Levy upon property

# 1.

Definitions.
As used in this section, unless the context otherwise indicates, the following terms have the following meanings.

# A.

"Delinquent," when used to refer to a tax imposed by this Title, means a tax liability reported by a taxpayer or a tax assessed by the assessor that is not paid by its due date and to which no further administrative or judicial review is available pursuant to section 151 . "Delinquent" may also refer to any other obligation owed to the State and authorized to be collected by the bureau or to a taxpayer liable for delinquent taxes.

# B.

"Levy" means an administrative power to collect delinquent taxes through the means prescribed by this section, or the exercise of that power. The power to levy includes the power of distraint by any lawful means, the power to sell the property and the power to release the levy when it is no longer necessary or appropriate to further the process of collecting delinquent taxes. Exercise of the levy power creates a lien and makes the assessor a judgment creditor.
Except with respect to intangible personal property, a levy extends only to property possessed and obligations existing at the time the levy is made. A levy with respect to intangible personal property has the effect set forth in subsection 2, paragraph E .
B-1.
"Notice" means written notification served personally or sent by certified mail, except with respect to notice to a person who has consented in writing to some other means of notification.

# C.

"Property" means any right, title and interest held in property by a delinquent taxpayer, whether real or personal, tangible or intangible, located within this State.
D.

# 2.

Levy upon property for payment of delinquent tax.
The procedure for the levy upon property for payment of delinquent tax is as follows.

# A.

# B.

If a person liable to pay any delinquent tax neglects or refuses to pay that tax within 10 days after receipt of notice pursuant to section 171 , the State Tax Assessor may collect the tax and an additional amount sufficient to cover the expenses of the levy, by levy upon all property belonging to that person except as provided in subsection 5 . If the assessor makes a determination of jeopardy pursuant to section 145 , having given notice of that determination and made demand for immediate payment of that tax, the assessor may proceed immediately without regard to the 10-day period provided in section 171 to collect by levy the tax and an additional amount sufficient to cover the expenses of the levy.

# C.

If any property upon which levy has been made is not sufficient to satisfy the claim of the State, the assessor may, thereafter and as often as necessary, proceed to levy upon any other property of the person against whom the claim exists liable to levy until the amount due together with all expenses is fully paid.

# D.

The assessor shall promptly release a levy made pursuant to this section when the liability giving rise to the levy is satisfied or becomes unenforceable due to lapse of time and shall then promptly notify the person upon whom the levy is made that the levy has been released.

# E.

The effect of a levy on salary or wages payable to or received by a taxpayer is continuous from the date the levy is first made until the liability giving rise to the levy is satisfied. Except as otherwise provided by this paragraph, a levy on any other intangible personal property or rights to intangible personal property remains in effect until one year after the date that notice of levy under subsection 3, paragraph A is received by the person in possession of or liable to the taxpayer with respect to intangible personal property, including property that is first possessed or liabilities that arise after the date of receipt of the notice of levy. In the case of a levy upon property held by a financial institution described in subsection 3, paragraph A , the levy extends only to accounts in existence on the date the notice of levy is received by the financial institution, but includes deposits made or collected in those accounts after the notice of levy is received. A levy on intangible personal property or rights to intangible personal property, ownership of which is disputed on the date that notice the levy is received, remains in effect until one year after the dispute is resolved.

