Finance

Tax liens are placed on individuals or businesses who neglect or refuse to pay a tax administered by the IRS or state tax commission. Therefore, the tax plus additional penalty and interest is a lien in favor of the federal government, which has the rights to the individuals real estate and personal property. If youre a small business, tax liens are the last thing you need.

Tax liens are public documents that list the delinquent taxpayers personal and/or business names, the tax type, as well as the amount owed at the time the lien is filed. Both state and federal tax liens feature the same force and effect of a court judgement. A state tax lien allows the delinquents personal property, such as cars, computers, etc. as well as real estate to be seized and sold to pay the taxes they owe.

The Affect of Tax Lien on Credit
Your business credit can be affected for years if you have a tax lien filed against your company. Therefore, its strongly recommended that you always pay your taxes in full and on time. If you fail to do so, then the tax commission will issue a warrant to the district court, and once in the record, it becomes a judgement. This judgement is a tax lien against the persons property, which is located in the county of the district court the judgement has been filed in.

One way to avoid tax liens and maintain a good business credit rating is to enter into an IRS tax payment plan. As long as the payments are made, then no action will be taken on the lien. Many businesses have saved themselves from failing thanks to this deal with Uncle Sam.