State Legislative Updates

2018 Illinois State Tax Lien Changes

2018 Illinois State Tax Lien Changes

As many of the lenders and legal counsel of the world knows, state tax liens in Illinois attach to both real and personal property and are filed by the Department for unpaid taxes. As such, searching for state tax liens while conducting due diligence on a debtor is pertinent in determining what assets might be encumbered by a lien or if the solvency of a particular borrower/debtor is at risk.

With that said, under the new State Tax Lien Registration Act (“STLRA”) it’s important to note that as of January 1, 2018, Illinois has a new database that needs to be considered when searching for State Tax Liens. The STLRA creates a centralized State Tax Lien Registry, at which this registry will be updated and maintained by the Illinois Department of Revenue.

What about filing State Tax Liens at the county recorder’s office?

After January 1st, the new STLRA indicates that state tax lien filings no longer need to be filed at the county recorders’ offices throughout Illinois. Instead, all state tax liens will be available in one central location that covers the entire state. 

Should I still search the Country Recorder for state tax liens in Illinois?

Previously filed state tax liens at the county recorders’ offices filed through 12/29/17 will remain effective and searchable at these county recorder offices. At the same time, the Department has tried to capture previously filed state tax liens, thus adding them to the new registry. While this is good news and searchers can look forward to having one central database for these lien types, searching just this new registry might be too high of a risk. The best practice here might be to consider searching in both the county recorder’s office and the new Registry. While it may not be necessary to search both locations for the next 20 years (state tax liens in IL are active for 20 years), searching both locations for at least the foreseeable future makes sense; until additional guidance or updates are provided by the state.

Where can I learn more about this?

The attached October 2017 informational bulletin was posted and provides some insight. Moreover, you can review the Illinois website www.tax.illinois.gov to learn more. In addition, you can review this Youtube video for detailed information. https://www.youtube.com/watch?v=DITvksZs2JU

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