# 3.

Surrender of property or discharge of obligation; exceptions; personal liability; penalty.
A surrender of property or discharge of obligation is governed by this subsection.
A.
Except as otherwise provided in paragraph B , any person who is in possession of, or obligated with respect to, property or rights to property subject to levy upon which a levy has been made shall, upon demand of the assessor, surrender the property or rights or discharge the obligation to the assessor within 21 days after receipt of the notice of levy, except that part of the property or rights that is, at the time of the demand, subject to an attachment or execution under judicial process. It is a defense to the liability imposed by this subsection that the person who fails to comply with the terms of a notice of levy or that person's bailor has a valid claim against the delinquent taxpayer that accrued prior to receipt of the notice of levy or a valid security interest or lien upon the property of the taxpayer that was perfected prior to receipt of the notice of levy; but this defense is available only to the extent of that claim, security interest or lien.
Any financial institution chartered under state or federal law, including, but not limited to, trust companies, savings banks, savings and loan associations, national banks and credit unions, shall surrender to the assessor any deposits, including any interest in the financial institution that would otherwise be required to be surrendered under this subsection only after 21 days after receipt of the notice of levy, but not later than 30 days after receipt of the notice of levy. Except as provided in subsection 5, paragraph D , with respect to a levy on salary or wages, any person in possession of, or obligated with respect to, property subject to a continuing levy against intangible personal property, which property is first possessed or which obligation first arises subsequent to receipt of a notice of levy by that person, shall, upon demand of the assessor, surrender the property or rights, or discharge the obligation to the assessor within 30 days after the property is first possessed or the obligation first arises.
B.
A levy with respect to a life insurance or endowment contract is governed by this paragraph.

# (1)

A levy on an organization with respect to a life insurance or endowment contract issued by that organization, without necessity for the surrender of the contract document, constitutes a demand by the assessor for payment of the amount described in subparagraph (2) and the exercise of the right of the person against whom the tax is assessed to the advance of that amount. The organization shall pay over the amount no later than 90 days after receipt of the notice of levy. Notice must include a certification by the assessor that a copy of the notice has been mailed to the person against whom the tax is assessed at that person's last known address.

# (2)

A levy under this paragraph is deemed to be satisfied if the organization pays over to the assessor the amount that the organization could have advanced to the person against whom the tax is assessed on the date prescribed in subparagraph (1) for the satisfaction of the levy, increased by the amount of any advance, including contractual interest, made to the person on or after the date the organization received notice or otherwise had knowledge of the existence of the lien with respect to which the levy is made, other than an advance, including contractual interest, made automatically to maintain the contract in force under an agreement entered into before the organization received such notice or had such knowledge.

# (3)

The satisfaction of a levy under subparagraph (2) is without prejudice to any civil action for the enforcement of any lien imposed by section 175‑A with respect to the contract.
C.
Any person who fails or refuses to surrender any property or rights to property, subject to levy, upon demand by the assessor:

(1)
Is liable in person and estate to the State in a sum equal to the value of the property not so surrendered, but not exceeding the amount of taxes for the collection of which the levy has been made, together with costs and interest at the rate determined pursuant to section 186 on the sum from the date of the levy. Any amount, other than costs, recovered under this paragraph must be credited against the tax liability for the collection of which the levy was made; and

(2)
Without reasonable cause, is liable for a penalty equal to 50% of the amount recoverable under subparagraph (1). A part of the penalty may not be credited against the tax liability for the collection of which the levy was made.
The assessor may collect the liability established by this paragraph by assessment and collection in the manner described in this Part.
D.
Any person in possession of, or obligated with respect to, property subject to levy upon which a levy has been made, who, upon demand by the assessor, surrenders that property or rights to that property, or discharges the obligation to the assessor, or who pays a liability under paragraph C , subparagraph (1) is discharged from any obligation or liability to the delinquent taxpayer with respect to the property arising from the surrender or payment. In the case of a levy satisfied pursuant to paragraph B , the organization is discharged from any obligation or liability to any beneficiary arising from the surrender or payment.

# 4.

Books or records relating to property subject to levy.
If a levy has been made or is about to be made on any property, any person having custody or control of any books or records containing evidence or statements relating to the property subject to levy shall, upon demand of the assessor, exhibit those books and records to the assessor. Failure to comply with such an order is a Class E crime.

