North Carolina State Tax Lien Checklist
Understanding State Enforcement
What a Certificate of Tax Liability Means
A Certificate of Tax Liability is a legal claim the North Carolina Department of Revenue files against your property when you owe unpaid state taxes. This certificate gives the state a claim against your assets—real estate, bank accounts, vehicles, and other property—to secure payment of the debt.
The CTL functions as a judgment once recorded with the clerk of court and creates a lien on real and personal property. Understanding state enforcement actions is essential because ignoring them allows the state to escalate collection efforts, potentially affecting your property ownership and access to funds.
Why the State Files This Enforcement Action
When a tax debt remains unpaid, North Carolina law empowers the Department of Revenue to file a Certificate of Tax Liability. The state initiates enforcement when a taxpayer ignores billing notices, fails to make payment arrangements, or misses payment deadlines.
Filing a CTL creates a public record of the debt and gives the state legal standing to pursue collection against your property. This is a standard administrative procedure used by the state to collect taxes owed under N.C. Gen. Stat. § 105-242(c).
Consequences of Ignoring This Action
If a Certificate of Tax Liability remains unresolved, the state may pursue additional enforcement actions, such as wage garnishment, bank account garnishment, or property seizure. The CTL remains a public record and may be discovered by lenders through public record searches when you apply for loans or refinance property. The longer the debt remains unpaid, the more collection tools the state may use and the more costs may accumulate through interest and penalties.
What a Certificate of Tax Liability Does Not Mean
A Certificate of Tax Liability does not mean your property has been seized or sold. The CTL does not automatically result in wage garnishment or bank account garnishment—those are
separate enforcement actions the state may pursue later. A CTL also does not prevent you from selling property, though the certificate must typically be satisfied as part of any sale transaction to deliver a clear title.
Steps After Receiving an Enforcement Notice
Step 1: Locate All State Notices
Find all tax notices you have received from the North Carolina Department of Revenue. Look for notices that list the tax years involved, the amount owed, and any deadlines. Check whether you have received a Notice of Collection or other enforcement correspondence. Keep all notices in one place for reference, and note the specific tax years in question and the total amount of tax, penalties, and interest owed.
Step 2: Verify the Debt Amount
Visit the North Carolina Department of Revenue website or contact the Department directly.
Request a written statement of your current tax balance, including all tax years involved. Ask for a detailed breakdown showing the original tax amount, penalties, interest, and any enforcement costs. Confirm whether the Certificate of Tax Liability has been filed, and against which property or assets.
Step 3: Review Your Tax Filing History
Gather copies of your past tax returns for the years listed in the enforcement notice. Check whether you filed returns for all years in which the state claims you owe tax. Locate evidence of any payments you made toward this debt, including bank statements, check records, and receipt confirmations. Review whether you received prior notices or bills before the enforcement action.
Step 4: Assess Your Financial Situation
List all monthly income sources and amounts to determine what funds are available. Identify all monthly expenses, including housing, utilities, food, transportation, child support, and other debts. Calculate the difference between income and expenses to understand your payment capacity. This information will be needed if you pursue a payment plan or hardship relief option.
Step 5: Contact the NCDOR Collections Unit
Call the Department of Revenue at 1-877-252-3252 to speak with a case resolution specialist about collections matters. Identify yourself and reference the tax years and notice number from your enforcement letter. Request a detailed explanation of the debt and any enforcement
actions taken or planned. Ask about available options for resolving the debt and provide your
Social Security number or tax ID when requested.
Step 6: Explore Resolution Options
The state may offer options to resolve the enforcement action. Standard options include full payment, payment plans, and, in some cases, hardship relief. Full payment of the entire balance in a single payment will result in the CTL being released upon receipt and processing of payment.
Payment plans allow you to pay the debt in monthly or quarterly installments over time, with terms depending on the amount owed and your ability to pay. Offer in Compromise may allow settling the debt for less than the full amount owed, though eligibility is limited and specific criteria apply.
Step 7: Gather Required Documentation
The documents you need depend on which option you pursue. For a payment plan, you will typically need to provide income and expense information. Recent pay stubs or proof of income, bank statements, and proof of essential expenses may be requested. Provide copies of prior tax returns and proof of any payments already made when requested by the Department.
Step 8: Submit Your Application
Complete any required forms or agreements provided by the Department. Include all requested supporting documentation and submit your application by the specified deadline. Request written confirmation that your application was received, and keep copies of everything you submit for your records.
