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Liens on Unpaid Taxes and Fines

A tax lien is a claim against a taxpayer's assets to satisfy an unpaid tax debt, typically assessed by the government when payments have been ignored or deemed uncollectible.

What are Tax Liens?​

Tax liens are essentially claims filed by the IRS or state taxing authority for unpaid taxes and related penalties. These claims can lead to a tax lien being placed on the taxpayer's property, such as their home, vehicle, or business assets. The most common types of tax liens include:

  • Unpaid income tax
  • Business-related tax debts
  • Self-employment tax debts
  • Payroll tax liens

Who Can File a Tax Lien?​

Both the IRS and state taxing authorities have the power to file tax liens. However, it is worth noting that not all states offer this option. The type of property that can be affected varies by state and jurisdiction.

What Happens When a Tax Lien is Filed?​

When a tax lien is filed against a taxpayer's assets, their credit score may suffer. Additionally, the taxpayer will likely receive letters from the taxing authority informing them about the unpaid debt and stating its intention to take further action if payments are not made promptly. The lien typically remains in place until either the debt is paid or an agreement is reached between the taxing authorities and the taxpayer.

Impact of a Tax Lien​

A tax lien can severely affect your credit score, reducing your ability to secure loans, get credit cards, or even renting property. However, the impact of a tax lien can be softened by making timely payments and agreeing on a payment plan with the taxing authority.

Getting Rid of a Tax Lien​

It's possible to remove a tax lien from your record once the debt is fully paid. This process may involve working directly with the taxing authorities or hiring an attorney experienced in tax law. Consulting with a professional is highly recommended, especially if you're unsure about how to proceed.