# 5.

Exempt property.
This subsection governs property exempt from levy.
A.
The following property is exempt from levy:

# (1)

Items of wearing apparel and school books necessary for the taxpayer or the members of the taxpayer's family;

# (2)

If the taxpayer is the head of a family, the fuel, provisions, furniture and personal effects in the taxpayer's household, arms for personal use, livestock and poultry of the taxpayer, the total value of which does not exceed $1,500;

# (3)

Books and tools necessary for the trade, business or profession of the taxpayer, the value of which, in the aggregate, does not exceed $1,000;

# (4)

Any amount payable to the taxpayer with respect to the taxpayer's unemployment, including any portion payable with respect to dependents, under an unemployment compensation law of the United States or any state;

# (5)

Mail, addressed to any person, that has not been delivered to the addressee;

# (6)

Annuity or pension payments under the federal Railroad Retirement Act of 1974, 45 United States Code, Chapter 9, Subchapter IV, benefits under the federal Railroad Unemployment Insurance Act, 45 United States Code, Chapter 11, special pension payments received by a person whose name has been entered on the Army, Navy, Air Force and Coast Guard Medal of Honor Roll, 38 United States Code, Chapter 15, Subchapter IV and annuities based on retired or retainer pay under 10 United States Code, Chapter 73 (1982);

# (7)

If the taxpayer is required by judgment of a court of competent jurisdiction, entered prior to the date of levy, to contribute to the support of minor children, as much of the taxpayer's salary, wages or other income as is necessary to comply with that judgment;

# (8)

Any amount payable to or received by a taxpayer as wages or salary for personal services, during any period, to the extent that the total of the amounts payable to or received by the taxpayer during that period does not exceed the applicable exempt amount determined under paragraph D ; and

# (9)

The principal residence of the taxpayer, unless the assessor has made a determination of jeopardy pursuant to section 145 or the assessor personally approves in writing the levy of that property.
B.
The officer seizing property of the type described in paragraph A shall appraise and set aside to the owner the amount of the property declared to be exempt. If the taxpayer objects at the time of the seizure to the valuation fixed by the officer making the seizure, the assessor shall summon 3 disinterested individuals who shall make the valuation.
C.
Notwithstanding any other law, no property or rights to property are exempt from levy other than the property specifically made exempt by paragraph A .
D.
A levy upon salary and wages must specify the amount of percentage to be surrendered and delivered to the assessor by the taxpayer's employer for each pay period, consistent with the provisions of this paragraph. Salaries and wages are exempt from levy to the extent of 75% of the taxpayer's disposable earnings for any pay period, or an amount equal to the federal minimum hourly wage multiplied by 30, multiplied by the number of weeks in the pay period, whichever is less. A levy on salaries and wages is continuous from the date on which the notice of levy is received until the delinquency is discharged and applies to all pay periods commencing after that date. The assessor shall notify the taxpayer's employer as soon as practicable upon discharge of the delinquency that the levy has been discontinued.

# 6.

Seizure of property; notice; sale.
Seizure, notice of seizure and sale of seized property are governed by this subsection.
A.
As soon as practicable after seizure of property, the assessor shall give notice to the owner of the property, or, in the case of personal property, the possessor of the property, or leave notice at the owner's or possessor's usual place of abode or business, if any, within the State. If the owner or possessor cannot be readily located, or has no dwelling or place of business within the State, the notice may be sent by first-class mail. In the case of real property, the notice must be filed in the registry of deeds in the county where the property is located. The notice must specify the sum demanded and contain:

