Things You Should Know About Federal Tax Liens

A tax lien is something that the IRS files against you in order to lay claim to your personal property. You will have a tax lien filed against you when you don’t pay your taxes. Dealing with a tax lien can be quite exhausting and you need to make sure you avoid it.Lien

If you are in this position, however, here are several things you need to know about such liens.

The Process

First, you have to be assessed for tax before a lien can be issued against you. The IRS has ten years to collect unpaid taxes, so liens can only be issued during this period. After this, the outstanding tax expires.


If you don’t pay your taxes, the IRS will send a letter every 30 days. This is a Notice and Demand for Payment. If you still don’t pay, the Final Intent to Levy notice will arrive at your registered address. This is your final warning and you have 30 days to pay either the taxes or appeal for another assessment.

The government files a lien in court nine months after your tax has been assessed. A lien is a public document and tells creditors that the government has stepped in against you.

After a Lien is Activated…

Once a lien has been activated, the Federal authorities can begin reclaiming the unpaid tax in a number of ways. For a start, this can happen through physical taking of property, such as your car and house. Most of the time, it happens through garnishing your wages and actively taking the money from your bank account.

Final Word

A tax lien is a serious situation in which to find oneself. If this happens, the best course of action is to work with the IRS and come to a settlement as soon as you possibly can.

Image credit:

About the author

Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.

Leave a Reply