Connecticut Tax Lien Process: A Guide for Investors

A Connecticut tax lien is more than just a notice from the state—it’s a legal claim against your property for unpaid taxes. When taxes remain unpaid, the Connecticut Department of Revenue Services (DRS) can file a lien to secure the debt and protect the state’s interest. This action can affect your ability to sell, refinance, or transfer ownership of your home or business assets until the balance is resolved.

Tax liens can impact many people, including homeowners, small-business owners, and heirs who inherit property with outstanding tax debt. Even if the unpaid balance seems small, a lien can create lasting complications by appearing in public records and reducing your access to credit. Understanding how these liens work and differ from ordinary tax bills helps protect your property and financial security.

This guide explains every step of the Connecticut tax lien process, from how liens are filed and recorded to how long they last and how to remove or release them. You’ll also learn how the DRS handles liens, how state rules differ from federal IRS liens, and which forms and payment options apply to your situation. Knowing what to expect helps you make informed choices that keep your property in good standing and maintain compliance with state tax laws.

What is a Tax Lien in Connecticut?

A Connecticut tax lien is a legal claim the state places on your real or personal property when you owe unpaid taxes. It secures the amount owed to the Connecticut Department of Revenue Services (DRS) and ensures the state collects the debt before you sell, refinance, or transfer ownership. Simply put, a lien gives the government a legal right to your assets until the balance is fully paid.

How a Tax Lien Differs from a Tax Bill or Judgment

A lien is more serious than a regular tax bill or court judgment because it directly affects property ownership:

• Tax Bill: States the amount due but does not restrict ownership rights.
  
  
• Tax Lien: Attaches to your property, limiting your ability to sell or refinance.
  
  
• Judgment: A court order that may follow if taxes remain unpaid, authorizing further collection actions.

A lien can also impact your credit score and ability to obtain new loans or financing.

Types of Property Subject to a Connecticut Tax Lien

A lien can attach to various assets depending on the unpaid tax debt:

• Real property: Homes, land, or commercial property located in Connecticut.
  
  
• Personal property: Movable items such as vehicles, business equipment, or valuables.
  
  
• Business assets: Inventory, accounts receivable, or fixtures owned by a company.

Legal Authority and Its Impact on Ownership

Under Connecticut General Statutes §12-398, the DRS can file a lien once taxes become delinquent. The lien remains until taxes, interest, and penalties are satisfied. You still own the property, but the lien restricts your ability to sell, refinance, or transfer ownership until the debt is cleared. Acting promptly prevents long-term financial complications and protects your property rights.

Who Files and Manages Connecticut Tax Liens?

The Connecticut Department of Revenue Services (DRS) is responsible for filing and managing Connecticut tax liens. The DRS ensures that unpaid state taxes are appropriately recorded and collected to protect the state’s financial interests. Once filed, a lien becomes a public document that secures the state’s claim on your real or personal property until the balance is paid.

Divisions Within the Department of Revenue Services

Different DRS divisions handle specific aspects of the tax lien process in Connecticut, depending on the type of tax owed:

• Estate Tax Section: This division manages liens related to unpaid Connecticut estate taxes. These liens arise when estate property transfers before all taxes are paid. Executors or legal representatives work directly with this section to obtain lien releases or partial discharges.
  
  
• Collections and Enforcement Division: This division oversees most income, business, and sales tax liens. It issues written notices, contacts taxpayers by phone, and may pursue collection actions if the debt remains unpaid.
  
  
• Collections Support Unit: This specialized unit manages lien paperwork, payoff requests, and releases. Taxpayers can contact this unit to verify a lien’s status or request a payoff letter.

Other Agencies Involved

In estate-related cases, Connecticut probate courts may assist with lien resolution. Once the estate's tax obligations are satisfied, the probate court works with the DRS to confirm payments, approve escrow arrangements, and issue release certificates.

When the DRS May Contact You

The DRS or one of its divisions may reach out when:

• You have outstanding tax debt or past-due balances on your account.
  
  
• Your property or business assets are at risk of a lien due to delinquent taxes.
  
  
• The state needs to confirm payment arrangements or release documentation.

Taxpayers can verify recorded liens or research business and UCC filings through the official Connecticut Secretary of State online lien search system. You can protect your property rights and maintain compliance with state tax laws by acting promptly when contacted by the DRS.

How Connecticut Tax Liens Are Filed and Recorded

The Connecticut Department of Revenue Services (DRS) follows a structured legal process when filing and recording tax liens. Each lien must be appropriately documented and recorded before it becomes enforceable. The filing process depends on the type of property involved, such as real estate, business assets, or estate property.