# (1)

In the case of personal property, an account of the property seized; and

# (2)

In the case of real property, a description with reasonable certainty of the property seized.
In the case of levy on a motor vehicle that is the subject of a Certificate of Title issued by the Secretary of State, a copy of the notice must be filed with the Secretary of State, who shall note the levy in the records of ownership of the motor vehicle in question. In the case of levy on that type of personal property, a security interest in which may be perfected by filing in the office of the Secretary of State, a copy of the notice must be filed in the office of the Secretary of State, who shall file the notice of levy as a financing statement.
B.
The assessor, as soon as practicable after the seizure of property, shall cause a notice to be published in a newspaper of general circulation within the county where the seizure is made, or, if there is no such newspaper, post the notice at the city or town hall nearest the place where the seizure is made and in at least 2 other public places. In the case of real property, the notice must be sent by certified mail to all persons holding an interest of record, including, without limitation, recorded leases and security interest of all types, in the property as reflected at the time the notice of levy is recorded by the indices of the registry of deeds in the county where the property is located. In the case of a motor vehicle subject to a certificate of title issued by the Secretary of State, notice must be sent by certified mail to all persons holding a security interest of record in the motor vehicle as set forth in the records of the Secretary of State. In the case of personal property that is the subject of a security interest perfected by filing in the office of the Secretary of State, notice must be sent by certified mail to all secured parties claiming an interest in the property seized as reflected at the time the notice of levy is recorded in the records maintained by the Secretary of State pursuant to Title 11 . The notice must specify the property to be sold, subject to the liabilities of prior encumbrances, if any, and the time, place, manner and conditions of the sale. If levy is made without regard to the 10-day period provided in section 171 , public notice of sale of the property seized may not be made within the 10-day period unless subsection 7 applies. It is a Class E crime to intentionally remove or deface the posted notice of sale prior to the scheduled sale date, unless the property has been redeemed or the sale is for some other reason canceled. The assessor or any law enforcement officer may enter onto the land if necessary to carry out the purposes of this section.
C.
If any property liable to levy is not divisible to enable the assessor by sale of a part of the property to raise the whole amount of the tax and expenses, the whole property must be sold.
D.
The time of sale may be not less than 10 days nor more than 40 days from the time of giving notice under paragraph B. The sale may be adjourned from time to time but adjournments may not be for a period to exceed a total of 30 days. Notice of any adjournments of the sale must be posted in the public places within the county where the notice prescribed in paragraph B was posted.
E.
Before the sale, the assessor shall determine a minimum price for which the property must be sold. If no person offers the amount of the minimum price for the property, the property is declared to be purchased at that price for the State; otherwise the property is declared to be sold to the highest bidder. In determining the minimum price, the assessor shall take into account the expense of making the levy and sale.

(1)
The assessor may by rule prescribe the manner and other conditions of the sale of property seized by levy or purchased by the sale.

(2)
If payment in full is required at the time of acceptance of a bid and is not paid at that time, the assessor shall forthwith proceed to again sell the property in the manner provided in this subsection. If the conditions of the sale permit part of the payment to be deferred, and if a deferred part is not paid within the prescribed period:

(a)
Suit may be instituted against the purchaser for the purchase price or the part of the price that has not been paid, together with interest from the date of the sale; or

(b)
In the discretion of the assessor, the sale may be declared by the assessor to be void for failure to make full payment of the purchase price and the property may again be advertised and sold as provided in this subsection. In the event of a readvertisement and sale, any new purchaser receives the property, or rights to the property, free and clear of any claim or right to the former defaulting purchaser, of any nature whatsoever, and the amount paid on the bid price by the defaulting purchaser is forfeited.

# (3)

Only the right, title and interest of the delinquent taxpayer in and to the property seized may be offered for sale, and the interest must be offered subject to any prior outstanding mortgage, encumbrances, or other liens in favor of 3rd parties that are valid as against the delinquent taxpayer and are superior to the lien of the State. All seized properties must be offered for sale "as is" and "where is" and without recourse against the State. No guarantee or warranty, express or implied, may be made by the officer offering the property for sale, as to the validity of title, quality, quantity, weight, size or condition of any of the property or its fitness for any use or purpose. No claim may be considered for allowance or adjustment or for recision of the sale based upon failure of the property to conform with any representation, express or implied.

