CandleFocus Glossary Editor
Tax lien is a legal claim to a taxpayer's assets to satisfy unpaid tax debt. When property owners fail to pay their taxes, the government has the right to issue a lien against the property, the assets owned by the taxpayer, or the funds they have in the bank. These liens create a legal right for the government to seize any property belonging to the debtor and to prevent any further sale of the property for as long as the lien is in effect.
When the taxpayer does not respond to a notification of unpaid taxes, the government may put a lien on the person’s assets. These liens can remain in place until the tax debt is paid or a payment plan has been agreed upon. The lien will attach to all assets of the debtor, including real estate, personal property, business interests, stocks and bonds, and motor vehicles. In addition, the government can garnish wages, put a filing on bank accounts and intercept other forms of income.
The most significant consequence of a tax lien filed against a taxpayer's assets is that it negatively impacts the individual's credit score and hampers their ability to access credit in the future. Tax liens also give the government the right to seize the property, freeze bank accounts, and initiate other collection activities if the taxes are not paid on time.
The easiest way to reduce a tax lien is to negotiate a payment option with the government. It’s important to be aware that the longer the debt goes uncollected, the more severe consequence will fall upon the taxpayer, such as the government taking legal action and seizing property. Taxpayers can sometimes get the lien removed by paying off the debt, arranging an installment plan with the government, or offering to settle the debt for less than what is owed.
Tax liens are often a last resort for governments to collect taxes that are due, but understanding the laws and procedures in place can help lessen the burden if the situation applies to an individual. It's always advisable to reach out to professional help, such as a tax attorney or an accountant, if a lien is filed against your assets.
When the taxpayer does not respond to a notification of unpaid taxes, the government may put a lien on the person’s assets. These liens can remain in place until the tax debt is paid or a payment plan has been agreed upon. The lien will attach to all assets of the debtor, including real estate, personal property, business interests, stocks and bonds, and motor vehicles. In addition, the government can garnish wages, put a filing on bank accounts and intercept other forms of income.
The most significant consequence of a tax lien filed against a taxpayer's assets is that it negatively impacts the individual's credit score and hampers their ability to access credit in the future. Tax liens also give the government the right to seize the property, freeze bank accounts, and initiate other collection activities if the taxes are not paid on time.
The easiest way to reduce a tax lien is to negotiate a payment option with the government. It’s important to be aware that the longer the debt goes uncollected, the more severe consequence will fall upon the taxpayer, such as the government taking legal action and seizing property. Taxpayers can sometimes get the lien removed by paying off the debt, arranging an installment plan with the government, or offering to settle the debt for less than what is owed.
Tax liens are often a last resort for governments to collect taxes that are due, but understanding the laws and procedures in place can help lessen the burden if the situation applies to an individual. It's always advisable to reach out to professional help, such as a tax attorney or an accountant, if a lien is filed against your assets.