Real Estate Tax Liens

For real property, the lien is filed with the town clerk’s office where the property is located. This office also records deeds, mortgages, and other property-related documents.

• Once recorded, the lien becomes part of the property’s public record, meaning it will appear in title searches conducted by lenders, buyers, or attorneys.
  
  
• The filing creates a legal claim restricting the owner from selling or refinancing the property until the tax debt is resolved.
  
  
• Connecticut General Statutes Section 12-398 requires the lien to be appropriately recorded to ensure its validity against other creditors or buyers.

UCC and Business Liens

When tax debt involves personal or business property, the DRS files a Uniform Commercial Code (UCC) lien with the Connecticut Secretary of State.

• These liens may cover equipment, inventory, or accounts receivable.
  
  
• Businesses and individuals can confirm whether a lien has been filed using the Connecticut Secretary of State’s online lien search system or public record searches.
  
  
• The lien remains in place until the balance, including penalties and interest, is paid in full.

Estate Tax Liens

For estates, liens attach automatically at the time of death when Connecticut estate taxes are due.

• The lien ensures the state’s interest in the decedent’s real property until all taxes are paid.
  
  
• Probate courts and the DRS coordinate to verify payment and issue a Certificate of Release once the estate meets its tax obligations.
  
  
• The certificate must then be recorded with the appropriate town clerk to clear the property’s title.

Proper filing and recording are essential to protecting the taxpayer and the state. Verifying that the lien is accurately recorded and confirming its release once paid helps maintain clear ownership and avoid complications in future property transactions.

How Long Do Connecticut Tax Liens Last?

The duration of a Connecticut tax lien depends on the type of tax owed and whether the balance has been paid in full. A lien continues to secure the tax debt until all taxes, interest, and penalties are satisfied or officially released by the Connecticut Department of Revenue Services (DRS).

Estate Tax Liens

An estate tax lien automatically attaches to a decedent’s real property and remains valid until the tax is paid. It does not expire automatically and must be released by the DRS or probate court after verification. Under Connecticut General Statutes §12-398, the lien stays in effect from the tax’s due date until the balance is cleared.

Income and Business Tax Liens

These liens remain active until delinquent taxes are paid or the DRS renews or discharges them. If a payment plan or court judgment is in place, the lien may continue until all terms are met.

Municipal Property Tax Liens

Local tax liens follow separate rules. They may last several years and can be extended by filing a continuation certificate with the town clerk. Because Connecticut tax liens do not expire automatically, taxpayers should verify their release with the DRS or town clerk to protect property ownership.

Connecticut Tax Liens vs. Federal IRS Liens

Connecticut and federal tax liens secure unpaid taxes but differ in how they are filed, prioritized, and enforced. Understanding these distinctions helps taxpayers protect their property and determine which resolution process is most applicable to their situation.

1. Filing Authority

• Connecticut: Filed by the Connecticut Department of Revenue Services (DRS).
• Federal: Filed by the Internal Revenue Service (IRS) under federal law.

2. Where It’s Recorded

• Connecticut: Recorded with local town clerks for real property or with the Secretary of State for business and personal assets.
• Federal: Filed with the Secretary of State or county recording offices, and applies nationwide.

3. Scope of Property Affected

• Connecticut: Applies to real and personal property within the state, based on ownership registration and public records.
• Federal: Extends to nearly all tangible and intangible assets owned by the taxpayer across the United States.

4. Priority Rules

• Connecticut: Follows the principle of “first in time, first in right.” In some cases, a federal lien may take priority if filed earlier.
• Federal: Federal precedence may override state liens when recorded first.

5. Effect on Property Sales

• Connecticut: A lien must be resolved before ownership transfer. Buyers should perform due diligence to confirm a clean title and accurate lien value.
• Federal: Although the lien attaches to the taxpayer rather than the property, it can still block transfers until the debt is paid or settled.

6. Payment and Release

• Connecticut: Payments are made to the DRS by check or money order. The lien is released after full payment or approval of a valid payment agreement.
• Federal: Payments go directly to the IRS, which issues a certificate of release once the liability is fully satisfied.

7. If Unable to Pay

• Connecticut: Taxpayers facing financial hardship may apply for installment plans or offers in compromise through the DRS.
• Federal: The IRS offers payment plans, hardship programs, and settlement options for qualifying taxpayers.

8. Enforcement Actions

• Connecticut: The state may seek court approval or negotiate settlements before initiating foreclosure.
• Federal: The IRS can seize assets and conduct public auctions to recover unpaid tax debt.

9. Notification Method

• Connecticut: The DRS sends written notice by mail before or after a lien is filed.
• Federal: The IRS mails official lien notices, explaining the filing process and taxpayer rights.

