What is a Lien






Practical Examples of Liens



Liens and Taxes

There are also several statutory liens, meaning liens created by laws, as opposed to those created by a contract. These liens are very common in the field of taxation, where laws often allow tax authorities to put liens on the property of delinquent taxpayers. For example, municipalities can use liens to recover unpaid property taxes.

In the United States, if a taxpayer becomes delinquent and does not demonstrate any indication of paying owed taxes, the IRS may place a legal claim against a taxpayer's property, including his home, vehicle and bank accounts. A federal tax lien has precedence over all other creditors' claims, and can lead to a sheriff's sale. It also affects the taxpayer's ability to sell existing assets and to obtain credit. The only way to release a federal tax lien is to fully pay the tax owed or to reach a settlement with the IRS. The IRS has the authority to seize the assets of a taxpayer who ignores a tax lien.