Tax Lien - Definition
Written by Jason Gordon
Updated at December 18th, 2020
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What is a Tax Lien?
A Tax lien is a legal claim that the government has over a non-compliant taxpayers properties or assets. A tax lien arises when an individual or business fails to pay taxes owed to the taxing authority (Federal, State, or Local government). Tax liens generally gives the federal government the right to claim a legal interest in the assets or personal properties of a taxpayer.
Back To: COMMERCIAL LAW: CONTRACTS, PAYMENTS, SECURITY INTERESTS, & BANKRUPTCY
A Little More on What is a Tax Lien
The federal, state, or local government can place tax liens on an individuals assets or property after non-compliance to tax payment.
Although, tax lien is a legal claim, it does not necessarily permit the sales of asset by the government. It only stipulates that the government has the first claim over the assets among other creditors who might be eyeing the assets.
If the debt remains unpaid, the government may initiate a foreclosure or repossession action against the property.
Tax liens also prevent the owners of the properties (non-compliant taxpayers) from selling the properties or assets.
The lien holds until the taxpayer pays off the debts or when statute of limitation takes effect.
Tax liens may be publicly recorded, they reflect on the offenders credit report and can last up to 10 years.
Academic Research on Tax Lien
- Priority of the Federal Tax Lien, Young, W. F. (1967). The University of Chicago Law Review, 34(4), 723-760.
- The Effect of the Federal Tax Lien Act of 1966 Upon Security Interests Created Under the Uniform Commercial Code, Coogan, P. F. (1967). Harv. L. Rev., 81, 1369.
- The New Federal Tax Lien Law, Plumb Jr, W. T. (1966). Bus. Law., 22, 271.
- After Drye: The Likely Attachment of the Federal Tax Lien to Tenancy-by-the-Entireties Interests, Johnson, S. R. (2000). Ind. LJ, 75, 1163.
- Federal Tax Collection and Lien Problems (First Installment), Plumb Jr, W. T. (1957). Tax L. Rev., 13, 247.
- The Tax Lien of the United States, Rogge, O. J. (1927). ABAJ, 13, 576.
- Fog, Fairness, and the Federal Fisc: Tenancy-by-the-Entireties Interests and the Federal Tax Lien, Johnson, S. R. (1995). Mo. L. Rev., 60, 839.
- Federal Tax Collection and Lien Problems (Second Installment), Plumb Jr, W. T. (1957). Tax L. Rev., 13, 459.
- The Tax Lien Tamed, Shanks, H. (1961). UCLA L. Rev., 8, 339.
- The Good, the Bad, and the Ugly in Post-Drye Tax Lien Analysis, Johnson, S. R. (2001). Fla. Tax Rev., 5, 415.
- The Purchase Money Security Interest and Federal Tax Lien: A Proposal for Legislative Change, Fetzer, P. N. (1984). Hastings LJ, 36, 873