Of course, in the real world, the IRS doesn't always enforce this lien with its seizure power. For instance, only as a last resort will the IRS seize your paycheck, or your bank balance, to pay your back taxes. In fact, it was the abuse of those very powers that caused Congress to give you many new rights in the 1998 Tax Act. So in the real world, the federal tax lien mostly just sits there in the public records until you try to sell property. We'll explore how that is done in another article, but now let's turn to the impact of this lien on divorcing or separating couples.
Couples normally divide property in a divorce or separation.
Property settlement agreements and federal tax laws allow for easy transfers. But if the couple owes joint taxes, all the property is encumbered with the federal tax lien, whether you actually know about the lien filing or not. Similarly, much other property is transferred in divorces, property that is not usually held as tenants by the entirety as the home normally is. Let's say the husband gets the wife's car in the divorce. The same goes with most other types of property, though there are a few exceptions.