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What is an IRS Tax Lien?

Definition– a tax lien is a legal claim against the assets of an individual or business who fails to pay taxes owed to the government. The lien serves to guarantee payment of a debt, and if the obligation is not satisfied, the IRS may proceed to seize the assets.

 

What It Really Means

If you owe money to the IRS, the government can place a tax lien of your property to cover the cost of the amount you owe. The lien may be removed once you agree to a payment plan, or pay the outstanding balance owed to the government. If no attempt to repay the debt is made, the government may seize the assets.

 

Example

Charles owes $20,000 in past due taxes to the federal government. He has made no attempt to pay them previously. Charles owns a vacant piece of land that is valued at $15,000 and a car that is valued at $5,000. The government is able to place a tax lien on the vacant land and the car owned by Charles, in order to satisfy the debt.

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