeris absent from the State. The period is tolled during the taxpayer's absenceplus one year after the taxpayer returns.

(2)        Upon the death ofthe taxpayer. The period is tolled while the taxpayer's estate is administeredplus one year after the estate is closed.

(3)        While an action ispending to set aside a conveyance made by the taxpayer as a fraudulentconveyance.

(4)        While an insolvencyproceeding against the taxpayer is pending.

(5)        During the period ofany statutory or judicial bar to the enforcement of the certificate.

(6)        The period for whicha taxpayer has waived the 10‑year period.

(c1)      Release of Lien. – TheSecretary shall release the State tax lien on a taxpayer's property if theliability for which the lien attached has been satisfied. The Secretary mayrelease the State tax lien on all or part of a taxpayer's property if one ormore of the following findings is made:

(1)        The liability forwhich the lien attached has become unenforceable due to lapse of time.

(2)        The lien is creatingan economic hardship due to the financial condition of the taxpayer.

(3)        The fair marketvalue of the property exceeds the tax liability and release of the lien on partof the property would not hinder collection of the liability.

(4)        Release of the lienwill probably facilitate, expedite, or enhance the State's chances forultimately collecting a tax due the State.

Ifthe Secretary of Revenue shall find that it will be for the best interest ofthe State in that it will probably facilitate, expedite or enhance the State'schances for ultimately collecting a tax due the State, he may authorize adeputy or agent to release the lien of a State tax judgment or certificate of taxliability upon a specified parcel or parcels of real estate by noting suchrelease upon the judgment docket where such certificate of tax liability isrecorded. Such release shall be signed by the deputy or agent and witnessed bythe clerk of court or his deputy or assistant and shall be in substantially thefollowing form: "The lien of this judgment upon (insert here a shortdescription of the property to be released sufficient to identify it, such asreference to a particular tract described in a recorded instrument) is herebyreleased, but this judgment shall continue in full force and effect as to otherreal property to which it has heretofore attached or may hereafter attach. This______ day of __________, ____

__________________________________________

Revenue Officer, N.C. Department of Revenue

WITNESS:

_______________________________________________42 C.S.C."

The release shall be noted onthe judgment docket only upon conditions prescribed by the Secretary and shallhave effect only as to the real estate described therein and shall not affectany other rights of the State under said judgment.

(d)        RemediesCumulative. – The remedies herein given are cumulative and in addition to allother remedies provided by law for the collection of said taxes.

(e)        Exempt Property. – Onlythe following property is exempt from levy, attachment, and garnishment underthis Article:

(1)        The taxpayer'sprincipal residence, unless the Secretary approves of the levy in writing orthe Secretary finds that collection of the tax is in jeopardy.

(2)        Tangible personalproperty that is exempt from federal levy as provided in section 6334 of theCode.

(3)        Intangible personalproperty that is exempt from federal levy under section 6334 of the Code.

(4)        Ninety percent (90%)of the taxpayer's salary or wages per month.

(f)         Uneconomical Levy.– The Secretary shall not levy against any property if the Secretary estimatesbefore levy that the expenses the Department would incur in levying against theproperty would exceed the fair market value of the property.

(g)        Erroneous Lien. – Ataxpayer may appeal to the Secretary after a certificate is filed undersubsection (c) of this section if the taxpayer alleges an error in the filingof the lien. The Secretary shall make a determination of such an appeal asquickly as possible. If the Secretary finds that the filing of the certificatewas erroneous, the Secretary shall issue a certificate of release of the lienas quickly as possible. (1939, c. 158, s. 913; 1941, c. 50, s. 10; 1949, c. 392, s. 6; 1951, c.643, s. 9; 1955, c. 1285; c. 1350, s. 23; 1957, c. 1340, s. 10; 1959, c. 368;1963, c. 1169, s. 6; 1969, c. 1071, s. 1; 1973, c. 476, s. 193; c. 1287, s. 13;1979, c. 103, ss. 1, 2; c. 179, s. 5; 1979, 2nd Sess., c. 1085, s. 1; 1989, c.37, s. 6; c. 580; 1991, c. 228, s. 1; 1991 (Reg. Sess., 1992), c. 1007, ss. 12,13; 1993, c. 532, s. 5; 1997‑121, s. 1; 1999‑456, s. 59; 2003‑349,s. 2; 2007‑491, ss. 28, 29, 31.)