The Federal Tax Lien is a negative mark on the credit report of a debtor. Many creditors ask for notes to check, once they know of this Federal Tax Lien(FTL.)



The Federal Tax Lien is considered to be the major claim against the assets ofthe debtor, excluding the first mortgage holders who have all their financingdocuments perfectly filed. The Federal Tax Lien may even shake the position ofthe factoring firms that lend on bank revolving lines of credit and on accountsreceivable.

Local law in some jurisdictions allows separate filing of liens for personalproperty and any real property.  In such cases, two identical liens arefiled by the IRS, one under the real property records and the other under thepersonal property records.  It is important to file both; otherwise itamounts to not perfecting the government claim on all assets.  If we aretalking about a corporation as the debtor, failure to file, depending on thelocal law, may result in imperfect claim. 

The Federal Tax Lien is the main basis for the IRS for foreclosure of theassets of the debtor with seizure.  Ever since the 1998 IRS Reform Act,these seizures have reduced. You should not mistake the lien with the IRSlevy.   The IRS has the power to levy on a debtor's wages or accountswithout a Federal Tax Lien. 

People can also appeal the filing of a Federal Tax Lien if they have a goodreason to do so.  If you are able to confirm that the Federal Tax Lienwill actually not help the government in recovering payments or that there isan incorrect tax assessment, you stand a chance to succeed.

 

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