How to Perform a Tax Lien Search
A Tax lien can be very unsettling, and create a lot of trouble financially for those who have one. It’s important to know how to find out if you have a tax lien so that you can find out what local, state or federal government agency has placed a tax lien on your financial accounts or assets so that you can begin the mitigation process. Here are a few ways to go about running a tax lien search:
- Contact the IRS or your state’s government tax agency. While local and state government agencies can put a lien, or levy, against your assets or property, the majority of tax liens that individuals deal with are placed by the federal government for tax payment issues.
- Get in touch with your state board of equalization if you’re self-employed or own a business, and are dealing with a tax lien that has been placed on a business property by your state or local government. Individual states like California all operate their own board of equalization.
- If you fail to pay your local city or county taxes as a business operator you can also be subject to a tax lien, from your city or county government, on your business assets or financial accounts. You will want to follow up through your local government or through your state’s tax agency. In California, for example, you can contact the Franchise Tax Board to find out what local government might have placed a lien against your business.
- Use a third-party public record website to run a tax lien search. These can be useful when you’re trying to find out if there is a lien against your property or assets. The benefit to using a resource like this is you can also search to find out if someone else has a lien against them with a simple name search. Many of these public record resources also give you anonymity while searching, which means you can lookup someone’s lien anonymously.
Figuring out if you have a tax lien against your property is often a simple process since you’ll likely be notified by a government agency. However, there are cases where you may be living at a different address or your notices simply do not make it to you. Once you have a formal tax lien issued, whether it’s personal or business, it becomes public record that anyone can view.
What is a Tax Lien?
A tax lien is what happens when the government puts a claim on your financial assets or physical property due to failure to pay taxes. Typically, the government agency that you are delinquent in paying your taxes to will send a letter to you before actually placing the lien, asking you to pay back taxes or simply file your tax return(s) for the relevant calendar year(s). Even if you do not owe taxes, a lien may be placed against your property if you do not file a return at all. After sending a letter about payment due and you do not follow up with the issuing agency, the government can place a lien against your assets or property. This may go along with a lien against earnings you make from any type of employment. It is the government’s legal right to do this if you are not paying your taxes or filing your tax returns at all.
What Does a Tax Lien Mean?
A tax lien is something most people have heard of, but if pressed on the issue, many don’t really know what they’re all about. While that’s a good thing and probably means that you’ve never had a lien levied against your property before, it can come as a serious shock when you find out you have to handle one. Learning how to find out if you have a tax lien can save you a lot in fines, interest as well as prevent the IRS or State to seize your assets or funds from your bank account.
Left unattended, a tax lien can result in the government taking money directly out of your bank account or garnishing your wages. Getting any sort of credit may also be very difficult when you’ve got a lien on your property. Avoid these problematic situations by doing your homework and tackling your lien right away.
How to Remove a Tax Lien
There are some key steps in removing a tax lien that starts with doing some basic research as to which government agency has issued a lien for your personal or business property. Here are some easy to follow steps on how to begin the process to fixing the issues that led to a lien being issued for failure to pay your taxes:
- First, verify that the lien is legitimate. Government agencies can make errors on these occasionally and there are also scammers out there to watch out for.
- File any outstanding tax returns and setup a payment plan if you cannot pay your past due taxes all at once. If you do not owe money for the year in question, your lien can potentially be removed once your taxes are filed and processed.
- Pay your tax bill if you have not or file an appeal if there is anything you do not agree with. If it’s as simple as paying your past due taxes, it’s a good idea do this in a lump sum if possible, which will generally result in your lien being removed as quickly as possible. If you cannot pay in a lump sum, most government agencies will work to put you on an installment plan you can afford to get your bill paid down.
- Request that your tax lien is removed, or withdrawn, once you’ve paid your bill or resolved your tax issues. You may need to do this in writing. You may also want to consult with a tax attorney if you cannot resolve the lien on your own.
- Once your tax lien is removed, request a background check on yourself to make sure your tax lien is not still visible on your credit report.
