Tax Liens

A tax lien may be filed against you if the case falls into certain parameters that the IRS feels it needs to protect its interest. A tax lien is filed in the county of the taxpayer's residence, or any other county in which the taxpayer may own property (such as lake homes).

In the case of a business the IRS will also file a tax lien at the Secretary of State's office. A tax lien attaches to real estate and personal property. Filing a tax lien does not mean that the IRS will take seizure action right away. Some personal property is exempt from the tax lien unless the IRS can and does perfect their tax lien by recording the lien on the title of that property, such as auto's and other property that is titled. The IRS is not likely to enforce foreclosure or seizure on their tax liens unless it is a last effort to collect the taxes. However, if the property is sold or transferred, the IRS stands to collect any moneys that would be due to the taxpayer upon the sale or transfer.

When the IRS files a tax lien against a business, anyone who holds a secured interest (UCC) in the accounts receivables or inventory of that business only has 45 days to get their interests satisfied. Thereafter, under Federal statute, the IRS takes a priority position in those assets and they can seize those assets without any consideration for the secured creditor. This does not however, change that creditor's secured position in regard to other creditors. Some States cannot foreclose on their tax liens on homesteaded property; real estate that is the primary home of the taxpayer.

Also, in some States the IRS cannot foreclose their tax lien on a property if there is a co-owner/non-liable party (such as a non-liable spouse) if the non-liable party does not give their permission for the liable party's interest to be sold.

You can avoid a tax lien, if you have enough forewarning, by getting a bond for the IRS. However, a bond can be very expensive and is not practical for most people and businesses.

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