Tax Lien

The IRS and state taxing authorities will protect a financial judgment against a person or business by putting a legal claim on property owned by the person or business. In the case of tax liabilities, the IRS calls such a claim a tax lien. Most states also call them tax liens, though some states call them tax warrants. In this capacity a lien and a warrant are the same thing.

Liens and warrants may be filed on tangible property, such as homes and vehicles, shares of stock, and accounts receivable.

A notice of federal tax lien may be filed after:

The IRS assess the liability;
The IRS sends you a Final Notice - Balance Due - a bill that tells you how much you owe in taxes; and
You neglect or refuse to fully pay the debt within 10 days after notified about it.

Once these requirements are met, a lien is created for the amount of your tax debt. By filing notice of this lien, your creditors are publicly notified that of a 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.

Tax Liens: The Law

Internal Revenue Code Sec. 6321: LIEN FOR TAXES

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.

Internal Revenue Code section 6322: PERIOD OF LIEN

Unless another date is specifically fixed by law, the lien imposed by section 6321 shall arise at the time the assessment is made and shall continue until the liability for the amount so assessed (or a judgment against the taxpayer arising out of such liability) is satisfied or becomes unenforceable by reason of lapse of time.

To resolve your tax problems, please contact Larson Financial today.

The information provided on this website is for general guidance and to offer the user general information on particular subjects of interest. It is not intended to constitute legal, accounting, tax or other professional advice or services. To the extent that this site concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law.
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