§ 5895. Tax liability as property lien

(a)(1) If any corporation, partnership, individual, trust, or estate required to pay or remit any tax liability under this chapter neglects or refuses to pay it in accordance with this chapter after notification or assessment thereof under sections 3202 and 3203 of this title, the aggregate amount of the tax liability then due and owing, together with any costs that may accrue in addition thereto, shall be a lien in favor of this State upon all property and rights to property, whether real or personal, belonging to the corporation, partnership, individual, trust, or estate.

(2) The lien shall arise at the time the notification or assessment is made by the Commissioner and shall continue until the aggregate tax liability with costs is satisfied in full or becomes unenforceable by reason of lapse of time. The lien shall be valid as against any subsequent mortgagee, pledgee, purchaser, or judgment creditor when notice of the lien and the sum due has been filed by the Commissioner with the clerk of the town or city in which the property subject to lien is situated, or, in the case of an unorganized town, gore, or grant, in the office of the clerk of the county wherein the property is situated. The lien shall be deemed filed when the clerk of the town or city indorses a certificate on the lien pursuant to 24 V.S.A. § 1159.

(3) In the case of a motor vehicle, the lien shall also be valid when a notation of the lien is made on the certificate of title and shall only be valid as against any subsequent mortgagee, pledgee, bona fide purchaser, or judgment creditor when such notation is made.

(4) In the case of any prior mortgage on any real or personal property so written as to secure a present debt and also future advances by the mortgagee to the mortgagor, the lien established pursuant to this section, when notice thereof has been filed in the proper clerk's office, shall be subject to the prior mortgage unless the Commissioner also notifies the mortgagee of the recording of the lien in writing, in which case any indebtedness thereafter created from the mortgagor to the mortgagee shall be junior to the lien established pursuant to this section.

(b) The Commissioner shall issue to the taxpayer a certificate of release of the lien if:

(1) the Commissioner finds that the liability for the amount demanded, together with costs, has been satisfied or has become unenforceable by reason of lapse of time; or

(2) there is furnished to the Commissioner a bond with surety approved by the Commissioner in a sum sufficient to equal the amount demanded, together with costs, the bond to be conditioned upon the payment of any judgment rendered in proceedings regularly instituted by the Commissioner to enforce collection thereof at law or of any amount agreed upon in writing by the Commissioner to constitute the full amount of the liability; or

(3) the Commissioner determines at any time that the interest of this State in the property has no value.

(c) The lien provided for by this section may be foreclosed at any time after the tax liability with respect to which the lien arose becomes collectible under section 5886 of this title. In the case of real property, the lien may be foreclosed in the manner prescribed in 12 V.S.A. §§ 4931 through 4954 and in such rules as the Supreme Court may promulgate for the foreclosure of mortgages on real estate. In the case of personal property, the lien may be satisfied in the manner prescribed in 9A V.S.A. Article 9 for the disposition of collateral under a security interest, or in the manner provided by law for the foreclosure of other security interests in personal property. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1971, No. 185 (Adj. Sess.), § 226, eff. March 29, 1972; 1989, No. 119, § 18, eff. June 22, 1989; 2017, No. 74, § 140; 2019, No. 14, § 80, eff. April 30, 2019; 2019, No. 38, § 6.)