A tax lien is a notice to the public that you owe taxes to the Internal Revenue Service. It is usually recorded at the county recorder's office, in the county where you live or in a county where you own real property. The purpose of a tax lien is to protect the government's interest in collecting taxes. Also, by giving notice to a prospective buyer or seller, a tax lien warns them that unless the lien has been cleared before the completion of a transaction, the government would have superior rights to the property after that transaction.

When would tax liens arise?

A tax lien arises when the tax is accrued - not when a lien has been recorded.

What are the disadvantages of a tax lien?

It prevents a taxpayer from getting new credit, including refinancing or second trust deeds. It also prevents a taxpayer from selling property without paying off the taxes first.

Can I get rid of a tax lien if I file bankruptcy?

No. If there is equity in your property, a tax lien cannot be discharged, even if the tax is dischargeable in a bankruptcy proceeding.

What is the difference between a tax levy and a tax lien?

A tax levy is an order by a the Internal Revenue Service to withhold money payable to you, whereas a tax lien is a notice informing the public that the tax collecting agency has superior rights to your property.

Would a "Homestead" filing protect me against a tax lien?

No. While a creditor cannot attach any equity in your home subject to a "Homestead," tax liens attach to your property even if it is subject to a "Homestead" filing.

The 10 Most Important Things to Know about Tax Liens