Definition
A tax lien is a claim against real estate property placed by a government entity due to nonpayment of taxes.
Analysis
Tax liens are public records that remain on file for public inspection permanently. They also appear in the public record section of a credit report.
Tax liens may be placed on property by a city or county government due to nonpayment of property taxes. They may also be levied as a result of unpaid income tax liabilities owed to the state or federal government.
Federal tax liens may remain on a credit report indefinitely, although the three main credit bureaus normally remove such records after 15 years. In addition to complicating the sale of real property, federal tax liens can also prevent the purchase of a home. Lenders will not approve a new mortgage application if the borrower still has a large tax lien in place.
A federal tax lien is a government claim against the property that must be dealt with. A federal tax lien may be followed by a levy if the taxpayer fails to satisfy the tax liability. A levy can include seizure of the property by the government.
