Taxes help cover vital infrastructure like roads, schools, and emergency services.

A lien is securing the governments position for tax debt owed. Similarly, a lean may be placed on your car while you pay off the loan. The lender, known as the lienholder, has a claim over the property before anyone else.

Tax liens are particularly cumbersome because the government can have first rights to your business, home, or assets before any other lender. The federal and state government may enforce a lien to resolve tax debt.

Tax liens are oftentimes problematic that make the sale of an asset a bit more challenging, For example, in most states, a sale cannot be completed until the lien is discharged (or the tax debt gets settled).

Liens can be placed on physical property like land or buildings, as well as personal property like a car or equipment. Tax liens are one of several collection tools that the IRS and/or states utilize when a tax debt exists.

Liens are public notices that inform others that a debt exists and may encumber property and assets. Tax liens can be damaging to your credit score and can also inhibit you from securing new financing , since lenders are naturally more hesitant to provide loans to individuals and businesses with a tax problems and liens.

Consequently, liens make it exceedingly difficult for small business owners to continue to be successful.

The IRS is generally required to notify you of unpaid taxes. You have opportunities to resolve the tax debt and prevent collection action. If you continue to avoid a resolution or ignore the IRS altogether, the taxing authorities will likely pursue forced collection action.

Liens are damaging to homeowners because they indicate that there is debt owed and make qualifying for a new loan or selling the property a bit more challenging.

Before things escalate, you should consult a tax professional to address the lien.

Federal Tax Liens give the IRS a legal claim to your property as security or payment for your tax debt. A Notice of Federal Tax Lien may be filed only after the IRS assesses the liability.

You will be sent various collection notices from the IRS. Eventually, the IRS may file a lien if you do not respond, the IRS collection actions may continue. This may ultimately lead to additional headaches that could be otherwise avoided by taking a proactive approach.

By filing a notice of lien, your creditors are publicly notified that the IRS has a potential claim against all your property, including property you acquire after the lien is filed. This notice is used by courts to establish priority in certain situations, such as bankruptcy proceedings or sales of real estate.

The lien attaches to all your property (such as your house or car) and to all your rights to property (such as your accounts receivable if you are a business).

A lien is technically a claim or legal right against assets that are typically used as collateral to satisfy a debt. Therefore, a lien is technically not a debt, but a legal way for a lender to approach and hold your assets because of unpaid debt.