Is it illegal for a bank to open a business checking account to a company whose owner has a state tax lien?

We wanted to move our business checking account to another bank offering more services and were denied an account because of a state tax lien. Is this the law or is this the bank not wanting to deal with any hassle of a bank levy? The tax debt has since been put into a reorganization wage earner bankruptcy and is being paid every month. Would we be able to propose this to the new bank and have a better chance of getting an account or is just a legal matter that they cannot. The tax lien will stay on our credit report until it is completely paid (not for a while yet)

It's not a legal matter (after all, how can you pay off a state tax lien if you don't have a bank account?), but more than likely the bank doesn't want to deal with the hassle of it.

A bank would have to do extra work to make sure that lien is satisfied. This is why it doesn't want to do that. There's no legal requirement for a bank to open an account with you. While they cannot discriminate on race or other factors, they can freely discriminate on credit. For more info on tax liens, how to remove them and how to actually invest in them, you should read up on the Complete Guide to Real Estate Tax Liens and Foreclosure Deeds: Learn in 7 Days by Don Sausa [isbn 0978834682].