The good news is that taking care of a tax lien is something you can tackle. In some cases, the lien may also have been reported in error, which is generally easy to clear up. While it’s not a criminal record, a lien against your assets or property can result havoc in refinancing your home, getting a loan, significantly impacting your credit score and seizure of your property. The most important step in the process of removing a tax lien is communicating with the issuing government agency and setting up a plan to repay your taxes before your wages are garnished or you lose your property completely.
How Long Does a Tax Lien Stay on Your Credit Record
A tax lien will typically show up on your credit report, which can make it very hard to buy property, get a credit card or handle basic needs like getting a car. You may also have a harder time getting employed by a company that runs a background and credit check since a person with a tax lien levied against they may be a financial risk.
While some states have statutes of limitations regarding collections, these can vary and be long enough to cause you serious problems. In most cases, simply paying your tax bill, making installment arrangements or requesting that an old solved lien is removed is your best course of action.
A tax lien can wreak havoc on your life, so getting yours resolved quickly is of the utmost importance. Follow this simple guide and you can get back to living a life free of debt and the fear of garnished wages or seized assets. Knowing how to find out if you have a tax lien can certainly ease the concerns about past due or unpaid taxes. It’s a good idea to get in front of a lien as it can put a big dent in your good name and your future opportunities.
Tax Lien FAQs
What are the consequences of a tax lien?You can have your wages garnished, property and assets seized, as well as having your credit score tarnished. You can also lose the ability to procure a loan or refinance a home. It can put a big dent in a person's livelihood to have a tax lien filed against them.
Can I purchase a tax lien?Yes, you can purchase a tax lien from a local government when a property owner fails to pay their taxes. If a tax lien is placed on a person's property it can be auctioned off by the government in an attempt to reclaim unpaid taxes by someone.
What is tax lien investing?Tax lien investing is the process of buying property or assets that are seized by the government in an attempt to reclaim unpaid taxes. It can be risky but very profitable as some assets are sold for pennies on the dollar, but it is generally not recommended for inexperienced investors.
What is a tax lien certificate?A tax lien certificate is a document that is issued by a government agency to another person or business that buys a tax lien property or asset sale. This certificate effectively shows that the property or assets have been transferred to another person or entity. It is an official document of ownership.
How is a tax lien created?A tax lien is created when a taxpayer fails to pay either personal or property taxes. When this happens, the government agency issues a "Notice of Tax Lien" that alerts creditors that the government has a legal right to a taxpayer's property or assets.
Can a tax lien be removed or released?Yes, a tax lien can be removed or released once when the tax debt is fully paid. Then the lien can be contested and removed.
What is the difference between a tax lien and a tax levy?A tax lien is a legal claim against your property to secure payment of your tax debt, while a tax levy actually takes the property to pay off the tax debt.
How long does a tax lien last?Federal tax lien lasts for 10 years from the date it was issued, if no further actions are taken by the IRS after that initial date. Some states will hold onto tax lien for less time depending on the circumstance.
Can a tax lien affect my ability to sell my property?Yes, a tax lien can make it very difficult to sell your property, as you may need to settle the tax lien before selling the property.
Can I appeal a tax lien?Absolutely, the relevant tax agency typically provides a process for taxpayers to appeal or contest a tax lien. If they do not then you may need to consult with an attorney.
Can a tax lien be renewed?Yes, the IRS can refile an additional Notice of Federal Tax Lien if the lien is about to expire. This can extend the federal tax lien an additional 10 years after the first one expires
Is a tax lien public record?Yes, tax liens are public record and can be viewed by anyone via the Freedom of Information Act
Does a tax lien go away during a bankruptcy?It is possible in certain circumstances, but a bankruptcy may not eliminate a federal tax lien on property, and the lien can remain against any property the debtor has or acquires after bankruptcy.
How can I prevent a tax lien?The best way to prevent a tax lien is to pay all your taxes in full and on time. If you can't pay in full, you can set up a payment plan can help avoid a future lien