• IRS tax liens can have a detrimental effect for taxpayers if not dealt with effectivelytax forms image by Stephen VanHorn from Fotolia.com
  
  Under federal tax codes, the IRS can place a lien against a taxpayer's property when the taxpayer owes back taxes. This is true for both individuals, corporations and partnerships.
  
  Understanding how tax liens work, what they affect and how to clear them is important as tax liens can impact the sale of personal property and real estate if not handled effectively. Here are some of the most common questions asked about tax liens:
  
  

When Can the IRS Levy a Tax Lien?

• Tax liens are allowed for under the Internal Revenue Code when the IRS has demanded a payment of tax from an individual or business and it has not been paid in the time-frame demanded. A tax lien allows the IRS to place a formal encumbrance on the property of the taxpayer which can prevent the sale or transfer of the assets until the lien is satisfied.
  
  The IRS will file formal documents relating to the lien in the state where the taxpayer resides. In the case of real estate, this will place the lien on the deed to the property.
  
  

What Property Can They Lien?

• The federal tax lien can be levied on all of the property of a taxpayer. This can include personal property such as cars, boats, antiques and furniture. It can also include the taxpayer's home and any other real estate he owns or has an ownership interest. Theoretically, receivables can also have liens registered against them but this is more difficult to register.
  
  For property such as real estate and vehicles, the lien will show on the deed or title and legal transfer of the assets cannot occur until the lien is satisfied. The IRS may also foreclose on the property once a lien has been filed and has the right to seize assets sufficient to satisfy the lien.
  
  

What Notification of the Lien Does the IRS Have to Provide?

• The federal tax lien is sometimes called the "secret lien" because the IRS does not need to inform the taxpayer officially of the existence of the lien. This makes it important for taxpayers who owe the IRS back taxes to keep apprised of the status of the debt to ensure that a payment plan can be made that prevents the IRS from placing a tax lien against property.
  
  

Where Does the IRS Tax Lien Show Up?

• Where the IRS lien shows depends on the state that the taxpayer lives in and the types of property subject to the lien. In the case of a bank account, the bank will receive the notice of lien and may or may not inform the account holder. The first indication of an account lien may be the withdrawal of all funds. In the case of real estate, liens will show on the deed to the property held in the local assessment office. The most effective way to find out if a lien exists is to contact the IRS directly.
  
  

How Can I Clear an IRS Tax Lien?

• Clearing an IRS tax lien is not as simple as paying off the debt to the government. The taxpayer must ensure that the clearing of the lien has been reported to the local county clerk's office and to any lender who was served notice of the lien. A tax lien is reported on a taxpayer's credit bureau report and will stay there for seven to ten years but it is important to ensure that the credit report reflects that the lien was paid. Taxpayers often engage the services of a tax attorney to ensure that the lien has been properly lifted everywhere it was filed or announced.