A lien is method by which a lender is able to secure, restrict the use of, or encumber property if debts owed are not paid in a timely fashion. A tax lien tends to refer to the government’s right that gives rights to a lender to encumber property when taxes owed are not paid. There is a slightly difference between it and a tax levy, where the government seizes property and can sell it to pay back taxes.
Tax lien in connection with unpaid taxes on property
Though you may often have heard about a tax lien in connection with unpaid taxes on property, a lien can also be used by organizations like the US Internal Revenue Service (IRS) as the beginning process in collecting unpaid income taxes, as can most state tax boards. Essentially against any “present or future property” including income you make the lien can exist . Most often though, a tax lien in connection with income tax results only in that case when there is a seizure of income via garnishment of future wages.
How Tax lien actually works?
When people are not able to pay needed taxes on property, then they essentially grant the right for a state or federal government to seize that property, especially in the US.
