Tax Execution vs. Tax Lien

When you are delinquent in paying taxes of any form, your local, state or federal government may choose to take a variety of actions to obtain the funds you owe. Both tax executions and tax liens serve this purpose and, depending on the type of tax owed, may overlap one another.

Tax Executions

A tax execution is issued against a taxpayer as a final solution to collection of a previously unpaid tax. The execution may take many different forms depending on the type of tax you owe. Collection of state and federal income taxes may take the form of a levy on your bank account, garnishment of your paycheck or a lien against property you own. Collection of unpaid local property taxes on your home or state sales tax on your vehicle generates a lien on the home or car associated with the tax bill.


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Tax Liens

Tax liens apply to real property. In many instances liens are placed on a piece of property associated with a specific tax owed, but a tax lien may be placed on your real property to satisfy an income tax bill. The IRS and state governments traditionally place a levy on your bank account or garnish your wages but will pursue liens if your tax liability is excessive or when levies or garnishments produce a minimum of funds.


Overlap of Tax Executions and Liens

When your state or local government has to take action against you for non-payment of sales tax on a vehicle or property taxes on your home, the tax execution for the debt takes the form of a tax lien. This is because the real property is attached to the debt or is the cause of the tax liability. The tax execution will also take the form of a tax lien in other situations when a sizeable tax debt is owed.


Avoiding Tax Executions

The only way to avoid a tax execution, whether it takes the form a lien, levy or garnishment, is to accurately report your income and pay appropriate federal and state income taxes. You must also remit any local property taxes and sales tax owed in a timely fashion. Should you receive a notice from a local, state or federal agency stating that you owe an additional tax debt, respond to the notice promptly to avoid additional measures being taken by the taxing authority.