Federal Tax Lien

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Federal Reserve Bank

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

    The legal proceedings initiated by a lender in the case of mortgage ...
  3. Internal Revenue Service - IRS

    A United States government agency that is responsible for the ...
  4. Monetary Policy

    The actions of a central bank, currency board or other regulatory ...
  5. Taxes

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

    A U.S. government agency created in 1935 by President Franklin ...
Related Articles
  1. Changes In Tax Legislation And Regulation
    Taxes

    Changes In Tax Legislation And Regulation

  2. What aids will help me file my own tax ...
    Retirement

    What aids will help me file my own tax ...

  3. Surviving The IRS Audit
    Taxes

    Surviving The IRS Audit

  4. Get A 6-Month Tax Extension
    Taxes

    Get A 6-Month Tax Extension

comments powered by Disqus
Hot Definitions
  1. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  2. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  3. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  4. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
Trading Center