Federal Tax Lien


DEFINITION of 'Federal Tax Lien'

A federally authorized lien against any and all assets of a taxpayer who has unpaid back taxes. The lien allows the Internal Revenue Service (IRS) to secure or otherwise requisition the taxpayer's property in order to secure payment. Federal tax liens can be assessed for unpaid taxes of any kind, including income, self-employment, gift or estate taxes.

BREAKING DOWN 'Federal Tax Lien'

Federal tax liens differ from tax levies in that they only denote the government's right to seize property, as opposed to the actual seizure of it. The IRS will often "perfect" a tax lien by filing notice with states and other creditors that it is first in line to receive payment for back taxes. Having a federal tax lien will substantially downgrade one's credit score, and in many cases this lien must be paid off in full before the taxpayer can obtain financing.

  1. Monetary Policy

    Monetary policy is the actions of a central bank, currency board ...
  2. Federal Reserve Bank

    The central bank of the United States and the most powerful financial ...
  3. Foreclosure Action

    The legal proceedings initiated by a lender in the case of mortgage ...
  4. Taxes

    An involuntary fee levied on corporations or individuals that ...
  5. Social Security Administration ...

    A U.S. government agency created in 1935 by President Franklin ...
  6. Internal Revenue Service - IRS

    A United States government agency that is responsible for the ...
Related Articles
  1. Taxes

    Changes In Tax Legislation And Regulation

    Keeping on top of these amendments can help you avoid penalties and take advantage of benefits.
  2. Taxes

    Surviving The IRS Audit

    Keeping thorough records and knowing the penalties make this experience easier than you'd expect.
  3. Taxes

    Get A 6-Month Tax Extension

    Discover how to get some extra time from the IRS, without paying for the privilege.
  4. Taxes

    Top 9 Solutions To An Unexpected Tax Bill

    Finding out you owe when you expected a refund is a nasty shock. Find out how to cope.
  5. Taxes

    3 Common Tax Questions Answered

    We clarify some rules that often puzzle taxpayers.
  6. Investing Basics

    Diversify with These Four Alternative Assets

    In times of market volatility, investors add alternative assets to their portfolios--highly illiquid, but profitable investments like art, land or precious metals.
  7. Professionals

    How Hard Is a Career Selling Life Insurance?

    Learn why selling life insurance is a difficult way to make a living, but also how agents who persevere are rewarded down the road with a strong passive income.
  8. Investing Basics

    Use Private Equity Strategy to Invest

    Forget trying to be a great trader. Learn to invest like private equity firms for superior results.
  9. Taxes

    7 Expenses You Won’t Believe Are Deductible

    You may be surprised at some of the things that qualify as legitimate tax deductions. Here are seven that are especially quirky.
  10. Taxes

    6 Tax Myths Everyone Should Know

    The notion that large refunds are good is but one of many enduring tax myths. Here are five more you should know.
  1. What aids will help me file my own tax return?

    Most of us will shy away from doing our own tax returns, especially if it involves reporting capital gains or losses, education ... Read Full Answer >>
  2. Why does the IRS withhold income taxes from employee paychecks?

    In the midst of WWII, the U.S. government ran into trouble funding the war effort. The problem did not originate from citizens ... Read Full Answer >>
  3. Does everyone have to file a federal tax return?

    This may come as a surprise to many individuals, but not everyone needs to file a federal tax return. According to the IRS, ... Read Full Answer >>
  4. Are Cafeteria plans taxable?

    Whether the benefits you receive through your employer-sponsored cafeteria plan are taxable depends entirely on which benefits ... Read Full Answer >>
  5. Can I borrow from my annuity to put a down payment on a house?

    You can borrow from your annuity to put a down payment on a house, but be prepared to pay an assortment of fees and penalties. ... Read Full Answer >>
  6. Why is the Cayman Islands considered a tax haven?

    The Cayman Islands is one of the most well-known tax havens in the world. Unlike most countries, the Cayman Islands does ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Ex Works (EXW)

    An international trade term requiring the seller to make goods ready for pickup at his or her own place of business. All ...
  2. Letter of Intent - LOI

    A document outlining the terms of an agreement before it is finalized. LOIs are usually not legally binding in their entirety. ...
  3. Purchasing Power

    The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing ...
  4. Real Estate Investment Trust - REIT

    A REIT is a type of security that invests in real estate through property or mortgages and often trades on major exchanges ...
  5. Section 1231 Property

    A tax term relating to depreciable business property that has been held for over a year. Section 1231 property includes buildings, ...
  6. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!