Tax Lien

Posted in Finance, Accounting and Economics Terms, Total Reads: 1519

Definition: Tax Lien

Tax lien is the lien imposed by the government of a country over the person who doesn’t pay the taxes which he/she is obliged to pay. The lien protects the interests of government in all property including personal and financial assets like bank accounts, investments, real estate property etc. One can evade from tax lien only by paying one’s taxes in time.


Before imposing tax lien, government assesses the liabilities of a person and sends a demand notice mentioning the amount of tax in due. It takes action only if that particular person fails to respond in stipulated time. In US, the whole process is carried by IRS (Internal Revenue Service).

Tax lien is publicly recorded and is reported to credit agencies so that the lien imposed person does not borrow money on the assets. If by any case assets are sold when lien is imposed, then taxes are paid by sales proceeds.

An imposed lien can be cleared by fully paying the taxes. In such case, lien is removed within 30 days after payment of taxes.

There are different types of tax liens on different types of taxes imposed by government. Estate tax, Corporate tax, Excise tax, Waging tax are some of its examples.

A Tax Lien Certificate is issued by the taxing authority for unpaid taxes as a proof that the assets/ property is under lien.


Let us assume that Mr. Venkata Bobby bought a house in India and the annual property taxes are Rs 50,000. Due to financial difficulties he has not paid the taxes. Hence, the government issues a tax lien stating the non submission of tax dues.

Hence, this concludes the definition of Tax Lien along with its overview.

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