If a tax lien is placed on your home, it means that you neglected to pay a tax debt. The federal government will then collect the debt by way of the lien when your home is sold. The tax lien will take precedence over any other liens on the property, including the mortgage lien.

Time Frame

A tax lien will be released 10 years from the date that the tax was originally assessed. However, the Internal Revenue Service (IRS) reserves the right to renew the lien at any time.

Considerations

A tax lien that is levied against a piece of property stays with the property. If you lose your home to foreclosure, any individual who wants to buy the home must first pay off the outstanding tax lien.

Misconceptions

Most creditors must first sue you and win their case before they are able to seek a property lien. However, the government can place a tax lien on property without first winning a lawsuit.

Warning

If the government places a tax lien on your home, evidence of the lien will appear on your credit report. This will negatively affect your credit score and may make it difficult for you to qualify for credit and loans. The lien will remain on your credit report until seven years after it is paid.

Solution

You can have a tax lien removed from your home by paying the back taxes that you owe and requesting a certificate of release. You also have the option of requesting a payment plan to satisfy your tax debt, rather than paying the money in a lump sum.

Source:

IRS: File a Notice of Federal Tax Lien

Cardreport: The Fair Credit Reporting Act

Resource:

Uncle Fed's Tax Board: Federal Tax Liens