IRS Tax Liens: What Every Taxpayer Needs to Know


An IRS lien is a federal tax lien (FTL) that the IRS places against your property, similar to a mortgage on your home or a lien on your car. The difference is that the lien is placed against everything you (the taxpayer) own, right down to the cash in your wallet, clothing, and furniture in your home. Today, many Americans find themselves unable to pay their taxes due to personal debt, credit card debt or mounting mortgage payments. Accumulating unpaid taxes can sometimes be unavoidable for those already facing serious in financial problems.

The tax lien is non-consensual, which means IRS puts the federal tax lien on your property without your permission or consent. And, in its effect, it's relatively passive. The lien stays dormant on your personal property until you try to do something with it, such as sell it -- or until the IRS seeks to foreclose on the lien by going to court. In the meantime, you may use your property and even collect income from it. And, in some cases, you may spend your money or sell your personal property to someone who doesn't know about the federal tax lien, without incurring any legal obligation to the IRS.

A lien is different from a levy, which is when IRS seizes your property. And while a lien is not as forceful as a levy, a lien could surprise you at a time when you don't want any surprises. A lien is one of many powerful weapons IRS can use to force you to pay your taxes.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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