Federal tax liens can have a severe impact on your financial stability. When you fail to pay your taxes, the IRS imposes a lien on all your assets, including real estate, giving them the legal authority to collect taxes from the proceeds of your assets. This can affect you, your spouse, or your company, potentially seizing your accounts receivables.
Once a lien is in place, everything you own is at risk of being claimed by the U.S. Government. Additionally, these liens appear on your credit report and can hinder your ability to open a checking account or secure loans against your assets. As a result, banks may be reluctant to deal with you to avoid complications with the IRS.
Obtaining reasonable loan terms becomes nearly impossible with a federal tax lien on your record. For instance, you might end up paying 18-22% interest on a car loan. It also prevents you from buying or selling any real estate, among other financial restrictions.
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