Tax Liens & Warrants
After the IRS (i.e., the Federal Government) assesses a tax, issues a notice and demand for payment of the tax, and payment of the tax is not made, a “silent” or “secret” lien exists against the taxpayer. That means any property owned by the taxpayer is encumbered by the IRS lien and generally cannot be sold or transferred without first resolving the IRS lien. If the taxpayer improperly sells or transfers the property without resolving the IRS tax lien, the tax lien can follow the property, thereby subjecting the property to being seized by the IRS despite no longer being owned by the taxpayer. However, for the IRS lien to have priority over Bona-fide Purchasers, Holders of Security Interests, Mechanic’s Lienors and Judgment Creditors, the IRS generally must file a Notice of Federal Tax Lien (NFTL). An NFTL is a public record that is filed in the County Clerk’s Office where the taxpayer resides, and functions as notice to third parties of the IRS’s security interest in the debtor’s property.