What is a federal tax lien?
The general tax lien, often called a statutory lien, is the basis of all enforced IRS collection actions. A lien is not a levy. The federal tax lien is the statutory basis which allows the Internal Revenue Service to levy upon taxpayer’s property. The issuance of the statutory federal tax lien is governed primarily by Code Sections 2321, 2322 and 6303. Under Code Section 6321, a statutory tax lien arises automatically upon the assessment of federal tax. This is the statutory lien and is not the same as that which is represented by the formal filing of a “Notice of Tax Lien” as discussed below. A basic understanding of the mechanics of a tax assessment is helpful in understanding liens. A tax assessment is the recording of a taxpayer’s tax liability upon IRS records. This is an official act and is accomplished when an assessment officer at an IRS Service Center signs “Form 23-C” also called the “assessment certificate”. The 23-C date is a very important date for IRS collection matters.
A federal tax lien is an obligation to the government as a result of the failure to pay taxes. The government reserves the right to possess the assets of an individual until the full amount of the taxes due is paid. According to the Internal Revenue Service, three things must occur before a federal tax lien is issued: The IRS must assess the liability, send a Notice and Demand for Payment, and you must neglect to pay in full for 10 days after the notice was sent. Once a federal tax lien is filed against you, your creditors are notified that the government has a claim to your property. This includes property that you currently own, and any property that you obtain until your tax obligation is met. Having a lien against you will negatively affect your credit profile and make it difficult for you to obtain any type of financing. In bankruptcy proceedings, or in the event of the sale of your property, your lien will take priority. Your federal tax lien can be released if you pay the debt i
A Federal Tax Lien (FTL) is a legal instrument that secures the claim of the United States in the right, title, and interest of a debtor taxpayer’s assets. It is a public document and is recorded at the County Clerk’s office or the Secretary of State, depending on local law. This is done to serve notice on all creditors or other interested parties of the government’s claim. The Federal Tax Lien is a negative item on the credit bureau report of the debtor. It may result in some creditors calling in their notes upon becoming aware of the FTL. The FTL generally becomes the most senior claim against the debtor’s assets with the exception of first mortgage holders who have properly filed financing documents. The Federal Tax Lien may also displace the primary security position of factoring firms lending on accounts receivable and bank revolving lines of credit 45 days after filing (each situation is unique and must be considered on individual circumstances). Certain claims may trump an FTL s
A federal tax lien is a claim by the IRS against your property to secure the payment of federal tax, penalty and interest assessed against you. This claim starts out as an “invisible” animal since no one knows about it except you and the IRS . But for instances when this claim can become public knowledge, see Notice of Federal Tax Lien below. A federal tax lien attaches to all property you own, whether that property is real estate such as your home, tangible personal property such as cars and boats, money in the bank, your wages, and anything else which can be considered property owned by you. And it doesn’t matter whether that property is located in the United States , or somewhere else in the world, the federal tax lien can attach to it. What is a Notice of Federal Tax Lien ? Sometimes, in order to put the world on notice that the IRS has a claim against your property, IRS agents file a piece of paper in the county you live, or at the secretary of state’s office for the state in whic
