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What are Liens?

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A lien is a claim placed legally by the government on taxpayer assets. A lien is used to ensure that a debt, such as a loan or in this example, taxes, will be settled. The creditor can seize the assets if the debt remains unpaid. Remember: The lien does not imply that the house will be put up for sale. Instead, it guarantees that the tax authority receives preference over any other creditors when claiming the asset of the creditor.

Quick Facts

1. Priority Status: Tax liens generally have priority over other liens or claims on the property. 

2. Credit: When a tax lien is filed, it becomes public. This can make it more difficult for the taxpayer to obtain credit, secure loans, or qualify for favorable interest rates.

How Liens Are Processed

  1. Liens begin when a taxpayer receives a letter outlining how much is owed. A notification and demand for payment is what this is called.
  2. The Internal Revenue Service (IRS) has the authority to put a lien on a taxpayer’s assets if they refuse to pay the amount or make an effort to resolve it with the IRS.
  3. All of a taxpayer’s assets, including securities, real estate, and automobiles, are covered by this lien. The lien also extends to any assets that the taxpayer obtains during that time. Additionally, it affixes to all company assets and accounts payable.
  4. The lien and the tax debt might remain applicable even after the bankruptcy if the taxpayer decides to file for bankruptcy. 

To know more about liens and how you can avoid them, visit us at Priority Tax Relief and get the tax assistance you deserve. Call 800-493-8308 for your FREE consultation now.

Frequently Asked Questions: Liens

Obtaining financing or loans with a tax lien on your record can be challenging. Tax liens negatively impact your creditworthiness and may make lenders hesitant to extend credit. However, options such as subordination or obtaining a loan specifically for tax debt repayment may be available. It’s important to consult with lenders and explore your options. term, or both.

 If you cannot pay the tax debt, and the tax lien remains on your property, the government may pursue enforced collection actions. This can include the forced sale of the property through a tax lien foreclosure process to satisfy the tax debt. It’s crucial to communicate with the tax authority and explore resolution options to prevent or address this outcome.

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