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What happens when a federal tax lien is attached to property?

Seeing a notice from the Internal Revenue Service arrive in the mail isn't likely to be a welcome sight. When federal officials claim that taxpayers have failed to pay their full tax liabilities, a lien may be attached to their personal property. This essentially means that the government is laying claim to property until the tax issue is resolved.

Resolving a tax lien isn't necessarily the most simple of tasks, which is why many people feel overwhelmed by claims that they've failed to pay their taxes. As expected, the IRS will not lift a lien until the tax issue is entirely resolved or the statute of limitations for tax debt has passed. In fact, even personal bankruptcy won't release a tax lien from a person’s property.

While a lien is in place, tax officials may rely on a variety of tactics to collect a debt if it's not handled. The IRS might resort to wage garnishment or seizing property in an effort to recoup any supposed deficiencies. Clearly, it can be very detrimental to simply ignore a lien and take no action.

Not only can federal liens affect property, but they can also impact credit scores. Notices of liens are reported by the top three credit agencies. Having this mark on a credit report can prove to be harmful to a person's financial and professional security. Forbes notes that some employers run credit scores on job candidates.

Although finding out that a federal tax lien has been attached to your property can be a stressful experience, there are options to help bring the issue to a close.

Source: Forbes, "Dealing With A Federal Tax Lien," Stephen J. Dunn, Oct. 5, 2013

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