Step 9: Follow Up on Your Request
Wait for the Department to respond to your application or agreement. If you do not hear back within thirty days, contact the Department to confirm receipt. Keep all correspondence from the
Department in your file. If your payment plan is approved, make payments on the schedule provided and keep payment records and receipts.
- Missing deadlines when responding to the Department’s requests may result in the
- Not providing complete information delays processing or results in the denial of your
- Ignoring follow-up notices from the Department prevents your case from being resolved.
- Not making agreed-upon payments on time can result in the loss of your payment plan
- Assuming the debt will go away through inaction is incorrect because tax debts do not
- Failing to request the release of the certificate after paying the debt leaves the public
- State enforcement notices and responses
- Sales tax audits, assessments, and collections
- Payroll & trust fund tax enforcement issues
- Penalty and interest reduction options
- Payment plans and state tax relief eligibility
- Representation before state tax agencies
Step 10: Request Certificate Release
After resolving the debt either in whole or through an approved arrangement, ask the
Department when the Certificate of Tax Liability will be released. Request written notice once the state has officially released the CTL. Contact your local service center to initiate the release process and keep documentation of the certificate release for your records.
What Happens After Resolution
Once you have submitted your application, agreement, or payment, the Department will review and process it in accordance with its procedures. If your request for a payment plan or relief is approved, you will receive written confirmation outlining the terms. If you make payments on an approved plan, the Certificate of Tax Liability will be released after the debt is paid in full. The release must be recorded with the clerk of court where the CTL was initially filed.
Mistakes That Create Problems denial of relief options or continued enforcement action. application. or the initiation of renewed collection action. expire without resolution. record uncleared.
Frequently Asked Questions
How long does it take for the state to file a Certificate of Tax Liability?
Under North Carolina law, the Department of Revenue has the authority to file a Certificate of
Tax Liability (CTL) after assessing a tax debt that remains unpaid despite notice and demand.
The debt must be final and collectible under N.C. Gen. Stat. § 105-241.22 before the
Department can file. Contact the Department to ask about the timeline for your specific situation.
Will a Certificate of Tax Liability prevent me from selling my property?
You can still sell property even if you have a Certificate of Tax Liability. The CTL must typically be satisfied as part of the sale to deliver a clear title to the buyer. Proceeds from the sale may be used to pay the certificate balance.
Can I remove a CTL without paying the full amount?
In some cases, the state may accept a payment plan or settlement for less than the full amount through an Offer in Compromise. Specific eligibility criteria, application, and availability vary by case. Contact the Department to discuss your options and determine what relief may be available.
What happens if I do not respond to enforcement notices?
If you do not respond, the state may pursue additional enforcement actions, including wage garnishment, bank account garnishment, or property seizure. The Certificate of Tax Liability will remain in place until the debt is resolved through payment or other arrangement.
Does a Certificate of Tax Liability affect my credit score?
Certificates of Tax Liability do not appear on credit reports. As of April 2018, all three major credit bureaus stopped including tax lien information on consumer credit reports. Lenders may discover the CTL through public record searches conducted outside of credit reporting systems.
Can the state take my paycheck or bank account?
Yes, the state may pursue wage garnishment or bank account garnishment as separate collection methods if other enforcement efforts are unsuccessful. These are distinct enforcement actions that may follow if the Certificate of Tax Liability does not resolve the debt.
What if I think the state’s claim is incorrect?
You have the right to challenge the debt. Contact the Department of Revenue at
1-877-252-3252 to request a review or to dispute the amount owed. Ask about procedures for appealing the assessment and provide documentation supporting your dispute.
Can penalties and interest be reduced?
In some cases, penalties may be reduced or eliminated if certain conditions are met. Contact the Department to ask about penalty relief options for your situation and provide information about circumstances that may support your request.
Moving Forward
State enforcement is a serious matter that requires prompt attention and action. Understanding what a Certificate of Tax Liability means and what steps are available will help you respond effectively. Contact the North Carolina Department of Revenue at 1-877-252-3252 as soon as possible to discuss your specific situation, explore resolution options, and begin addressing the debt. Taking action now is more effective than waiting for additional enforcement actions.
Facing State Tax Enforcement Action?
If you’ve received a notice related to sales tax or payroll tax enforcement and aren’t sure how to respond, our team can help you understand your options and next steps.
We help with:
20+ years experience • Same-day reviews available
