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Encyclopedia > Tax liens

A tax lien is a lien imposed on property by law to secure payment of taxes. Tax liens may be imposed for delinquent taxes owed on real property or personal property), or as a result of failure to pay income taxes or other taxes. In law, lien is the broadest term for any sort of charge or encumbrance against an item of property that secures the payment of a debt or performance of some other obligation. ... A tax is a compulsory charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (e. ... Real property is a legal term encompassing real estate and ownership interests in real estate (immovable property). ... Personal property is a type of property. ...


Tax liens in connection with property taxes

Unlike personal debts, tax liens on real estate "run with the land"; that is, a property owner becomes responsible for payment even if the tax obligation was incurred by a prior owner. Depending on the law of the State or jurisdiction, the owner of the property may also be personally liable for payment of the taxes.


Payment of a tax lien may occur through various methods:

  • Payment may be made directly by the property owner or, in some cases, indirectly by the mortgage holder using an escrow account. Notice is given both to the property owner and mortgage holder when a property tax is delinquent; thus, even if the property owner does not have an escrow account on the mortgage, the mortgage company will receive notice of the delinquency and may pay the tax. The mortgage company will then demand repayment from the owner/borrower and/or create an escrow account to recoup the proceeds, since the mortgage company might lose some of the value of its mortgage lien if the property were sold by the taxing agency to satisfy unpaid taxes foreclosure.
  • If a property is sold by the owner prior to tax foreclosure by the government body, the tax lien (which is generally discovered as part of a title search) is usually paid as part of closing costs from the sale proceeds.
  • Procedures vary from State to State. Generally, in the event a tax lien on personal property is not paid within a specified time (and after several notices are generally given), the property may be seized and sold at foreclosure sale. On real property, one of two methods may be used: either the property may be seized and sold at a tax lien sale (a tax deed sale), or in some States the tax lien may be offered to investors with an accompanying right for the investor, after a specified period of time, to institute foreclosure proceedings (a tax lien sale).

Escrow is a legal arrangement whereby a thing (often money, but sometimes other property such as art, a deed of title, or software source code) is delivered to a third party (called an escrow agent) to be held in trust pending a contingency or the fulfillment of a condition or... Foreclosure is the legal proceeding in which a bank or other secured creditor sells or repossesses a piece of real property (immovable property) due to the owners failure to comply on its promissory note. ... A title search is an action taken prior to the sale of real property to determine whether there are any liens or other encumbrances on the property which might prevent or delay the sale of the property. ... A tax deed sale is the forced sale, conducted by a governmental agency, of real estate for nonpayment of taxes. ... A tax deed sale is the sale, conducted by a governmental agency, of tax liens for delinquent taxes on real estate. ...

Federal tax lien in the United States

In the United States, the Federal tax lien may arise in connection with any kind of Federal tax, including but not limited to income tax, gift tax, or estate tax. The United States imposes an income tax on the taxable income of individuals, corporations, trusts, decedents estates and certain bankruptcy estates. ... Inheritance tax, also known in some countries outside the United States as a death duty and referred to as an estate tax within the U.S, is a form of tax levied upon the bequest that a person may make in their will to a living person or organisation. ... Inheritance tax, also known in some countries outside the United States as a death duty and referred to as an estate tax within the U.S, is a form of tax imposed upon the transfer of the property of the estate of a deceased person that is left to a...


Internal Revenue Code section 6321 provides: The Internal Revenue Service (IRS) is the United States government agency that collects taxes and enforces the tax laws. ...

Sec. 6321. LIEN FOR TAXES.
If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, additional amount, addition to tax, or assessable penalty, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belong to such person.

See 26 U.S.C. § 6321. The United States Code (U.S.C.) is a compilation and codification of the general and permanent federal Law of the United States. ...


Under the doctrine of Glass City Bank v. United States, 326 U.S. 265 (1945), the tax lien applies not only to property and rights to property owned by the taxpayer at the time of the assessment, but also to after-acquired property (i.e., to any property owned by the taxpayer during the life of the lien).


The term "assessment" refers to the statutory assessment made by the Internal Revenue Service under 26 U.S.C. § 6201. Seal of the Internal Revenue Service The Internal Revenue Service (IRS) is an agency that collects taxes. ... The United States Code (U.S.C.) is a compilation and codification of the general and permanent federal Law of the United States. ...


Internal Revenue Code section 6322 provides:

Sec. 6322. PERIOD OF LIEN.
Unless another date is specifically fixed by law, the lien imposed by section 6321 shall arise at the time the assessment is made and shall continue until the liability for the amount so assessed (or a judgment against the taxpayer arising out of such liability) is satisfied or becomes unenforceable by reason of lapse of time.

See 26 U.S.C. § 6322. The United States Code (U.S.C.) is a compilation and codification of the general and permanent federal Law of the United States. ...


The statute of limitations under which a Federal tax lien may become "unenforceable by reason of lapse of time" is found at 26 U.S.C. § 6502. The lien generally becomes unenforceable ten years after the date of assessment. The United States Code (U.S.C.) is a compilation and codification of the general and permanent federal Law of the United States. ...


  Results from FactBites:
 
File a Notice of Federal Tax Lien (1068 words)
By filing notice of this lien, your creditors are publicly notified that we have a claim against all your property, including property you acquire after the lien is filed.
The lien attaches to all your property (such as your house or car) and to all your rights to property (such as your accounts receivable, if you are a business).
That determination may support the continued existence of the filed federal tax lien or it may determine that the lien should be released or withdrawn.
tax lien: Information from Answers.com (1714 words)
Tax liens may be imposed for delinquent taxes owed on real property or personal property), or as a result of failure to pay income taxes or other taxes.
If a property is sold by the owner prior to tax foreclosure by the government body, the tax lien (which is generally discovered as part of a title search) is usually paid as part of closing costs from the sale proceeds.
The creation of a tax lien, and the subsequent issuance of a Notice of Federal Tax Lien, should not be confused with the issuance of a Notice of Intent to Levy under 26 U.S.C. § 6331(d), or with the actual act of levy under 26 U.S.C. § 6331(a).
  More results at FactBites »

 
 

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