A Lien is a form of security interest granted over an item of property to secure the payment of a debt or fulfillment of some other obligation. A tax lien is a lien imposed by law upon a certain property to ensure the payment of taxes. It can be enforced due to delinquent taxes owed on real or personal property, or as a consequence of not paying income taxes.
Having a tax lien against you can be detrimental to your credit and severely impair your ability to borrow money, sell your house, get a loan, a credit card, etc. When it comes to real estate, even if the tax obligation was incurred by the previous owner, as the new owner of such a property you would still be responsible for paying the difference.
This sort of situation can arise due to any tax situation outside of real and personal property. According to the Internal Revenue Service code section 6321:
If any person liable to pay any tax neglects or refused to pay the same after demand, the amount (including any interest, additional amount, 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, belonging to such a person.
Furthermore, under the doctrine of “Glass City Bank vs. United States,” the lien applies to real and personal property not only at the time of assessment, but also to property obtained subsequently, as long as the lien is in effect.
Those are really just the bare basics to this huge and foreboding subject.
This is a very serious situation to find yourself in. If you have a specific question, you should consult tax experts and experienced taxpayers through an online tax service like TurboTax Online. They will quickly point you in the right direction to solving your issues.
Federal tax liens can become complicated and convoluted in no time at all, so it’s best to seek help immediately concerning your particular situation, as tackling the whole subject by yourself could use up your free time for several months.
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