What is a tax lien?

A tax lien is a legal claim imposed by a government entity on a property to secure payment of taxes. Tax liens are imposed by state and federal taxation authorities when a taxpayer is delinquent in paying taxes. In California, the Franchise Tax Board is the agency responsible for issuing tax liens. A tax lien grants the government the right to take possession of the property if the taxes are not paid. This can include collecting overdue taxes, interest, and penalties from the sale of the property or from any proceeds from a refinancing or sale. When the lien is imposed, the lienholder (the government) has the right to receive all money the taxpayer may receive from the property. Having a lien imposed does not necessarily mean the taxpayer will lose their property. The taxpayer (or property owner) can still negotiate with the taxing authority to set up payment plan or to resolve the issue of the taxes due. However, if the property is sold, the lienholder is entitled to receive payment before the sale can be finalized. In some circumstances, a taxpayer can object to the lien at a hearing. If the taxpayer can show that the lien is not valid, the lien can be released. If the taxpayer does not dispute the lien, the lien will remain until the taxes are paid in full, or until the lien is released by the taxing authority.

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