General Tax Lien§
Definition§
A General Tax Lien is a legal claim by a tax authority against all the property and assets owned by a taxpayer who has failed to pay their tax liabilities. Unlike a specific tax lien, which is linked to particular property, a general tax lien affects all the taxpayer’s real and personal property. It is typically attached to the taxpayer’s assets until the tax debt is fully paid off. This lien remains effective for a period of six years, during which the government has the right to seize assets to recover the unpaid taxes.
Examples§
- IRS Lien: If a person fails to pay their federal income taxes, the Internal Revenue Service (IRS) may place a general lien against all the taxpayer’s assets, including homes, cars, bank accounts, and other personal property.
- State Tax Lien: A state taxing authority might place a general tax lien on a business’s assets if the business neglects to pay state income taxes or business taxes.
- Municipal Property Taxes: A local government might impose a lien for unpaid property taxes that can affect not just the property but all assets of the taxpayer within the jurisdiction.
Frequently Asked Questions (FAQs)§
What triggers a general tax lien?§
A general tax lien is triggered when a taxpayer neglects or refuses to pay their tax obligations. The tax authority will typically issue multiple notices and demand for payment before filing the lien.
How does a general tax lien affect credit?§
A general tax lien can significantly damage a taxpayer’s credit score and remain on the credit report even after the debt is paid off, depending on credit bureaus’ policies.
Can a general tax lien be discharged?§
A general tax lien can be discharged once the taxes owed are fully paid, or through certain bankruptcy proceedings. The taxpayer may also try to negotiate a settlement or payment plan with the tax authority.
What property is affected by a general tax lien?§
All of a taxpayer’s property, including real estate, personal property, and financial assets, can be subject to a general tax lien.
Is it possible to appeal a general tax lien?§
Yes, taxpayers can appeal the imposition of a tax lien, typically by proving that the lien is erroneous or that the tax debt has been paid.
Related Terms§
- Tax Lien: A claim by a government entity against a taxpayer’s assets for unpaid tax liabilities.
- Specific Tax Lien: A lien on specific property rather than all property owned by the debtor.
- Tax Levy: A legal seizure of property to satisfy a tax debt.
- Tax Debt: The amount of money owed to a tax authority due to unpaid taxes.
- Lien Certificate: A document proving the imposition of a lien on a property.
Online Resources§
Suggested Books for Further Studies§
- Tax Lien Investing Secrets by Joanne Musa
- The Complete Guide to Real Estate Tax Liens and Foreclosure Deeds by Don Sausa
- The Rich Get Richer and You Can Too: Taking Advantage of Tax Liens by Chantal Howell Carey and Bill Carey
Fundamentals of General Tax Lien: Taxation Basics Quiz§
Thank you for delving into the specifics of general tax liens with us, and for your participation in our informative quiz. Keep expanding your knowledge in taxation!
