We Know: All about Tax Liens

What is a Tax Lien?

Tax Liens give the Federal, State, and City governments’ legal claim to your property as payment for your tax debt. A Notice of Tax Lien may be filed only after the amount owed is accessed and a Notice and Demand for payment is sent. If the taxpayer neglects or refuses to pay the debt within a specified amount of time, a lien is created for the tax debt.

Why would a tax lien be placed on my property?

The Federal Government will place a lien on all of your property if your income taxes have not been paid. This includes anything you acquire after the lien is placed. The State can place a lien on real estate, boats, and accounts receivable if property and income taxes go unpaid. The City may place a lien on real estate for unpaid taxes, fines, and other costs associated with failure to keep real-estate properties clean and safe.

Who will know that a tax lien is placed on my property?

Creditors are publicly notified that a claim has been filed against your property and liens have been placed. This will also be reported on your credit history. You may not be able to get a loan to buy a house or a car, get a new credit card, or sign a lease. The full amount of your lien will remain a matter of public record until it is paid in full. Therefore your family, friends, and neighbors may also discover that you have liens placed on your property.

How can I avoid a tax lien?

A tax lien can be avoided if you:

  • Take care of your property before action is taken against you.
  • Take care of your tax obligations before they become a problem, or pay them in full at the time of notice.
  • Negotiate a satisfactory payment agreement if you cannot pay the obligation if full. In some cases, such as a large debt or poor the tax history, a lien might still be filed against the taxpayer under a payment agreement.

How can I have a tax lien removed from my property?

Reasons a tax lien may be removed, appealed, or withdrawn are:

  • When the tax liability, penalties, interest, and fees, have been paid in full
  • The tax was assessed and the lien was filed while the taxpayer was in bankruptcy and subject to an automatic stay
  • An incorrect assessment was made
  • If you wish to make spousal defenses

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