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  • Brian Barto, EA

Understanding Federal Tax Liens



The IRS automatically issues Tax Lien once a taxpayer has been notified of a tax debt and fails to pay. There are 3 pre-requisites to a valid federal tax lien

  1. The IRS has assessed the tax liability

  2. The taxpayer has been notified of the amount due and a demand for payment has been issued. (IRS billing notice sent to taxpayer in the mail.)

  3. The taxpayer has failed to pay within 10 days of the notice.

A Federal Tax Lien is very powerful. The tax lien attaches to all assets the taxpayer owns, AND all assets the taxpayer acquires in the future. In most cases, the taxpayer will not even realize that a lien has been placed. If the tax debt is greater than $10,000, then the IRS will issue a Notice of Federal Tax Lien. The Notice of Federal Tax Lien is a public document filed to alert third parties that the taxpayer owes the IRS. The IRS will file the Notice of Federal Tax Lien in 3 places:



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