10. Best Interest of the Taxpayer

• Connecticut: Acting quickly helps protect financial interests and prevent title clearance delays.
• Federal: Prompt communication with the IRS can prevent asset seizure and reduce penalties.

Both agencies have the authority to collect unpaid taxes, but their enforcement and release procedures differ. Knowing how these systems operate allows taxpayers to plan effectively and protect their ownership rights.

How to Remove or Resolve a Connecticut Tax Lien

A Connecticut tax lien can be removed in several ways, depending on your financial situation and the type of tax debt. The Connecticut Department of Revenue Services (DRS) adheres to precise protocols to guarantee the correct payment, release, or correction of liens. Acting quickly protects your real property rights and prevents further collection actions.

Full Payment and Lien Release

The fastest way to resolve a lien is to pay the total balance—taxes, interest, and penalties—in full. Once payment clears, the DRS issues a Certificate of Release, which must be recorded with the local town clerk or Secretary of State to remove it from public records.

Partial Payment or Partial Release

If selling or refinancing, taxpayers may request a partial release. The DRS determines the proportional payment to clear a single property, while the remainder stays secured.

Estate and Hardship Options

For estate liens, the DRS or probate court may issue a release when payment is assured through escrow or a letter of credit. If full payment is not possible, taxpayers can request an installment plan or offer in compromise based on financial hardship.

Maintaining documentation and communication with the DRS ensures timely resolution and protects property titles and credit standing.

Step-by-Step: Getting a Connecticut Tax Lien Released

Releasing a Connecticut tax lien requires careful coordination with the Department of Revenue Services (DRS) and, in some cases, the local town clerk or probate court. Following the correct procedure ensures that the lien is legally removed from public records and your property title remains clear.

1. Identify the Type of Lien and Responsible Agency

Identify the agency that filed the lien before proceeding with any action.

• Estate tax liens are managed by the DRS Estate Tax Section or the local probate court.
  
  
• The Collections Support Unit of the DRS handles income, business, and sales tax liens.
  Understanding which division oversees your lien helps you contact the correct office and request the proper forms.

2. Request a Payoff Amount Using Form TPG-198

To obtain an official statement showing the total amount owed, use Form TPG-198, Request for Real Estate or UCC Lien Payoff Amount.

• The form requires basic taxpayer information, the type of property affected, and a requested payoff date.
  
  
• Submit the form by mail, fax, or person to the DRS Collections Support Unit.
  
  
• Processing generally takes five to ten business days.

3. Review the Payoff Letter

After processing, the DRS sends a payoff letter listing:

• The tax amount owed, including any accrued interest and penalties.
  
  
• The total payment is required by a specified date.
  
  
• Instructions on how to submit your payment and reference the correct case number.

Verify that all details match your records before sending payment to avoid delays.

4. Make Payment to the DRS

You can pay by personal check, cashier’s check, or money order payable to “Commissioner of Revenue Services.”

• Include your account number, taxpayer ID, and lien reference on all payments.
  
  
• If paying in person, visit the DRS Hartford office; payments are not accepted at branch offices.
  
  
• For estates, payments may also be made through an escrow account or estate representative.

5. Obtain the Lien Release Certificate

Once the payment clears, the DRS issues a Certificate of Release of Lien, confirming that the tax debt has been satisfied.

• For estate-related liens, use Form CT-4422 UGE, Application for Certificate Releasing Connecticut Estate Tax Lien, which must be submitted before the release is granted.
  
  
• Keep a copy of the release certificate for your personal and legal records.

6. Record the Release with the Town Clerk or Secretary of State

Recording the release is essential to removing the lien from public records.

• Bring or mail the original certificate to the town clerk’s office where the lien was filed.
  
  
• For business or personal property liens, submit the release to the Connecticut Secretary of State.
  
  
• Pay local recording fees (usually $25–$50) to finalize the process.

7. Verify the Release in Public Records

After recording, verify that the lien is no longer listed on your property or business record.

• Request a current property search or title report from the town clerk or use the Connecticut Secretary of State’s UCC search system.
  
  
• Provide copies of the recorded release to your mortgage lender, title company, or attorney.
  
  
• Maintain these documents in your financial records to prevent future complications.

Timeline Expectations:

• Payoff request processing: 5–10 business days
  
  
• Payment confirmation: 10–15 business days after receipt
  
  
• Certificate issuance: 5–10 business days after payment clears
  
  
• Recording and verification: typically, same-day service at the clerk’s office

Following these steps ensures that the release of the Connecticut tax lien is recorded correctly, restoring your property’s clear title and protecting your credit standing.

