What is a tax lien?

A tax lien is specifically a legal claim placed on a property or assets due to unpaid taxes. This typically occurs when an individual or business fails to pay their taxes, resulting in the government asserting a right over the property to ensure that the tax obligation is fulfilled. The lien acts as a notice to other creditors that the government has a claim against the taxpayer's property, which can complicate or prevent the sell or refinancing of that property until the tax debt is resolved.

In this context, the other options do not accurately represent what a tax lien is. Claims by shareholders pertain to ownership stakes in a company rather than tax obligations. A tax credit is a reduction in the tax owed, applied at the end of the tax period, and thus doesn’t relate to unpaid taxes. A tax exemption refers to certain income or property being excluded from taxation, which also does not describe the concept of a lien. Hence, the definition of a tax lien as a legal claim for unpaid taxes is clear and precise.