A federal tax lien is a legal claim by the federal government against a taxpayer’s property when he or she neglects or fails to pay a tax debt. After the IRS assesses liability by listing a balance due in its records and sending the taxpayer a Notice and Demand for Payment, it may encumber a taxpayer’s property with a federal tax lien. The IRS files a public notice known as a Notice of Federal Tax Lien to notify creditors and other parties in interest that the federal government possesses a legal right to a taxpayer’s property.
A federal tax lien attaches to all of a taxpayer’s assets such as real property including a personal residence or investment property. It also attaches to personal property such as bank accounts, securities, and motor vehicles. It even attaches to future assets acquired during the duration of the lien.
The filing of a Notice of Federal Tax Lien may also limit a taxpayer’s ability to obtain credit. If a taxpayer is a sole proprietor, the lien may attach to all business property and to all rights to business property, including accounts receivable. Also, as mentioned in many of our website’s blogs, even if a bankruptcy case is filed, tax debt and lien may continue after the filing and completion of a bankruptcy case.
It is important to note the distinction between a tax lien and a levy. The former secures the government’s interest in the property when a tax debt is not paid. A levy seizes or takes the property to pay the tax debt. Taxpayers must pay or make arrangements to settle their tax debt as the IRS may levy, seize, and sell any type of real or personal property in which a taxpayer owns or has an interest.
Please see future blogs for more information on how a taxpayer may deal with and resolve federal tax liens.
The experienced Fort Lauderdale debt relief attorneys are here to help you if you have excessive debt, including tax debt. To schedule a free consultation at any of our three conveniently located offices, contact Loan Lawyers today by calling 954-523-HELP (4357).
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Loan Lawyers is made up of experienced consumer rights attorneys who use every available resource to develop comprehensive debt solution strategies. Our goal is to take on those burdens, resolve those problems, and allow our clients to sleep soundly knowing they are on the path to a better future.
