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IRS Tax Liens – The Basics

A tax lien secures the government’s interest in your property and/or assets in the event that you do not pay a tax debt. The IRS will place a lien against you if their notices regarding the payment of back taxes are not answered. This action can apply to any property you own or come into possession of for the life of the debt.

If you do not file your tax return, the IRS estimates your tax liability using information from third party sources such as employers and banks. This estimate is used to file a Substitute for Return (SFR), which allows them to assess your debt and begin collection action.

If your debt remains unpaid for long enough, your property is ultimately at risk for seizure. Additionally, a lien can negatively impact your credit score. Obtaining a loan, mortgage or even a credit card can be difficult.

A tax lien is also damaging because the IRS files a public notice of the lien. This is what allows creditors to become aware of your situation. Liens can also damage your job prospects, as many employers consider an applicant’s credit reports.

A lien may be removed once your debt is paid in full, or after the ten-year Collection Statute Expiration Date (CSED) has passed. Taking action to resolve your tax debt and get it paid off as quickly as possible can reduce the likelihood that you’ll have to deal with a tax lien.