When a taxpayer does not pay or make suitable arrangements to resolve an outstanding tax debt, the Department of Revenue may seize and sell any type of non-exempt real or personal property that the taxpayer owns.
After property is seized, public notice of a pending sale is given. This notice must be posted in at least three public places within the county where the property is located. The notice of sale must also appear three times in the newspaper with the largest circulation within that county. The original notice of sale must either be delivered to the taxpayer personally or sent to the last known address by certified mail. Seized property may be sold 30 days after notice is given and perishable property may be sold immediately upon seizure.
To release seized property prior to sale, at least one of the following actions must be performed by the taxpayer:
- Pay the entire liability, including tax, interest, penalties, fees, and seizure expenses
- Furnish an acceptable bond
- Make an acceptable payment agreement
Sale of seized property is conducted by either public auction or public sale under sealed bids. If several items or parcels are seized, the property may be offered for sale separately, in groups, or as a whole. Ownership of personal property transfers to the successful purchaser(s) immediately upon conclusion of the sale.
For real estate, there is a 120-day redemption period prior to transfer of ownership or title to the property. To redeem seized property, individuals who hold an "economic interest" in the seized property must reimburse the successful bidder(s) for the full amount of their winning bid plus interest at the rate of 20% per annum. If the property has not been redeemed at the end of the 120-day period, ownership will be deeded to the purchaser(s).
Proceeds of sale are applied to the expenses of seizure and sale first. Any remaining amount is applied to the tax liability, including penalties, interest, and cost of collection fees. If sale proceeds are not sufficient to pay the tax liabilities and the seizure/sale expenses in full, the taxpayer is still responsible for the remaining liability. If sale proceeds are more than the total of the tax liabilities and seizure/sale expenses, the taxpayer is notified of the surplus and provided with instructions for requesting a refund. Mortgagees and other lien holders with submitted claims have superiority to the taxpayer's refund request and will be paid prior to disbursing any refunds to the taxpayer.