If you don't pay your federal taxes, the IRS files a Notice of Federal Tax Lien with the state recorder's office to secure the debt. You can search for a federal tax lien at the recorder's office in the taxpayer's home county and state, or you can use a private company offering online public records searches. A federal tax lien attaches to everything you own in that state, including real estate and personal property.
Read More: How to Buy Tax Lien Property in California
Federal Tax Liens Provide Protection for the IRS
The IRS takes its collection duties seriously and has more ways of securing its debts than the average creditor.
If you fail to pay your federal taxes, the IRS takes immediate action. First, it prepares a tax assessment to determine what you owe. It then forwards a bill to you for this amount. If you don't pay or arrange for a payment plan, the IRS records a federal tax lien in your home state. The lien gives the IRS a protected interest in any real or personal property you own or that you acquire while the lien is in effect. You cannot sell your property without paying your tax debt.
Federal Tax Levies
The IRS uses both tax liens and tax levies to protect and collect past due taxes. These are very different actions.
A tax lien is essentially a legal claim that the IRS makes against your assets. This public document also informs the public that the government has a claim on the taxpayer's assets.
A tax levy, on the other hand, involves actually taking property. When it levies on a bank account or a retirement account, the IRS seizes the money to put toward your tax debt. The IRS has the right to seize or levy on funds, securities, personal assets and real property. The IRS can even garnish Social Security, which private creditors cannot do.
Free Federal Tax Lien Search
Because federal tax liens public records, you can find out if the federal government has filed a tax lien against you or your spouse, or anyone else.
In order to fulfill their function of providing public notice of a government's claim on a taxpayer's assets, tax liens must be officially recorded. The IRS records these liens in the taxpayer's home state with the state recorder's office. This office goes by different names in different states, but it is usually the same place you record a property deed.
The state recorder office often provides an online index of recorded documents. For example, in California, federal tax liens are filed with the County Clerk Recorder. The San Francisco Assessor-Recorder's Office has a searchable databank of documents recorded in that county. You can run an online search to verify the existence of a lien. Search by name, document number, type of document, or Assessor’s Parcel Number (APN).
You'll also find various companies offering tax lien searches online. They usually charge fees for this service. A title company can run a title search, which will also turn up tax lien information.
Read More: How to Look Up a Federal Tax Lien
- IRS: Understanding a Federal Tax Lien
- IRS: Automated Lien System Database Listing
- IRS: IRS Collection Process
- San Francisco County: Recorded Document Search
- SF Office of the Assessor: Records Search
- Legal Beagle: How to Look Up a Federal Tax Lien
- Legal Beagle: How to Buy Tax Lien Property in California
- Legal Beagle: How Far Back Can the IRS Audit You?
- Legal Beagle: How to Read a Property Title Search
- According to the Internal Revenue Code, the Service files the lien against real property "in one office within the State (or the county or other governmental subdivision), as designated by the laws of such State, in which the property subject to the lien is situated."
Teo Spengler earned a JD from U.C. Berkeley Law School. As an Assistant Attorney General in Juneau, she practiced before the Alaska Supreme Court and the U.S. Supreme Court before opening a plaintiff's personal injury practice in San Francisco. She holds both an MA and an MFA in English/writing and enjoys writing legal blogs and articles. Her work has appeared in numerous online publications including USA Today, Legal Zoom, eHow Business, Livestrong, SF Gate, Go Banking Rates, Arizona Central, Houston Chronicle, Navy Federal Credit Union, Pearson, Quicken.com, TurboTax.com, and numerous attorney websites. Spengler splits her time between the French Basque Country and Northern California.