First off, according to The US Tax Center at IRS, a tax lien is a claim on a property that the government utilizes to maintain its rights in tax debt. If the IRS sends a notice and the amount is not paid, they will take this action. The IRS can send out a notice of tax lien if no payment is made within 10 days of making the demand. A Notice will then be filed by the organization as a public record document, and it will be noted on credit reports. It will prevent the applicant from applying for additional credit until the debts are paid. Taxpayers’ failure to pay their income taxes is one of the main causes of tax lien.
A taxpayer can have quite a few legitimate reasons for failing to pay taxes. But when IRS discovers that the ultimate intention of the taxpayer is to avoid paying the tax altogether, they can choose tax lien to get the tax. This article will tell you more about the system.
What to do on getting the notice?
It is advised that if you obtain a tax lien, you do not disregard it because doing so will make the situation worse. Make a call to the IRS right away to work out a solution.
Assets a taxpayer can lose
A lien has several effects on you and is attached to everything, including the things listed below:
Assets:
Any and all assets, even future assets, are impacted by liens. Both actual and intangible assets are included in this.
Bankruptcy:
Filing for bankruptcy won’t make the lien go away because it will still be attached.
Business:
Accounts receivable, along with all business assets and rights associated with those assets, are likewise impacted.
Credit:
Because the lien is recorded on your record, it restricts your capacity to obtain more credit.
