Tax Lien
A lien is charge, hold, claim or encumbrance upon the property of another as security for a debt or charge. A tax lien is a statutory lien which exists in favor of a state or municipality to secure the payment of past due taxes. A federal tax lien issued and filed by the Internal Revenue Service can arise in connection with the accrual of any type or kind of federal tax debt.
Section 6321 of the Internal Revenue Code specifically states, “If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, additional amount, addition to tax, or assessable penalty, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belong to such person.”
If you owe a federal tax debt, the Internal Revenue Service may have already filed a federal tax lien, or is likely to file a federal tax lien. Formalizing an agreement to resolve the tax debt does not guarantee the Internal Revenue Service will not file a tax lien, but it can certainly help.
The tax lien becomes an issue when the taxpayer wishes to sell property as the lien will likely show on the title of the property. Even if the lien is not showing on the title of the property, the sale or any transfer of such property could be considered a fraudulent conveyance depending upon the circumstances and use of the monies received through the sale. Furthermore, a tax lien can negatively affect your credit.
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