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To protect its’ interest in tax debt, the IRS uses a claim on your property called a tax lien. Having a tax lien placed against your assets by the IRS is a stressful event. However, the IRS will only place a lien against your property after it has sent you a bill and not received payment. Though being the recipient of a lien is a difficult and stressful event, understanding the process makes it easier to navigate.
The IRS will file a public document called a Notice of Federal Tax Lien, which is placed on your credit record and limits your ability to apply for credit. The tax lien will affect all of your property until the tax debt is satisfied. The lien also applies to business assets, including all your accounts receivable. The IRS gets first rights to any money that’s generated from the sale of property.
Note that a tax lien is different from a tax levy, which is an outright seizure of property in order to pay the tax debt. A tax lien give the IRS a secure interest in your property when you fail to pay your tax debt, while a tax levy actually takes your property away.