"Sometimes in our lives, we all have pain. We all have sorrow." Those are some of the lyrics from "Lean on Me," a song that has had repeated resurrections since it was first a hit more than 40 years ago. One of the last things anyone with a tax debt wants is to have the Internal Revenue Service put a lien on you and your assets, however.
The IRS says federal tax liens are legal claims against your property imposed when you fail to pay a tax debt. The lien tells the world that the tax collector has a right to the things you own, including your home, your business and other assets.
The lien can show up on your individual credit report, or on your business credit score. Unsurprisingly, the presence of a lien on the report can do enormous damage, making it more difficult to get credit. When credit dries up, it can make it impossible for some businesses to keep their doors open, and decrease the likelihood that the tax debt will be promptly paid.
The federal government has another collection tool at its disposal often confused with a lien: the levy. A levy is a much more drastic measure than the lien. A levy quite literally takes your property away to pay off your tax debt. Some chilling words from the IRS on the scope of its levy power: "the IRS can levy, seize and sell any type of real or personal property that you own or have an interest in."
There should be no doubt in anyone’s mind that when a tax debt dispute has reached the point in which a lien or levy is a possibility, a discussion with an experienced tax law attorney is in order.