Key Connecticut Tax Forms and Resources

Managing or releasing a Connecticut tax lien requires submitting the correct forms to the proper agency. These documents allow taxpayers to request payoff amounts, obtain lien releases, and confirm compliance with state tax laws. Completing and filing them correctly ensures timely resolution and prevents unnecessary delays.

• Form TPG-198: Request for Real Estate or UCC Lien Payoff Amount: Used to determine the total balance owed on a lien, including tax, interest, and penalties. Submit to the DRS Collections Support Unit by mail, fax, or person.
• Form CT-4422 UGE: Application for Certificate Releasing Connecticut Estate Tax Lien: Applies to estate tax liens on real property. Executors or legal representatives must include proof of payment or escrow documentation when requesting release.
• Form LGL-001: Power of Attorney: Authorizes a representative, such as an attorney or accountant, to communicate with the DRS and handle lien-related filings.
• Form CT-706/709: Connecticut Estate and Gift Tax Return: Determines total estate tax due and whether a lien applies. Filing promptly helps avoid interest and penalties.
• Form C-3: State of Connecticut Domicile Declaration: Used by nonresident estates to confirm property ownership before lien release.

Official Online Resources

Connecticut Department of Revenue Services Portal: https://portal.ct.gov/drs. The DRS website provides updated forms, filing instructions, and online payment tools. It also includes contact information for each DRS division that manages tax liens and taxpayer accounts.

Practical Examples of Connecticut Tax Lien Situations

Real-life examples help illustrate how Connecticut tax liens can arise and how taxpayers may resolve them. Each scenario shows how timing, documentation, and communication with the government affect the outcome.

Example 1: Estate Property Sale and Lien Release

A family inherited a Hartford home with a state estate tax lien. The executor submitted Form CT-4422 UGE and paid the required balance before the filing deadline. After the funds cleared, the Department of Revenue Services released the lien, allowing the property to be sold immediately.

Example 2: Small Business with a Filing Error

A business owner discovered a lien recorded in error due to a payment posting issue. After showing proof of prior payments, the lien was withdrawn under DRS review. This example highlights the importance of keeping receipts and confirming that all filings are correctly recorded.

Example 3: Partial Payment for Property Sale

A homeowner facing financial hardship could still sell part of their property after requesting a partial release. The DRS approved the request, considering the situation an exception under Connecticut General Statutes §12-398. Though the process added some cost, resolving the lien protected the remaining assets and allowed the sale to proceed.

Connecticut Taxpayer Rights and Contact Information

Every taxpayer facing a Connecticut tax lien is protected under the Connecticut Taxpayer Bill of Rights. This law guarantees fair treatment, clear communication, and access to assistance when dealing with the Department of Revenue Services (DRS). Understanding these rights helps you manage your tax debt and resolve issues efficiently.

Your Rights as a Taxpayer

• You have the right to written notice before any lien is filed or enforced.
  
  
• You may request explanations of all tax assessments and lien balances.
  
  
• You can appeal incorrect assessments through the DRS Appellate Division or Connecticut courts.
  
  
• You may authorize a legal or financial representative to act on your behalf using Form LGL-001 (Power of Attorney).
  
  
• You are entitled to professional and respectful treatment from all DRS employees.

Where to Get Help

• DRS Collections Support Unit (Liens): 860-297-5940
  
  
• Estate Tax Section: 860-297-5737
  
  
• Problem Resolution Office: 860-297-5603

Contacting a qualified tax attorney or CPA can protect your rights and help you fully comply if your situation becomes complex.

Frequently Asked Questions (FAQs) 

How do I determine if I have a Connecticut tax lien on real property?

You can confirm active liens by searching public records through the Connecticut Secretary of State’s online database or contacting your local town clerk. These sources show whether a lien has been recorded against your real property. You can also call the Department of Revenue Services (DRS) to request official documentation or verify your payment status.

Can I sell or refinance real or personal property with a Connecticut tax lien?

Yes, but the lien usually must be satisfied before the transaction closes. Sometimes, the DRS allows a partial release when sale proceeds are held in escrow. Mortgage lenders and title companies require proof that the lien has been removed to finalize financing or property transfer, so resolving it early prevents costly delays.

How is a Connecticut tax lien different from a federal tax lien?

The state’s Department of Revenue Services files a Connecticut tax lien, while the IRS files a federal one. The state lien applies to property within Connecticut, while the federal version can attach to assets nationwide. Both protect the government’s interest in collecting unpaid taxes but follow separate laws and procedures.

What types of property can a Connecticut tax lien attach to?

A lien can attach to real or personal property, including land, homes, vehicles, and business equipment. This gives the state a legal claim until the tax debt is paid in full. Understanding which assets are affected helps you plan payment arrangements, prevent enforcement actions, and maintain ownership rights while resolving your balance.