Have you recently received a letter in the mail from the government seeking a federal tax lien on your holdings? This is a serious and damaging event, but with some understanding on what is going to happen and how it will affect you and your family is an important step in resolving issues and moving on with your life.

What is a Federal Tax Lien?

A federal tax lien is the government’s way of placing a claim against property held by you should events cause you to neglect or simply fail to deal with a past tax charge. The lien is the way for the government to maintain their interest in your property while the dept is collected, and this can cover everything from financial assets, personal property, and holdings in real estate.

To start a federal tax lien, the Internal Revenue Service will review any and all liabilities you may have regarding past tax defaults, and sends a series of bills as an attempt to collect before taking the more drastic measure of filing a federal tax lien. You will be informed how much you owe, as well as the inclusion of any penalties you may have incurred in the meantime. These are usually interest charges and fees associated with the collection effort. Should these go unanswered, they will file a document, a Notice of Federal Tax Lien, to make creditors aware the government has priority and legal claims against your property. In essence, they will get paid first before any private business interests can collect outstanding claims, if there are any.

How a Federal Tax Lien Affects Your Holdings

The lien will review inclusively every asset that you own – nothing is taboo when the government is trying to collect a tax debt. No matter your situation, they will collect. It’s as simple as that. Even a filing of bankruptcy will not necessarily avert the collections of the lien, as the notice will continue beyond the terms of the bankruptcy. A lien may simply not be discharged. If you own your own business, this will be attached to a personal federal tax lien as well. Any credit you have will be considered, and the lien will limit your access. Every single asset the government can identify as belonging to you, or under your control including personal and professional properties, and financial securities you may hold, and physical assets such as vehicles come under their umbrella. This also includes future acquisitions, as long as the federal tax lien is in effect.

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