Tax Lien

A tax lien gives a governing, taxing authority a legal claim on property. A tax lien results from the failure to pay assessed taxes and is used to ensure that the taxing authority will be paid. Failure to pay income taxes, city taxes, county taxes, payroll taxes, or estate taxes may result in a tax lien. The resulting claim can lead to the seizure of property. While a tax lien does not always lead to property seizure, it can prevent the property owner from transferring title of the property or using the property as collateral. A tax lien may also damage the credit rating of the individual or business that is the subject of the lien. In the case of mortgaged property, the tax lien supersedes the rights of the mortgage company. A tax lien can be sold at auction and purchased by anyone as an investment. A tax lien may be removed when the tax liability in question is fully paid or an agreement is reached between the involved parties. In the case of a tax lien issued by the IRS (i.e. Federal Tax Lien), the IRS is required to release the Notice of Federal Tax Lien within 30 days of payment by the taxpayers of taxes and interests owed and issue a Certificate of Release of Federal Tax Lien.