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A tax lien may be filed against you if your case falls into certain parameters that the Internal Revenue Service feels it needs to protect its interest. A tax lien is filed in the county of the taxpayer's residence, or any other county in which the taxpayer may own property (such as lake or vacation homes).
In the case of a business the Internal Revenue Service will also file a tax lien at the Secretary of State's office.
A tax lien attaches to real estate and personal property. Filing a tax lien does not mean that the Internal Revenue Service will take seizure action right away. Some personal property is exempt from the tax lien unless the Internal Revenue Service can and does perfect their tax lien by recording the lien on the title of that property (memorializing), such as auto's and other property that is titled. The Internal Revenue Service is not likely to enforce foreclosure or seizure on their tax liens unless it is a last ditch effort to collect the taxes. However, if the property is sold or transferred, the Internal Revenue Service stands to collect any moneys that would be due to the taxpayer upon the sale or transfer.
When the Internal Revenue Service files a tax lien against a business, anyone who holds a secured interest (UCC) in the accounts receivables or inventory of that business only has 45 days to get their interests satisfied. Thereafter, under Federal statute, the Internal Revenue Service takes a priority position in those assets and they can seize those assets without any consideration for the secured creditor. This does not however, change that creditor's secured position in regard to other creditors. Some States cannot foreclose on their tax liens on homesteaded property; real estate that is the primary home of the taxpayer.
Also, in some States the Internal Revenue Service cannot foreclose their tax lien on a property if there is a co-owner/non-liable party (such as a non-liable spouse) if the non-liable party does not give their permission for the liable party's interest to be sold.
You can avoid a tax lien, if you have enough forewarning, by getting a bond for the Internal Revenue Service. However, a bond can be very expensive and is not a practical solution for most people and businesses.
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