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Tax Liens

If you owe a significant amount of money in back taxes and penalties, the IRS may institute a tax lien. A tax lien is a claim on a business or an individual’s assets and is typically attached to real estate properties. This doesn't mean the taxing authorities intend to seize your property like a tax levy. Instead, it uses the lien as collateral for the tax debt and ensures that the government has first dibs on the property rather than any creditors.

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A lien can be attached to both personal and business properties. If the lien is on a business property, it can include accounts receivable and will remain in place even if you file for bankruptcy. Usually, a lien will stay active until some kind of agreement has been made to pay off the tax bill or the statute of limitations on the debt expires.

Image by William Iven
IRS Tax Liens

When the IRS issues a public Notice of Federal Tax Lien, this alerts creditors that the government has a legal right to your property. In this case, the IRS doesn't actually confiscate the property but uses the lien as security for the outstanding tax debt. A lien can be attached to business property including accounts receivable and can continue even if you file for bankruptcy

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