# 7.

Disposition of hard to keep property; notice to owner; public sale.
If the assessor determines that any property seized is liable to perish or become greatly reduced in price or value by keeping, or that the property cannot be kept without great expense, the assessor shall appraise the value of the property and, if the owner of the property can be readily found, shall give the owner notice of determination of the appraised value of the property. The property must be returned to the owner if within such time as may be specified in the notice the owner either pays to the assessor an amount equal to the appraised value, or gives bond in such form with such sureties, and in such amount as the assessor prescribes, to pay the appraised amount at such time as the assessor determines to be appropriate in the circumstances.
If the owner does not pay the amount or furnish bond in accordance with this section, the assessor shall, as soon as practicable, make public sale of the property in accordance with any rules prescribed by the assessor.

# 8.

Junior encumbrances; priority of encumbrances.
Priority of encumbrances is governed by this subsection.

# A.

A deed to real property executed pursuant to subsection 11 discharges the property from all liens and encumbrances over which the levy had priority.

# B.

The filing of the notice of levy provided in subsection 6, paragraph A perfects the lien of the State created under subsection 1, paragraph B with respect to the types of property covered by such a filing under subsection 6, paragraph A . A levy and lien not covered by the filing provisions of subsection 6, paragraph A is perfected by possession by the assessor or by demand upon a 3rd party holding the property under subsection 3, paragraphs A or B , whichever occurs first. The priority of the lien perfected by a filing under subsection 6, paragraph A is determined pursuant to section 175‑A as if the notice of levy had been filed as a notice of lien. The lien of any other levy has priority over any interest that is perfected after the lien of the State is perfected by possession or demand.

# 9.

Redemption of property.
A right of redemption exists according to this subsection.

# A.

Any person whose property has been levied upon and any person having a valid lien upon such property has the right to pay the amount due, together with the expenses of the proceeding, if any, to the assessor at any time prior to the sale of the property. Upon payment, the assessor shall restore the property to the taxpayer, and all further proceedings in connection with the levy must cease from the time of that payment.

# B.

The owners of any property sold as provided in subsection 6 , their heirs, executors or administrators, or any person having any interest in or lien on the sold property, or any person in their behalf, are permitted to redeem the property sold at any time within 90 days after the sale of the property. The property may be redeemed upon payment to the assessor, for the use of the purchaser, or the heirs or assigns of the purchaser, of the amount paid by the purchaser and interest on that amount at the rate of interest established pursuant to section 186 , together with the expenses of the proceeding.

# 10.

Certificates of sale; execution of deeds.
The assessor shall give the purchaser of property, sold as provided in subsection 6 , a certificate of sale upon payment in full of the purchase price. In the case of real property, the certificate must set forth the real property purchased, for whose taxes the property was sold, the name of the purchaser and the price paid for the property.

# A.

In the case of any real property sold as provided in subsection 6 and not redeemed in the manner and within the time provided in subsection 9 , the assessor shall execute to the purchaser of the real property, upon surrender of the certificate of sale by the purchaser, a deed of the real property stating the facts set forth in the certificate.

# B.

If real property is declared purchased by the State at a sale pursuant to subsection 6 , the assessor shall, at the proper time, execute a deed for the property, and without delay cause the deed to be duly recorded in the proper registry of deeds.

# 11.

Effect of certificates of sale and deeds.
Certificates of sale and deeds have the following effects.
A.
In cases of sale of property, other than real property, pursuant to subsections 6 and 7 , the certificate of sale:

# (1)

Is prima facie evidence of the right of the assessor to make the sale and conclusive evidence of the regularity of proceedings in making the sale;

# (2)

Transfers to the purchaser of all right, title and interest of the delinquent party in and to the property sold subject to the applicable redemption period and subject to all senior liens determined under subsection 8, paragraph B . In the case of personal property, the assessor shall provide a final validation stamp following the expiration of the redemption period if the property is not redeemed;

# (3)

If the property consists of stocks, constitutes notice, when received, to any corporation, company or association of the transfer, and gives authority to the corporation, company or association to record the transfer in the same manner as if the stocks were transferred or assigned by the party holding them in lieu of any original or prior certificate, which is void, whether or not the certificate is canceled;

# (4)

If the subject of sale is securities or other evidences of debt, constitutes a valid receipt to the person holding the securities or evidences of debt, against any person holding or claiming to hold possession of the securities or other evidences of debt; and

