The law provides that the federal tax lien can arise out of nonpayment of any tax, but the most common cases where a federal claim generally appears are either income tax, gift tax or estate tax levied by the federal government.
The provision for federal tax liens has been provided in the section 6321 of the Internal Revenue Code of United States. The article provides that the government of United States can impose a lien on the property of any person who is negligent or deliberately refuses to pay the lawfully imposed taxes on him or any associated interest or penalties levied by any legally appointed authority. The lien shall be applicable in favor of US government, and it shall be applicable on both real and personal property.
The period for which the lien shall be in force is defined in the section 6322 of the Internal Revenue Code of United States. The law says that unless there is a specifically declared period for which the lien has been imposed, it shall be applicable until the taxpayer in question clears all his dues or until such period, after which it becomes impossible to sustain. This means that theoretically, a federal tax lien can apply in perpetuity.
The IRS can only impose federal tax lien after it has assessed the tax liability of the taxpayer, sent a notification and demand to pay the taxes and if no payment is made within10 days of such information. It is only after every single one of these three conditions have been fulfilled that the federal tax lien can arise.
Federal tax lien weighs heavily on the credit rating of a person who is served with the claim. It becomes painfully difficult to buy any property or a new credit card. Even signing a lease becomes a great bother. The federal tax lien attaches itself to all units of property that is owned by the taxpayer or in which the taxpayer has a right. This means that federal tax lien can land anyone in severe financial trouble if mismanaged.
Thankfully an appeal can be made against the federal tax lien in some cases. The conditions include the clearance of all the dues before the claim was imposed or if the application was imposed in the period of bankruptcy. There are some other instances when federal tax lien appeals can be made the most common is where a procedural error had occurred in the assessment of tax liabilities.
If you fail to pay off your real property tax or other taxes, your property becomes subject to foreclosures. You can look for real estate investor financing or tax lien help organizations if you want to get rid of federal tax lien imposed on you by Uncle Sam.