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.

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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.

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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.

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