# (5)

If the property consists of a motor vehicle, constitutes notice, when received, to the Secretary of State, or to any public official charged with the registration of title to motor vehicles in any other state, of the transfer and gives authority to the Secretary of State or other official to record the transfer in the same manner as if the certificate of title to the motor vehicle were transferred or assigned by the party holding the certificate in lieu of any original or prior certificate, which is void, whether or not the certificate is canceled.
B.
In the case of the sale of real property pursuant to subsection 6 , the deed of sale given pursuant to subsection 10, paragraph A , is prima facie evidence of the facts stated in the deed. If the proceedings of the assessor are substantially in accordance with the law, the deed operates as a conveyance of all the right, title and interest the delinquent party had in the real property sold at the time the lien of the State attached to the property, subject to all senior liens determined under subsection 8, paragraph B .
C.
A certificate of sale of personal property given or a deed to real property executed pursuant to this section discharges the property from all liens, encumbrances and title over which the lien of the State, with respect to which the levy was made, had priority.

# 12.

Records of sales and redemption of real property.
The assessor shall keep records of all sales of property under subsections 6 and 7 and of all redemptions of that property. Each record must include the tax for which the sale was made, the dates of seizure and sale, the name of the party assessed and all proceedings in making the sale, the amount of expenses, the names of the purchasers and the date of the deed. A copy of a record, or any part of a record, certified by the assessor is evidence in any court of the truth of the facts stated in that record.

# 13.

Expenses of levy and sale.
The assessor shall determine the expenses to be allowed in all cases of levy and sale. The assessor may pay the expenses from the revenue account intended to benefit by the receipts of the levy.

# 14.

Disposition of money realized under this section.
Any money realized by proceedings under this section by seizure, surrender under subsection 3 , except pursuant to subsection 3, paragraph C , subparagraph (2), or sale of seized property, or by sale of property redeemed by the State must be applied in the following order of priority:

# A.

Against the expenses of the proceedings under this section;

# B.

The amount, if any, remaining after payment of senior claims and expenses is then applied against the liability for which the levy was made or the sale was conducted; and C.
Upon application and satisfactory proof in support of the application, credited or refunded by the assessor to the person or persons legally entitled to any remaining surplus proceeds.

# 15.

Actions permitted.
Any person, other than the taxpayer whose delinquency occasioned the levy:
A.
Who claims an interest in property that has wrongfully been levied upon may apply to the assessor for a stay of proceedings under this section at any time before the property has been sold but within 5 days after receiving notice of levy. An action for a stay is governed by Title 5, section 11004 ; or B.
Who claims pecuniary loss because property was wrongfully levied upon and sold, may bring a civil action against the assessor in the Superior Court. A recovery in such an action may not exceed the proceeds of the sale.
Except as provided in this subsection, a suit contesting or restraining the collection of taxes pursuant to this section may not be maintained in any court of this State by any person. Any award must be paid from the revenue account to which the money was originally credited.

# 16.

Time for collection of taxes.
Taxes imposed by this Title must be collected by levy within 10 years after the assessment of the tax becomes final or before the expiration of the period of collection agreed upon in writing by the assessor and the taxpayer. Other obligations owed to the State and authorized to be collected by the bureau must be collected by levy within 10 years from the time the obligation arises. The period agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon. A levy action ordered by the assessor before the expiration of the 10-year period continues beyond the expiration of the 10-year period for a period of 6 months from the date the levy is first made or until the liability out of which the levy arose is satisfied or becomes unenforceable, whichever occurs first. The running of the 10-year period is stayed during the time that a consensual payment plan between the taxpayer and the assessor is in effect. When a taxpayer files for protection under the United States Bankruptcy Code, the assessor's right to collect the tax due by levy continues until 6 years after the date of discharge or dismissal of the bankruptcy proceeding or until 10 years after the assessment of the tax becomes final, whichever occurs later.