A tax lien can be used by the IRS or other taxing authority in the event that you don’t pay some or all of the tax that you owe.
A tax lien is a claim by a governmental taxing authority against your assets. This is usually a last resort to get the taxpayer to pay what they owe.
What Is a Tax Lien?
A tax lien can be used by the IRS in the event that you don’t pay some or all of the tax that you owe. They place a claim in your assets, such as your home, as security for their debt. The tax lien doesn’t force you to sell the assets, but when you do, the IRS gets their money before you realize anything from the sale proceeds.
State taxing authorities can place a tax lien for unpaid state income taxes, local governments can place a lien for unpaid property or other local taxes.
A tax lien is a matter of public record meaning that it will affect your credit report and could show up in a background check when applying for a new job. In some states and municipalities notices of tax liens are published in the newspaper.
The IRS can also send a notice of their intent to levy. This gives them the right to seize your property or assets like cash in a bank account to satisfy the tax debt.