Everyone knows that if you do not pay your taxes, the IRS will come after you to get the money owed. They may either sue you for the money or place a tax lien on you. The tax lien can come in one of several forms, as the following will show:
Tax Lien Against Future Refunds
Most people would consider this the worst possible kind of lien because they depend upon an annual tax refund to settle old bills or get something they have wanted for a long time. However, if you do not pay your taxes, the IRS can seize all future refunds until your tax debt is paid. Luckily, most people hit with this kind of lien have very little amounts to repay. It only takes one to two years to pay off the amount owed, if you pay taxes owed in the succeeding years.
Tax Lien Against Your Home
If you do not have your mortgage paid off yet, the IRS can add to your mortgage woes by tacking your unpaid taxes onto the mortgage debt. This prevents you from selling the house and gaining profit until you have paid off the taxes. Unfortunately, if you owe a sizable amount of taxes, it also blocks one of the possible means of actually paying your taxes because you could sell the house and pay the taxes! Additionally, with an IRS lien on your house, you will not be able to take out any home loans or equity loans to pay the taxes either.
Tax Lien Against Your Business
If you own a business and have not paid business taxes, then the IRS can levy a lien against your business, too. If your business took off and someone wanted to buy the business from you, you could not sell until your back taxes were paid. Of course, if you are doing so well that someone wants to buy your business from you, then you should have enough to pay the taxes anyway.
Tax Lien Against Other Valuable Property
The IRS can get very creative when they want to extract money from people. That said, if you have anything of real value, such as a boat, vacation property, etc., the IRS can try to levy a lien against that as well. It all depends on how much you owe, whether or not you owe any back taxes, and what the judge has to say about the levy/lien in court.