notice of tax lien

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Notice of tax lien, often used in the context of federal tax, refers to a document released by Internal Revenue Service (IRS) in public records to notify that a taxpayer that she owes taxes, alerting the taxpayer’s creditors that the IRS has a claim against all your property. Since the filing of a notice of tax lien is in public record, credit reporting agencies may obtain the filing and show it on the taxpayer’s credit report, thus harming the taxpayer’s credit score. IRS will withdraw a notice of tax lien if the Notice was not filed according to IRS procedures or the taxpayer has entered into an installment agreement to satisfy the liability.

The tax departments of states can also issue tax liens. In California, for example, the Franchise Tax Board can file a Notice of State Tax Lien against a taxpayer if the taxpayer failed to respond or pay in full her tax debts. The Notice of State Tax Lien can be recorded with one or more local county recorders.

[Last updated in November of 2020 by the Wex Definitions Team]